Oil Demand Driven by Need for Transportation Fuels

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Woe betide us for accusing the market of getting it wrong. But do crude oil prices really fall because the cherry blossoms bloom in Washington in January? Or less poetically, does warmer weather reduce demand for oil?

Not according to Energy Information Administration.  According to its 2006 International Energy Outlook, the agency reckons that over 50% of crude oil demand is for transportation fuels. And unless someone can show us that demand for transportation fuels falls as the weather gets warmer, we’d actually expect oil demand to rise with warmer weather, as people drive their cars more, or use more electricity to stay cool (rather than heating oil to stay warm).

oildemandfortransportationfuels.jpg

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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