Gas prices dropping soon?

[Gregs24]

Actually May 2020 was the lowest, it went up from there. You can see the curve in January was already well on it's way up. As people returned to work, demand shot up.

With a noticeable uptick at the end of February - wonder why!

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[Gregs24]

So no answer. BTW the answer is yes.

Just like the answer to what pootin is doing.

I think you are asking yourself questions and answering them yourself. I suppose you will always agree with the answer!

There are no 'nukes' in Ukraine, it voluntarily surrendered them years ago. Putin is just on a land grab, similar to other despots previously.

 

[sk47]

I don't know that I'd call them reserves, that congers up oil in storage tanks. The issue is the oil companies are not allowed to recover the oil in the ground in many places. Anwr being one of them.

Hello; Correct i did mean oil reserves in terms of so far unrecovered oil still in place in the ground. Not the strategic oil reserve supply of oil bought and stored for emergency use.

In fact, I do think tapping the strategic oil reserves is another great mistake. That strategic reserve is intended for real emergencies and will leave us vulnerable when/if such an emergency happens.

 

[sk47]

When oil prices collapsed because of covid.

Global price, not US centric price

Hello; when global prices were down because of covid policies such as lockdowns and other such policies which are now bearing a very bitter fruit.

 

[sk47]

I think you are asking yourself questions and answering them yourself. I suppose you will always agree with the answer!

There are no 'nukes' in Ukraine, it voluntarily surrendered them years ago. Putin is just on a land grab, similar to other despots previously.

Hello; yes, something to agree on. Ukraine gave up the nukes some decades ago. Of course, Russia wants parts of or all of Ukraine. There are good sea ports to be had. Ukraine was once a part of Russia. Hard to say how many Ukrainians might want to be part of Russia again but for sure a lot do not judging by the way they are fighting.
A big thing was the chance Ukraine might be allowed into NATO. NATO includes nukes if I am not mistaken. Did not seem likely to ever happen but was not clearly taken off the negotiation table. Had it been made clear Ukraine would never be part of NATO such may not have stopped Putin, but at least one of his excuses would not be in play. The analogy of say China/india/Iran/North Korea putting nukes in Cancun Mexico works.

Note- I do not have the exact details but it is my understanding part of the deal when giving up the nukes many years ago was some form of promise of help. Best I understand not as strong a promise of help as a treaty.

 

[LSchicago]

With a noticeable uptick at the end of February - wonder why!

Ask and you shall receive. The reason gas went up at the end of February was demand skyrocketed. In the end of January people working from home were being called back to work after the big spike in Covid cases. Companies no longer wanted people to stay working remotely. As everyone returned back to office jobs, and found new jobs/returning at businesses opening after being closed from March of 2020. Cases were down to 55K a day on February 21, down from a couple months earlier at 293K a day. Look at the chart.

 

[Gregs24]

Ask and you shall receive. The reason gas went up at the end of February was demand skyrocketed. In the end of January people working from home were being called back to work after the big spike in Covid cases. Companies no longer wanted people to stay working remotely. As everyone returned back to office jobs, and found new jobs/returning at businesses opening after being closed from March of 2020. Cases were down to 55K a day on February 21, down from a couple months earlier at 293K a day. Look at the chart.

That and Russia invade Ukraine !

US COVID figures only affected US. China went into large scale lockdowns which would have easily cancelled out US consumption.

It was all confidence related to war.

 

[K4fxd]

It was all confidence related to war.

So the fact the US went from a net exporter of oil to a net importer has no effect?

 

[Mach VII]

So the fact the US went from a net exporter of oil to a net importer has no effect?

That old trope has expired, we still produce more 'petroleum products' than we import... buyer sets the price.

 

[sk47]

That old trope has expired, we still produce more 'petroleum products' than we import... buyer sets the price.

Hello; noted you used the term "petroleum products" rather than oil. I suspect such is technically correct. That being things refined from oil. Thing is the general conversation has been about the crude oil itself.

Now about the buyer sets the price. Supply and demand I suppose. Sure, that works. If there is less refined product than the general demand the price goes up. However, such is not the only factor concerning the specific price.

The USA has printed way too much money the last couple of years. Not sure just how many trillions but six to eight. Maybe more. I guess it is also a supply thing as well. The more the supply of dollars increased the less each dollar is able to buy. The inflation is a big part of the fuel cost issue.

The supply of oil was matched well to demand prior to the pandemic. Low unemployment and the world economy humming along. Oil producers were meeting demand well enough. Then a new infection gets away from the various health agencies around the world. An infection that mostly killed the old and/or basically unhealthy. Being old, obese or having some co-morbidities meant you have a greater chance of dying. Even so the survival rate among those most at risk was around 95% (last I kept track of some months ago) The overall survival rate for all has been at and perhaps above 99%. (Maybe above 99.5% ??)

After it was way too late the lockdowns/ shutdowns started. By way too late, meaning the virus was already much too broadly spread around the world. It also was both aerosol and airborne so continued to spread easily. Now for a small-scale example. During a bad storm in the Gulf of Mexico oil rigs and refineries are sometimes shutdown. After the storms it can take days or weeks to get things back up to speed.
Shutting down vast parts of the world economy which was running at close to 100% was a big mistake in terms of the consequences. The cry was it was necessary to stop the disease. Did not stop the disease did it? Not only does it take a lot longer to start back up a world economy, Years. We also had a lot of businesses go out of business. Some just could not survive the shutdowns. Somehow all the printed money did not make it around to all businesses. Some could not retain or rehire workers. People were being paid by governments to stay home.

Part of that world economy which was humming along was oil production. The shutdowns hurt the oil producers in several ways. Many already posted about. Then many ordinary folks had enough and started getting about and things stayed decent until after the election. First thing under new control a series of blows were directed at the oil producers. Some were clear and oblivious. Others have been more subtle. It seems the agencies controlling the issuing of oil lease permits and other red tape items have been having math trouble and other such things which delay things. Investors and oil producers got the message. Oils stock traders on the futures markets got the message. Heck, the man himself came out and said the words on TV recently.

There is more to be said, but enough for now.

( Note- I will in effect be arguing the effect of policy decisions as the basis of these comments. )

 

[Interceptor]

I was once informed many years ago, and what I was told seems to be accurate over the many years since.
The value of the American dollar relates to the price of a barrel of crude.
Basically our dollar has loss value and the cost of fuel has gone up accordingly. When the American dollar gains value back, the price of fuel will lower accordingly.

 

[sk47]

I was once informed many years ago, and what I was told seems to be accurate over the many years since.
The value of the American dollar relates to the price of a barrel of crude.
Basically our dollar has loss value and the cost of fuel has gone up accordingly. When the American dollar gains value back, the price of fuel will lower accordingly.

Hello; Heard a talking head this morning saying that the fed will have to rase the base rate to be above the inflation rate to get control of inflation. I do not have much confidence that will be done for several reasons. I will give only one right now. The USA pays only the interest on the national debt. Not a penny on the principal. A higher base interest rate will add many billions to what the government pays out.

If such is actually done, much will depend on if they use the real rate of inflation or some calculated lower rate.

I graduated and got my first real job in 1970. Interest rates were high to buy anything. Car dealers and home loan outfits wanted a big down payment. Maybe 20% or more down.

 

[Gregs24]

No I ask a question that no one wants to answer. I understand why though. I goes against who is the bad wolf and who the hero is.

Hint. The countries that bomb wedding and day cares might not be the hero’s. Inconvenient Truth.

You ask a rhetorical (in your eyes) question that nobody really understands!

 

[Gregs24]

I was once informed many years ago, and what I was told seems to be accurate over the many years since.
The value of the American dollar relates to the price of a barrel of crude.
Basically our dollar has loss value and the cost of fuel has gone up accordingly. When the American dollar gains value back, the price of fuel will lower accordingly.

A good explanation here:

Understanding the Correlation of Oil and Currency (investopedia.com)

A couple of key points:

• Countries that depend heavily on crude exports experience more economic damage than those with more diverse resources.

Since the Russian invasion of Ukraine in 2022, the U.S. dollar has strengthened against many world currencies due to the safe haven effect and rising inflation. This has happened even as the price of oil skyrocketed

Crucially Russia is not the safe haven and hasn't benefited / will not benefit long term. If Russia wants to sell oil as the year goes on it will need to find new markets (bearing in mind the pipelines largely go to Europe) and 'friendly countries' (as Putin likes to describe them) willing to buy oil (probably in Rubles) almost certainly at a discount. Russia buys chips / electronics etc just like everybody else and the suppliers are drying up.

In an attempt to restart car production safety rules have been dropped including airbags just to get something made. Don't underestimate the long term impact of these sanctions.

 

[sk47]

You ask a rhetorical (in your eyes) question that nobody really understands!

Hello; I get it.

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