Monday, June 13, 2022

Big Memorial Day weekend of travel has an effect, but lots of gasoline, oil still available

After a weekend of travel that included me choosing a $59 round-trip bus ride over driving to O'Hare and paying for parking and gasoline, I wanted to revisit some numbers on the availability of oil and gasoline in this country.

With gas prices continuing to rise, I wanted to see if this caused any kind of decline in demand for the high-travel Memorial Day weekend. Now that the Energy Information Agency has gotten their figures out for that weekend, let's take a look and see what we have, and compare it to the more "regular" week before (through the Friday before Memorial Day weekend).

As you can see, gasoline usage was down for the week before Memorial Day, but Memorial Day Weekend had the highest gas usage since COVID became a thing. Maybe that reflects pre-planned vacations, and we'll see gas consumption go back to declining when the next EIA consumption report comes out on Friday, but it certainly says that gas prices didn't stop a big increase in travel for that weekend.

That big jump in usage for Memorial Day weekend tightened the availability for gasoline in America. The days of supply is lower than it has been in past years, but still more available than in 2014 or 2015.

If the days of available supply continues to decline in the next couple of weeks after the high level of Holiday Weekend travel, then we should worry. But that will be due to worldwide constraints more than any lack of supply in America, because this country is pumping out oil at 2019's levels, with more expected to come.

And that, along with the dollar being at multi-year highs, is why US gas prices are generally lower than what Europe and Canada are dealing with today. And the choice not to pick up supply isn't anything related to DC mandates, but is more likely due to Capitalism 101 - maximize profits, not production.

High gas prices suck, and are still causing significant stress for Americans. This has led to a general gloominess of the overall situation, when the economy still is adding jobs and production, with nominal wages still rising. But I also think that the supply-and-demand situation in America doesn't match with those high prices, and if Americans do cut back on their driving, there's no reason for those prices not to go down.

I think it's well past time for the Biden Administration and Dems in DC to hammer this and investigate anti-competitive practices. I also think that direct intervention may be in store, given that it is worldwide issues that are raising the worldwide prices, and do some "America First" actions of our own. This could include redirecting US oil exports back to America, use the Defense Production Act to speed distribution of oil and to increase refining capacity, and putting in a maximum pump price (say, at $4.25) while subsidizing gas stations to make up the difference.

Given the supply-and-demand situation and the adjustments that will lower prices on their own in the coming months, short-term moves like this should be all that is needed.

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