Thursday, October 14, 2004

Barry Ritholtz over at The Big Picture has a great graph done by Professor Pollkatz on the relationship between US gasoline prices and Bush's approval rating. Suffice to say there is family resemblance.

I bring this up especially in the context of rising gasoline and heating oil prices. Regular gas is now up to $1.993/gal. nationally. This is the highest since the week of June 7, 15�/gal. higher than just a month ago, and only 7�/gal. below both the nominal all-time high (the week of May 24) and the highest real price in 18 years.

Combine this with distillate inventories, the fuel to make home heating oil, which are falling and thus prices are rising dramatically here as well.

As of October 8 the US has 120.9m barrels of distillate stocks. This time last year we had 129.8m. This is even more worrisome when one looks at the trends. In 2003 US distillate stocks rose steadily from April through December, exactly as one would hope and expect. Firms put distillate away in the warm summer and fall months, and then draw it down to produce heating oil in the winter. This year we see a truly troubling picture in which distillate stocks peaked in early September and have been falling steadily for a month now.

Stocks in the East Coast, the region most dependent on heating oil, are at the very low end of the average range now, and in the Gulf Coast region they've tumbled far below the average range. In response, NYMEX heating oil futures prices have skyrocketed, from $1.11/gal. in late August to a record $1.52/gal. today.

If Bush's popularity is tied to fuel prices even loosely, the Shrub is in real trouble. All the more reason to pay close attention to the Strategic Petroleum Reserve and the Northeast Heating Oil Reserve over the next two weeks.


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