The California Oil Outlook ? How Forecasts Are Made - Possible Sources of Oil Products

PETROLEUM industry forecasts are constantly made and revised but are not in the nature of predictions. Particularly in the field of demand, many of the factors are far beyond control by the producing industry. Supply reacts on demand and demand reacts on supply. Competent economists in the oil business forecasted a year ago, on the basis of experience, that demand would now be at a much lower level than it is. This increased demand increased the price of crude oil and products, and in turn those increased prices have brought forth increased supply. A reduction in demand would lead to a reduction in supply. Shortages are now world-wide, and costs of secondary importance, so if there were extra supplies in California they would be moved into what are termed "unnatural markets." For example, Argentina is in the market today for California gasoline; that is an unnatural market because of the greater transportation distances from California to Argentina than from normal sources.