Double Blind

It’s ironic that everybody was complaining about high oil prices half a year ago, but they didn’t realize that it kept the Canadian economy afloat. Now that oil has collapsed by 70% from its peak prices, everybody seems to be suffering since they were addicted to the cash that came from the black gold.

Anyhow, gasoline demand would suggest that prices will rise from this point. With this usually comes crude oil prices. One has to realize, however, that gasoline is one component of crude oil, the other major refinery products are diesel and kerosene. In terms of completely modelling demand for crude oil, one has to factor in pretty much every piece of transportation on this planet, and determine whether there are more jets, trains, ships and trucks travelling around the planet. In an economic downturn, this usually falls, which results in a corresponding decrease in demand for crude-related products.

I’m not saying this is the bottom for crude oil, but it’s something to look out for.

This entry was posted on Wednesday, February 11th, 2009 and is filed under Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.