To: CalculatedRisk who wrote (45847 ) 11/24/2005 11:06:13 AM From: russwinter Respond to Good update of the gasoline situation. financialsense.com headlines.accuweather.com The supply of gasoline comes from either the imports or the production. Looking at both the imports chart (Chart 2) and the production chart (Chart 3), we see the spike in imports and the sharp decline in production occurred at about the same time, at the end of September and the beginning of October. It's self-evident that the increase in imports during this period was to make up for the temporary production interruption caused by the hurricanes. They offset each other. Other than this variance, there's no discernable change in the gasoline supply. The imports have since dropped back down to 1.131 million barrels per day, and the production has returned to the 3-month average production level of 8.5 million barrels per day. Since there's been no meaningful increases in the real disposable incomes, we're well aware that the strong consumer spending comes primarily from extracting equities from their homes through cash-out refinancing. The retail industry has the propensity to move in the same direction as the mortgage refinancing volume. But divergences do happen from time to time. So far, there have been 3 such divergences in the second half of 2005.
