Jason Bordoff

You kind of work through some inventories, work through some oil that is in transit.

And a couple of weeks into this crisis, then you start to see the physical reality bite a lot harder.

Yeah, when you refine a barrel of oil, you get a bunch of different products from it.

Gasoline is the one most people think of, but there's diesel, which is sort of the workhorse, the lifeblood of the industrial economy, because everything we buy in the store gets there by truck, and those all run on diesel.

So you start to see it show up in prices elsewhere.

Heating oil, jet fuel, and lots of other kind of things you use in asphalt and things that we don't think about normally.

Yeah.

And the market for those, we've seen prices go up much, much faster because I think those are less liquid, less traded.

And so the physical tightness in those markets starts to hit refiners much more quickly.

So people who need to buy those products from refiners, they're seeing people charge a lot more for it already.

I think we haven't seen anything yet in terms of where I expect oil prices would go if this goes on for weeks longer.

Because as I said, you really do need prices eventually.

The physical reality catches up.

You need prices to rise high enough to actually destroy demand.

And that's hard to do.

What does destroy demand mean?

It means everyone figures out how to do something other than buy gasoline.

So you're going to drive your car less.

We saw the CEO of United Airlines the other day say they were going to start to idle some of their flights, the flights that maybe get a little less revenue, like Tuesday, Wednesday, Thursday, rather than on the weekend, the flights that aren't as profitable.

They're going to stop flying as many airplanes and some industrial factory is going to shut down.