Oil prices fell today after this week's inventory report showed that fuel supplies were growing, and that Americans were buying less gasoline.

We all remember last summer's record high gasoline prices that had a large part of the nation paying over $4 a gallon. This summer things are a lot different, with the national average for gasoline running at $2.46 a gallon. Compare that with this time last year when prices were $4.055 and you would assume that people would be buying up a lot more gasoline. But that is not the case.

Today's inventory report shows that the nation has 215.4 million barrels of motor gasoline in storage. This is 3% higher than the levels we saw this time last year, an indicator of how much people have been cutting back on their energy consumption this year.

Even though gasoline prices are roughly 36% lower than this time last summer, people are just not spending as much. The main difference between this summer and last summer is the overall view of the economy. The nation is dealing with rising unemployment that is just shy of 10%, and expected to move past 10% in the next couple of months. In fact last week we learned that 15 different states now have unemployment rates above 10%, with Michigan looking at a 15.2% unemployment rate.

With so many people losing their jobs, it is easy to understand why people are buying less gasoline. For one thing, you have fewer people commuting to work each day. In addition to fewer people working, fewer people are taking vacations. For one thing, people are cutting back on their spending so they are less likely to take their vacations, but also people are more afraid of being away from their jobs. With such unemployment a lot of people are deciding to forgo their vacations this summer in order to stay at the office. Beth Gaston Moon wrote an article earlier this summer that described this current trend of people opting out of vacations.

For today, gasoline supplies were driving the market, but do not be surprised if this trend does not last. We are right in the middle of a very pivotal earnings season, and every day some major companies are announcing their second quarter results. If we continue to see strong earnings reports oil should bounce back and continue its recent move higher.

Following today's inventory report, oil has dropped $0.21 a barrel to $65.40.