Declining Demand for Oil

Bloomberg ran an article today on the steepening decline in demand for oil and how it is driving the price per barrel down despite OPEC's attempts to cut production and control prices. This week's EIA Petroleum Status Report states that weekly refinery inputs (e.g. crude oil) averaged about 14.6 MM bbl/day (which is down about 415,000 bbl/day from last week for those keeping close score).

In the grand scheme of things, 415,000 bbl's just is not that much oil, so I fail to see how this decrease could possible result in the plummeting price of oil. Something is up here and I am not sure what it is.

For the record, my preference is to have oil relatively high because in my opinion, that will enable alternatives to be more cost competitive while not crippling the economy. I would like to see us move to a more diversified energy base and decrease fossil fuel consumption, but it's nonsense to think that solar cells on roofs and compact fluorescent bulbs can get us there. This is a pretty fundamental change in our economy and our energy infrastructure, and it's going to have to go slow to not traumatize us.