That was the data released today... Between crude (-8.8 Mbbl), gasoline (-3.2 Mbbl), and distillates (+1.6 Mbbl), we clearly used A LOT more fuel than we bought last week... and that was before the Memorial Day weekend...

What this shows very clearly is that 130.00/bbl is not nearly a high enough price to reduce global demand to equal global supply unless there were large stockpile gains in many other countries... which is unlikely since the world averaged ~1.1Mbbl/day drawdown last year - while the U.S. remained stable.

So... for those whining about 4.00/gallon... It isn't enough. If we continue at this rate it would take less than a year to completely deplete ALL of our commercial inventories, and less than 2.5 years to deplete all inventories including the SPR...

Oil and gasoline prices must rise further. It's supply and demand.

Of course, if there were a very high TAX on gasoline, that would increase the price to the point where supply and demand balanced, but the money would go to the government rather than the oil companies... We as a country voted against that though... and now we're having to pay other taxes to the government and pay the high prices for the fuel. To those that voted for the oilmen (republicans), thanks...

4.00/gallon will be remembered fondly as "the good old days", the energy crisis is upon us.

I'm not happy about it, but for those of us that actually chose to be informed... this is not a surprise.

Tundra, A couple of observations:

#1. Now that the Fed has signaled a likely end to rate cuts, this may moderate pressure on the spot and future markets and eventually steady price increases at the pump - at least until the elections. But the perverse effect of this will be the failure to dampen demand - the US consumer being sort of like the boiled frog. I.e., the administration is trying to curtail the shock (expect more pandering by McCain), and the inexorable march to $6 gasoline (and beyond) may take a bit longer - while the subsequent fall off the cliff will be even steeper.

#2. Reading the article in the NYTimes today on LNG, it struck me how natural gas is also becoming a fungible commodity, and while natural gas prices have been more stable in the past, these could also quadruple now that our sources and distribution infrastructure are being questioned. KS Deffeyes and others have also pointed out how vulnerable LNG is to terrorist attacks, but now it seems that globalization of the market (and depletion of local resources) puts the American consumer and the dollar into the same bidding market as the Euro and the Yen.

All of which makes it a possibility that the owners of McMansions in the exurbs will still need their cars to drive the family to a warming center in coming winters. :-)

After initially spiking sharply upward, the price of oil has dipped to more than $3 below yesterday's closing. There are still 25 minutes to go before todays close, so that could change. Commodity prices, generally, are also down sharply. If one had to judge strictly from the price movements, it would appear that it was just noticed that some medium size country disappeared from the planet in the last few hours and their demand is gone. Well, tomorrow may be completely different, with perhaps some new, and rapidly developing, country discovered in a previously hidden part of the globe. The average day would appear to have about two business cycles packed into it. That is a great productivity improvement over the era when it could take several years to execute a business cycle. I read "Blink", but still feel unprepared for the actions of the market. It is little comfort to those people who are now retired and depending on their IRAs and 401Ks for a significant portion of their upkeep. I am further comforted by having a good old-fashioned pension; although I must consider that the pension funds are invested in markets components not far different from those in my 401K. That, of course, leaves Social Security (and Medicare for my medical needs), although there are obviously a lot of people who feel that there will be an end to that. My wife, who will retire in a few months, has a conventional pension, a 401K, and Social Security, so I have to apply a multiplier to my income to estimate our family income. Anyway, I can see that market forces (read rampant speculative activity often characterized better as gambling) increasingly destabilize my financial plan. I thought my wife and I had provided well for our retirement, but a powerful minority, supported by a government which imagines itself to be part of that minority, is being allowed to destabilized the plans of many millions of families.

End rant.

To develop a Natural Gas cartel similar to OPEC to control prices for natural gas. Since gas is basically cleaner than oil, with much less refining energy needed for FT GTL (Fischer Tropes Gas-To-Liquids); it is likely that within 5 - 10 years natural gas may be sold for even MORE than oil on a per energy unit basis.

As far as the rising dollar goes, I think that the percentage of the Gross World Product (ppp) that is used for the purchase of oil will continue to increase for the next few years. Whether the dollar rises or falls will affect how much we pay to some marginal extent... but the dollar falling another dime against the euro did NOT cause the doubling of the price of oil... The dollar falling a couple of cents against the euro won't stablize oil. The total percentage of our economy spent on oil will continue to rise... so the best a strengthening dollar could do is slow the inflation of oil down a little.

There's a good bit of propaganda trying to tamp down the panic, and they can try... but we only have ~20 days of crude and ~22 days of gasoline and less than that of distillate in this country... We are in the bottom of the average range on all of these inventories. If the amount that we use is exceeding the amount that we produce and buy by this level for any extended length of time... then the market will eventually catch up to its fundamentals.

Oil prices have averaged ~5% increase/month beyond inflation since January of 2007... but the last month and a half it's jumped up at a much greater rate than that... Maybe the faster-paced runup has caused a few investers to get a little nervous, but whatever they don't buy other countries will... and our inventories will reduce... and the buying here will resume.

I think Goldman Sachs estimate of 141/bbl for the second half of the year is a little optimistic at best... I have absolutely no doubt that oil will reach above 150.00/bbl this summer.

A few days of wobble means nothing. As long as the inventories are going down, the price is going to go up.

Nothing else makes any sense at all.

That's B.S.! There is more oil lying beneath U.S. soil than we can use in 200 years! You can make up all kinds of false truths, it is still a gross display of GREED! This country is run not by the people, or for the people. It is run by big business and ***holes.

So you are saying - I presume because someone "in the know" told you - that we have ~1.6 trillion barrels of oil somewhere under the U.S...

No.

Sorry, but your source is sadly under-informed. There are a total of 21.76 billion barrels of proven oil reserves under U.S. controlled soil (or water). Period. That is enough for less than 3 years of our current demand, and less than 6 years of our current production.

The only presumable source of anything close to that (estimated ~150 billion barrels, which isn't really close, but...) rediculous 1.6 trillion barrel reserve you are speculating on would be the shale flats. Oil can be extracted from shale... it costs a lot though. Right now, small scale production can be achieved at ~150 - 200/bbl... but the consumption of natural gas is so high that ramping up production of shale oil would overtax our natural gas supply, which would cause THAT to hyper-inflate, which means it would take closer to 300 or more dollars/barrel for the heavy shale oil.

Assuming we won't tap the shale, we have only ~21 billion barrels, less than 1000 days of our total oil usage.

I'm sorry that you are misinformed... but we are in trouble.