- What is the impact of a glut in gasoline on the price of gasoline going forward?
- What is the impact on the price of oil going forward? Remember that gasoline refiners buy substantial quantities of crude oil because crude oil is an input used to produce gasoline.
Friday, February 17, 2017
What do you predict will happen to the price of gasoline?
https://twitter.com/WSJ/status/832596498336595969 states that the gasoline market has the largest glut in 27 years.
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Since there are record levels of gasoline, both crude and refined, sitting around, there is reason to be concerned. The glut due to high production levels happened to due to increased demand, but lately demand has been weak due to high prices. This dip in demand may be short-term, but consumption may rebound going forward. On the other hand, the price of the oil going forward will potentially increase because as demand growth is delayed. Here on the east coast we have a lot of imported crude oil and refined products, but the supply growth would cause refined products to rise. Unless demand does not rise, gasoline refiners would need to scale down production.
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