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Monday, January 04, 2010

Oil Prices Push Above $81 per Barrel

by Calculated Risk on 1/04/2010 05:51:00 PM

From the NY Times: Oil Surges Above $81, Driven by Several Factors

A combination of frigid weather, expectations of an improving economy and new tensions between Russia and Belarus catapulted crude oil prices above $81 a barrel on Monday.
Higher prices could impact the U.S. economic recovery (it is probably time to start watching U.S. vehicle miles driven again). Here is a graph of nominal oil prices ...

Oil Prices Click on graph for larger image in new window.

These are spot prices for Cushing WTI from the EIA (source).

Back in the Spring of 2008, we started seeing many signs of potential demand destruction - including fewer U.S miles driven, Asian countries reducing gasoline subsidies, and China stock piling oil for the Olympics.

And maybe we are seeing the first signs of demand destruction again, since the Dept of Transportation reports that U.S. vehicle miles declined in October: Traffic Volume Trends
Travel on all roads and streets changed by -0.5% (-1.4 billion vehicle miles) for October 2009 as compared with October 2008. ...

Cumulative Travel for 2009 changed by +0.2% (4.8 billion vehicle miles).
Vehicle Miles YoYThe second graph shows the comparison of month to the same month in the previous year as reported by the DOT.

Miles driven in October 2009 were 0.5% less than in October 2008, the first year-over-year decline since May 2009.

Still - I haven't seen any stories like the following from the NY Times on June 28, 2008: Cruise Night, Without the Car
For car-loving American teenagers, this is turning out to be the summer the cruising died.
From coast to coast, American teenagers appear to be driving less this summer. Police officers who keep watch on weekend cruising zones say fewer youths are spending their time driving around in circles...
There couldn't have been a clearer sign of a top in oil!