OIL STOCKS UP – GASOLINE STOCKS DOWN – WHAT’S THE DEAL?

I found these charts from the Energy Information Agency interesting. The first chart shows a fairly decent increase in oil stocks in June and July. Okay – I know someone out there will quibble with me over my choice of the words “fairly decent.”

 

On the other hand, the second chart shows a decrease in gasoline stocks.

 

 

 

Now, maybe I don’t quite understand how this works, but if the oil stocks are increasing why aren’t the refineries making more gasoline? Although my observations are simplistic, my question is simply this – if oil stocks are increasing why are gasoline stocks decreasing? Someone is making a decision to hold back the production of gasoline. Wonder who that is?

Just an observation – I have to admit I am not terribly learned in the area of the oil and gas markets. So what do you think?

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About Charlotte A. Weybright

I own a home in the historical West Central Neighborhood of Fort Wayne, Indiana. I have four grown sons and nine grandchildren - four grandsons and five granddaughters. I love to work on my home, and I enjoy crafts of all types. But, most of all, I enjoy being involved in political and community issues.
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2 Responses to OIL STOCKS UP – GASOLINE STOCKS DOWN – WHAT’S THE DEAL?

  1. Jeff Pruitt says:

    I think another plausible answer would be that the refineries are running at full capacity and simply can’t produce more gasoline.

    Even if oil stocks doubled there is no infrastructure to double the refining output. Now some claim this is due to environmental regulations and that refiners simply can’t build new refineries in a cost effective manner.

    This is completely false and Congressional hearings on this matter last year got the gist of the problem. Refineries take years to build and these companies think the demand for oil is going to drop in the long term so they’re not willing to invest their money in new refineries. From their point of view this makes perfect sense. Why build something that you may not need in 20 years and that will lower the price of your end product?

  2. Thanks, Jeff. This sets me to wondering whether the oil companies determined in strategic planning that the decrease in oil demand was coming, even though in the long term. If this is the case, and the oil companies understood this, why weren’t they jumping into alternative sources 20-30 years ago? Why wait until the new millennium to start hyping their “conservation” efforts on energy independence and alternative energy sources?

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