Gas Run,, R U Ready??

[JJ_BPK]

PSA

I start my day by scanning the lead articles of CNBC and Fox Business. There is always a bunch of Chicken Little verbiage about some earth-shattering event.

Currently, Ukraine is the #1 tag on the news.

But if you squint your eyes, read slowly, and breathe easy, there is financial news worth the effort.

Today, I spotted an article on oil futures going to 200 USD @ barrel

This morning Brent crude is @ 122 USD per barrel

This administration better start making decisions that help America.


Gonna make a run to the pumps..

[rsdengler]

I just paid $3.95 per gallon, but I know places up here are up to $4.00 or more. Such robbery for sure...

[Requiem]

My family members in N. California are seeing $6.29 a gallon.

Traditionally, Alaska does better with higher oil prices. Not advocating for Brandon's f*cked up addle-brained decisions which have pretty much shut down the state's major income sources: drilling, mining, and logging. But curious to see how this new development will affect Alaska's economy.

S.

[JJ_BPK]

Interday high of 139.13 USD


Vlad & Hunter are laughing all the way to the ATM to check their account balances

HJB

[GratefulCitizen]

Oil production isn’t the problem.
Too much money in the system is the problem.

There was a crash in production due to lack of demand during the pandemic, but most of that capacity can be restarted if needed.
https://www.eia.gov/dnav/pet/hist/Le...s=WCRFPUS2&f=W

Not sure how much longer it will take, but much of the extra money dumped into the system should be getting mopped up this year.
There isn’t an effective way to link it, but the B.E.A. has plenty of useful data to show what’s happening.

Here’s the site:
https://www.bea.gov/

One of the paths would be:
Tools>interactive data>GDP & personal income>begin using the data…

https://apps.bea.gov/iTable/iTable.c...=1&1921=survey

From there:
Section 2 (personal income and outlays), table 2.1 (personal income and its disposition)

Line 23 (government social benefits to persons/other) is the root of the problem.
Free money with no corresponding production.

Line 35 (personal saving as a percentage of disposable personal income) indicates that people’s savings may be shrinking back to reality.
This means reduced spending and increasing work.

Line 39 (disposable personal income: per capita: chained (2012) dollars) shows incomes coming back down to reality.
This also means reduced spending and increasing work.

Line 42 (percent change from preceding period: disposable personal income, chained (2012) dollars) shows more indications of reality arriving.
It’s particularly evident when viewed over a longer time period.

(You can modify the data for different time periods and put it in chart form if you want.)

It’s hard to tell if this will be a soft landing or a sudden crash, but people will run out of money.
When that happens, spending decreases, relative production increases, and prices drop.

There’s a reason the fed is hesitant to increase interest rates too soon.

[1stindoor]

I suspect a sudden crash. Everyone clamoring for "livable wages," and $15 an hour for minimum wage is all of sudden recognizing that though they're making more money...they have less to spend. Disposable spending is dropping fast, which means those in the service industry will be hit again.

[mojaveman]

Paid over $6.00 in Los Angeles the other day.

[Sohei]

We have had two jumps...the first was 0.25/gallon while the second was 0.50 - that was over two days. I just paid $3.69 with my discount at Kroger's as the average here is $3.99. I hope the population grows as tired of it as I am - at least at some point before we are all walking....

[rsdengler]

We are going to crash... The Ass Clown Administration, all in one tiny clown car...to steal a phrase from Box...Eat your damn peas...

[GratefulCitizen]

Inflation is required for governments to remain solvent.
They want it.

The alternation of inflation and short economic crashes is designed to dump the problems of government debt onto the population.
Chaos, fear, and unpredictability prevents most people from investing their money in a way to retain value.

House values do go up, but that just freezes out young buyers, drives up rents, and burns income renters might otherwise have been able to invest.
Also, state and local governments tend to get increased tax revenue when home values increase.

Rather than actively control their investments, most people will rely on their relatively low return 401k or some sort of pension.
The real value of those will be eaten up by inflation.

Meanwhile, governments keep interest rates artificially low to keep the burden of debt service low.
Governments don’t actually have to pay back debt, they only have to service it.

There are even bank rules in place (Basel III) regarding “tier 1 capital” requirements and the classification of government debt which creates artificially increased demand for government debt, further depressing servicing costs.
It’s called “financial repression”.

https://www.imf.org/external/pubs/ft/wp/2015/wp1507.pdf

Nominal growth (rather than real growth) of the economy combined suppression of government debt servicing costs results in a stealth tax where the burden of government debt shrinks, but most of the population fails to benefit from the nominal growth of the economy.

[7624U]

Step right up and get your Ukraine War Bonds for a nice return of 11%

https://theconversation.com/ukrainia...da-tool-178502

[GratefulCitizen]

There are no long-term supply problems.
Maybe a short-term shock, but the nation is quite secure when it comes to oil and oil products.

Yes, there is a net importation of crude, but there is also a net exportation of refined products.
On balance it’s pretty close to scratch.

https://www.eia.gov/dnav/pet/hist/Le...s=WCRNTUS2&f=W
https://www.eia.gov/dnav/pet/hist/Le...s=WRPNTUS2&f=W
https://www.eia.gov/dnav/pet/hist/Le...s=WTTNTUS2&f=W

As shown in an earlier link, there is tremendous crude production capacity which was idled during the pandemic.
The temporary price spike will more quickly wring the excess money out of the system, and fuel prices will stabilize.

With regards to oil, the nation is in a much better situation than it was when the price spiked back in 2008.
That settled down just fine.

Nmap and I debated the point at some length in an old thread.
Just like then, this will pass.

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