Redstate

By Vladimir Posted in Energy | Exxon Mobil — Comments (3) / Email this page » / Leave a comment »

Maybe we've found that key point on the supply/demand graph -- the point at which consumers make economic judgments on the use of gasoline, and actually curtail its use (rather than just idly b*tching about it).

Sure, gasoline costs more than consumers are accustomed to paying at the pump, but our mass behavior sheds light on the actual value of the product, based on its utility [which is its rather unique ability to put the Family Truckster down the road 15-20 miles]. It also points up the validity of the drum yr humble correspondent has been banging in these pages for 3-1/2 years, which is that during the period 1984-2004, petroleum was in an oversupply situation, and thus very cheap. And we all got hooked.

...more...

Exxon CEO says fuel prices eroding demand

"We're already seeing some gasoline demand slackening in terms of miles driven, so I think we're very near, if not already at, the price where people clearly are altering their daily behavior," [CEO Rex] Tillerson said in an interview today on NBC's Today show. "That's about all consumers can do."

[snip]

Gasoline touched a high of $3.2275 a gallon Wednesday on the Nymex. [That's the wholesale price of the commodity, before transportation and the retailer's profit margin. Oh, and state and federal taxes. - ed.]

"This is a demand-driven price run-up," Tillerson said. Rapid economic growth in China and India have "lifted tens of millions of people out of poverty. That's a good thing. The negative effect is huge demand for energy and that has put a lot of pressure on the price."

He said a proposed U.S. gasoline-tax holiday would affect prices at the pump, although it's "hard to judge" if it would help consumers. He said prices may rise even with a suspended tax.

Tillerson wouldn't forecast the effect of conservation on fuel prices.

"If you look back in the past history, when we've had rapid run-ups in prices like we've had, oftentimes the corrections are fairly dramatic," he said.

[H/T www.ocsbbs.com]