Yesterday, we noted the Beginning of Demand Destruction? Today, Oil has reversed, and that thesis may be getting questioned.
For more on demand destruction, see today’s WSJ:
"During the energy crunch of the late 1970s and early 1980s — the last time gas prices were close to current levels in inflation-adjusted terms — consumers sharply cut back their gas consumption. When prices dropped, demand rose again, but at a slower pace because of the embrace of more-fuel-efficient foreign cars.
This time around, the breadth of change in consumption patterns is even more dramatic, and, if oil prices stay near current levels, the decline in demand could be more sustained.
The slower economy means pinched consumers, as well as truck drivers delivering goods, are driving less. DOE economists estimate that a 1% decline in personal income results in a 0.5% drop in gasoline demand."
As the saying goes, your mileage may vary . . .
Prices Curtail U.S. Gasoline Use
Report Says 2007 Was Likely the Peak; An Enduring Shift
WSJ, June 20, 2008; Page A4