Friday, April 27, 2007

Gasoline Supply May be Very Tight This Summer


Phil Flynn, a member of Alaron Trading, told CNBC’s “Squawk Box” that the U.S. may face tight gasoline supplies this summer.

“(Production numbers) better change soon,” Flynn said Friday. “Otherwise, we’re going to have big problems in this country. I don’t know how we’re going to get gasoline supplies where they need to be by Memorial Day. We need to be at 210 million barrels in just a few weeks. We’re at 194 million.”

Here's a chart of US gasoline supplies. The red line -- the line that is heading down in a big way -- is the current inventory level.

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This means that gas prices could again be a problem this summer.

Last summer we had $3.00/gallon prices and above with little painful effect on the overall economy. However, we've now had 4 quarters of slow economic growth, and a year of bad housing news. This summer $3.00/gallon may be an inflection point hitting consumer spending negatively.

As with most things economic, we'll have to see how this one plays out.