Hit by Shortages, Vehicle & Parts Production Plunged to Lowest since Lockdown. Oil & Gas Has New Script

Industrial production over the long term is a sad sight, powered by offshoring.

By Wolf Richter for WOLF STREET.

Industrial production – manufacturing output, oil-and-gas extraction, mining, and gas and electric utilities – fell 1.3% in September from August, pushed down by production of motor vehicles and parts, which plunged 7.2% for the month, and by oil and gas extraction, which fell 3.8%.

Manufacturing of motor vehicles and parts has been hobbled all year by supply semiconductor shortages that have led to rotating shutdowns of parts manufacturing operations and assembly plants. The shortages continued to get worse – despite assurances earlier this year that they would be over with by Q4.

The manufacturing production index for motor vehicles and parts, adjusted for inflation, dropped to a value of 85.4. Beyond the collapse of production during the lockdown, it was the lowest output value since 2013 and was back where it had been in 2006:

Motor vehicle and parts manufacturing started hitting new highs in 2014 on an annual basis and continued to grow and peaked in 2018, before dipping in 2019 and plunging in 2020. This year promises to be rough too.

Unlike the Great Recession collapse of production of motor vehicles and parts – which was driven by a collapse in demand that caused GM and Chrysler and many component makers to file for bankruptcy – the drop in production this year was driven by supply shortages. The drop in production, amid strong demand, has caused inventories at auto dealers to be essentially depleted.

In an effort to keep their plants running, automakers have built large numbers of nearly finished vehicles that are missing a part of two and were put on storage lots until those parts arrive. Then the finished vehicles are shipped to dealers. In Q3, GM shipped over 68,000 of those vehicles to dealers.

Production of these unfinished vehicles sent into storage is included in these production figures. But they cannot be sold until they’re finished, and sales in September of new vehicles have continued their supply-driven multi-month plunge:

Oil and gas extraction dropped 3.8% in September from August, and was down 0.7% year-over-year, as producers along the Gulf Coast got slammed by Hurricane Ida, which raged from late August to early September, and shut down production temporarily.

The shale oil and gas industry bloodied and wiped out investors after hundreds of bankruptcies and debt restructurings during the oil bust from 2015 through 2020, following years when the only thing that mattered were production increases, no matter what the losses. This relentless surge in production caused oil and gas prices to collapse, and companies with them.

What’s left of the industry has tightened up, as burned investors have gotten careful, and the flood of money into the industry has slowed. Production has slowed too, as the highly fragmented shale oil-and-gas industry is now focused on keeping production down to levels that allow prices of oil and gas to rise. And they have risen big time.

Oil and gas extraction has been booming for years. From 2006 through September – a period over which the production index of motor vehicles and parts has remained flat – the oil and gas extraction index has surged by 117%, despite the 10.8% drop over the past two years:

Total industrial production has essentially remained flat for a decade, and is down roughly 10% from 2007, despite the growing US economy and population, as a lot of production has been offshored. And this this decline since 2007 occurred despite the massive surge in oil and gas extraction, as other industries declined faster than oil and gas extraction rose.

Note the barely visible little dip in September in overall production, compared to the plunges in motor vehicles and oil and gas extraction:

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  141 comments for “Hit by Shortages, Vehicle & Parts Production Plunged to Lowest since Lockdown. Oil & Gas Has New Script

  1. Jackson Y says:

    According to polls, only a slight majority of Americans are concerned about inflation, and even Republicans mostly believe it’s caused by supply-chain disruptions, while government & central bank money-printing are absolved from blame.

    How have the government & mainstream media so effectively controlled the narrative on inflation?

    • Depth Charge says:

      “According to polls…”

      And you believed it?

      • Djreef says:

        I think he answered his own question.

      • Jackson Y says:

        So far, this year’s off-year elections (CA/VA/NJ Governor, various House races, state & local, etc.) do not suggest a major backlash against the incumbent governing party, as they would if voters were (a) concerned about inflation AND (b) believe government is responsible for the problem.

        I’m a non-partisan independent, but you don’t have to be a Republican to realize that stimulus checks & QE are at least half of the inflation problem (with supply issues being the other half.)

        • MCH says:

          Hmmm, how much is the supply chain problem caused by the liquidity though?

          If you realize that costs are going up due to inflation, why would you not spend the cash hoard up front to secure your supplies?

          One would assume that this is what major companies like Apple did ahead of time because they actually had smart people looking at the issue.

        • Kaleberg says:

          The stimulus checks were squandered paying rent and buying food. It was the collapse of travel, entertainment and other services that led to increased spending on goods. People started buying stuff instead of buying services, and between COVID shutdowns in the US, China and elsewhere and this increased demand the supply chain collapsed and needs to be rebooted.

        • Wolf Richter says:

          “The stimulus checks were squandered paying rent…”

          Due to the eviction moratoriums, people stopped paying rent. Due to forbearance programs, people stopped making mortgage payments. And due to the automatic forbearance for student loans, student loan borrowers stopped making payments on their student loans.

          They got all the stimulus money, and the unemployment money, and the forgivable PPP loans, and didn’t have to keep paying for those pesky obligations.

        • VintageVNvet says:

          Reminds me of my best neighbor ever, with re whom I told my wife if ANY trouble when I was on the road: First call him,,, then call the sheriff:
          He told me that when he got the ”free money” from a ”settlement” from the cancers, etc., from working in the aluminum foundry, he spent most of it on women and booze,,, and the rest of it he ”squandered”// AKA wasted on worthless ”stuff”…

      • historicus says:

        I believe in the ignorance of the common citizen

        • COWG says:


          The common citizen is not smart enough to know they’re ignorant…

        • VintageVNvet says:

          Nonsense h; exactly why we continue on the path of every increasing ”abrogation” of equal rights and responsibilities for EVERY ONE..
          This started with the notion, and it was only an that, based on nothing what so ever, that regular working folks did not have the mental/intellectual capacity, etc.
          That concept was used, for instance and most recently to extreme, by the Nazis, and their ”research” proved it,,, to their satisfaction,,, similar or exactly the same as had/has been done for thousands of years to excuse the absolutely awful degradation of millions.
          Time and enough to get down to the reality of, for instance, Mozart, Einstein and SO many others who came from what were described, at the time, as hopeless losers of/for ethnic, social, and other artificial ”dividers” of the human species, especially including the entire concept of ”race”…
          WE, the part of WE The Peons, who want to ensure that each and every ”genius” can proceed to help our species, want all such divisive and usually derived from fascist focus to go away and stay away so that our species can go ahead and make our planet proceed to become part of the galactic and universal process of health and happiness and opportunity based on merit and performance.

      • historicus says:

        First question to be asked..

        What were the questions in the poll?

        Pollsters are paid to get a desired result, often times.
        BTW, the inflation is just starting.

        • kam says:

          Governments throughout the world, including the USA, stopped small businesses from operating, directly and by creating spontaneous, ever-changing and restrictive operating rules.
          At the margin, Government free-money programs, created a disincentive for employees to come to work.
          So diminishing supply is totally a function of Government Dictat. It is not complicated.
          A thirsty man will always chase the mirage in the desert. I disagree that common people are stupid; they pick the only choice put in front of them.

    • Cashboy says:

      The government and mainstream media have effectively controlled the narrative on inflation because most people don’t seem to actually care or have even worked it out.

      • Auldyin says:

        What else do you think they’ve controlled the narrative on?
        Let’s see where to start?
        How about, did you know Russia is now a major energy supplier to USA, second only to Canada?
        Shh! Doesn’t fit the narrative.
        Did you know South Korean car makers are getting chips, just a coincidence they didn’t sign up to the ‘Pivot’ to ‘contain’ China. Shh! Doesn’t fit the narrative. Were you told a US nuclear sub ‘collided’ with a ‘mystery’ object in the South China Sea?
        Don’t go near medicine or the military, some people literally live in a world of their own.

      • Kaleberg says:

        People know about inflation. They also know that their wages are rising. If you are part of the inflation, it’s like being a fish in the sea. Fish don’t worry about drowning in water.

      • Swamp Creature says:

        People see the price of their house go up and think they are rich. When in fact, its the same house it was before. The price didn’t go up in real dollars. The value of their dollars just went down.

        You can’t fight stupid.

        I can’t wait for gas to get to $7 a gallon or more. Then maybe these losers will notice that we have 20% inflation.

        • phleep says:

          A house at relatively low cost (paid off, or with a low fixed-interest loan balance) is a really valuable thing to own during inflation. This is true even if not sold, because rents are zooming. The mistake as I see it is piling on debt to get depreciating cash and buy stuff rapidly falling in value. Almost free and clear with my house, I don’t “think I am rich” — just very relieved, relatively less chained to a steepening treadmill. This does a lot to counterbalance other rising costs such as gas. So if all this is what hypothetical “losers” think, I didn’t hear your solution.

    • RockHard says:

      Probably because you have to be in at least your 50s to remember the last time this country had a serious problem with inflation – for me that was middle school and early high school. The last time I can remember having serious, long-lasting problems with supply was in the 70s energy crisis. If you were born and raised in the USA since the late 70s, you simply have no direct experience with inflation or widespread supply crises. We used to get stressed over shortages of Beanie Babies, and took for granted that you could always go run out and buy pasta, or paper towels, or cleaning supplies, or a new car. I can barely remember when that was a problem – I was a pre-teen and I remember my uncle getting laid off and being unemployed for years, or my cousin buying his first house on an 18% mortgage, but it wasn’t my direct experience.

      • Crunchy says:

        My strongest recollection as a kid in that era was an entire aisle at the A&P supermarket with nothing but GENERIC goods, all in white containers with black printing and no logos or art of any kind. A vast array of products (canned, boxed, bagged, frozen) was available this way, all a few cents cheaper than the store’s own label.
        Worst part about this was the uniformly inferior quality of all these generic items – they were the worst of the worst in flavor, texture, appearance, performance, etc. After the inflation era eased, these generic products gradually disappeared from the shelves as peoples’ wages caught up with prices.
        Be prepared for regressive times. With luck, you’ll have stories like this to tell afterwards.

        • cas127 says:

          Largely, the “generics” have been replaced by “store brands” – which still save you 25% to 35% off “branded” alternatives (giving everybody some idea of traditional/advertising-related markups).

          Personally, I almost never buy anything *but* store brands…and 90% of the time I can’t tell the difference.

          (There is a good reason for that too…production economics are such that store brands are almost always churned out on the exact same production lines as branded products…and sometimes with almost the exact same ingredient list/recipe).

          In the 40 yrs since the the heyday of generics, branded products have become more and more about psychological effects (“It costs more…it must be better” or “If I pay more, I must be a superior sort of human being” or “If I overpay for this hideous Axe body spray…I’ll get laid”) and less and less about objective product differences.

        • Crunchy says:


          Store brands existed well before these generics arrived. Back then, A&P had already carried exclusively in-store brands like Ann Page, Eight O’Clock (coffee), Jane Parker (baked goods), and maybe a few others for decades. They were store brands of the same type you see in every supermarket today, and generally cheaper than brands like Nabisco, Hunt’s, or Lay’s.
          Generics were different. They were cheaper, and the store did not have to stand behind the quality of it’s own brand or any other when selling generics…most or all the big supermarkets carried generics, and no one could easily tell you whether the products from the same generic manufacturer or different ones.
          It was a sign of the bad times. It’ll be interesting to see the sorts of things that will define our tough times to come, but I can wait to find out.

        • sam says:

          Cue up “Repo man” (supermarket scene)…

        • Shiloh1 says:

          Generic white can with black block lettering: ROOT BEER and there was the same can with BEER. Sometimes the cashiers didn’t notice the difference.

        • Whatsthepoint says:

          I used to work for a company that made the ‘generic ‘ brands of crackers, cookies, etc. for the markets….they were virtually identical to the branded ones…a lot of their costs are marketing and fluff…

      • Randy Oldman says:

        Wish you’d just stopped at your uncle getting laid.

      • josap says:

        I was 26, married with a new baby when inflation hit hard. My husband’s wages didn’t keep up, union wages at that.

        We weren’t in much debt, thankfully. But prices got very high, very fast. At least it seemed that way. One day the budget was a bit tight, the next week we were counting pennies.

        At least I remember how to make very cheap meals.

      • historicus says:

        In the late 70s, the banks were raising their prime rate every Friday…
        and the Fed FOLLOWED.
        And sometimes the Prime would rise 1/2pt at a crack….
        and now, the hand wringing over maybe, if , might happen…a 1/4pt.
        Give me a break.
        This Fed has set the stage for a wild and hairy ride…..

      • Paulo says:


        Well, I was a young twenty something with a fresh bought house, young family, and experienced it all….actually in ’81 – ’87 as the pain to control the 70s inflation hit then. Laid off Nov 24th 1981 so the company would not have to pay their employees Christmas and Boxing Day stats as per contract. Merry Christmas. Mortgage jumped to 18% that year, but I managed to secure private financing at 10% because the banks were paying about 7% on savings. And I worked away in the Yukon, as that was the only decent paying job available. But hey, working 1,000 miles away from my family for 100 days straight no biggee. Made good bucks…big bucks, but a day off meant no pay. Shot a moose every fall and brought it home. Did this for 3 summer seasons, and worked for cash doing construction the rest of the year…..then moved for a decent job after being underemployed for over 5 years that decade.

        Barely getting by leaves a mark. Never had debt since, always lived well and for the day, and retired at 57 due to those habits. You learn to trust in yourself and not rely on anyone beyond family. Work hard and be the indispensable one on the job, not a suck and never a brown noser, but the guy that sticks and does what needs doing.

        I just dug our potatoes today. The freezers are full, the woodsheds full, the bank account is full, the cars all gassed up, etc etc. Like I said, it leaves a mark. Personal debt is suicide…eventually.

        Does anyone here remember the lay away plan? There were no credit cards in the ’70s, just gas cards. My wife wanted a new coat one year when we were just dating. She paid some money down and the store owner put it away in the back room. She paid some for several pay cheques until the price was met and the coat was hers…..a really nice wool duffle coat. That’s the way people paid for things then. Cash, or the lay away plan.

        • Kaleberg says:

          It sounds like you were lucky. Not everyone found a job that paid anything even 1,000 miles away. Despite the good economic news, the 1980s were a pretty lousy decade what with three major recessions and pay, for the most part, collapsing.

          Also, you should read the moralistic complaints about those pernicious lay away plans in the 1920s and especially the 1930s.

          P.S. How did you manage a mortgage without debt?

        • Mad Puppy says:

          Paulo; Reading your comment was a walk down memory lane in so many ways. I would just like to add that my parents’ experiences also contributed to my views about security. My mother was a single parent for part of the depression, and even though I was born many years after the depression, I am ,in many ways, a child of the depression, especially around financial security. Living modestly and sleeping well at night works for me in the Fraser valley. I tried to teach my children to be adaptable in the face of financial insecurity, and only time will tell if I was successful. For now, they have family who have experienced very lean times. I fear for those who have no one who might provide guidance in such circumstances. In the almost 70 years of my life, the profligate ways of the past 20 or 30 years was never the norm and, in my opinion, is not sustainable. The coming down will be very hard! Stay well

        • Double Bluff says:

          Don’t forget 90 days same as cash.

        • RH says:

          You were exceptionally lucky. You did not get sick and incur catastrophic, medical bills? Your child’s post-conception effects growing did not cause your pregnant wife to get seriously ill driving the medical bills due to frequent hospitalizations sky high? Etc., etc.

          Having helped may people in financial trouble, I can tell you Americans have varied, serious problems that are sometimes their fault and sometimes the fault of the corrupt thieving of the banksters’ “Federal” Reserve which created massive inflation and so have made their wages not enough. Our politicians have placed the burden of the expenses of government on the poorer 70% of Americans while we spent their trillions in wars so the ultra rich could profit: e.g., the favorable, lucrative Iraqi, oil contracts obtained after we conquered that country that were sold to CHINA reportedly!!! Before the war, Iraqis were going to sell oil to France and Russia via OTHER oil companies not those multinational oil companies that bribed our politicians.

      • The Real Tony says:

        People with money all got rich during the inflationary 70’s. Interest rates paid a fortune compared to the rate of inflation. Today the opposite is true and the end result will be a lot of people getting a lot poorer.

    • RightNYer says:

      If that’s the case, then the people I speak to in my daily life, of all political stripes, are not representative of the American people as a whole.

    • Winston says:

      “How have the government & mainstream media so effectively controlled the narrative on inflation?”

      Refer to the IQ bell curve, the widespread lack of the LEARNED skill of critical thought and analysis, intellectual laziness, the lack of even the most basic training in economics (“TAX those damned corporations… because I think they’ll just eat that additional cost and not pass it on to ME via raised prices, quality or quantity reductions, or lowering what they can pay for labor”), etc.

      A whole host of reasons explain why pols (and, more recently, central bankers) have been able to get away with what they have throughout history and they are all related to their target audience.

      A more succinct explanation:

      “Think of how stupid the average person is and realize that half of them are stupider than that.” – George Carlin

    • Harold w/ one H. says:

      Did a quick search using Duck Duck Go:
      “poll Americans are concerned about inflation”
      Got a whole different outcome…

    • Ralph Hiesey says:


      I’m puzzled why you, and so many others seem POSITIVE that they can tell that inflation is caused by (fill in your favorite cause). You seem to think you know for sure.

      There are WELL KNOWN and demonstrable supply chain disruptions–and these certainly COULD be very likely at least PART of the cause–as anyone who has ever taken an economic course would know. Maybe some of those answering the polls had taken such course.

      I don’t claim to know for sure–it could be caused by both supply chain interruptions or Fed money printing. Or a combination of both.

      Or even something else, as I think COULD be by lots of copycat people proclaiming “inflation, inflation” and finding it easy to raise prices because everyone else is doing it, and that provides cover for them

      Those are three possible causes that I can think of. And maybe others I haven’t thought of.

      My big question–why do people feel that they HAVE to be CERTAIN about the cause where there there are real reasonable possible causes.

      And possibly the stupidest way of all to decide– by polling!

      • Wolf Richter says:

        Ralph Hiesey,

        Supply chain disruptions would mostly disappear if demand plunged back to the 2019 normal. This artificial demand was created by $4.5 trillion in money printing and by $5 trillion in government deficit stimulus spending. You cannot disconnect this artificially created demand from the supply issues. It’s a cause-and-effect relationship.

        • Ralph Hiesey says:

          Wolf, I agree artificial demand from stimulus has some part of influencing prices. But there is also the supply problems caused by Covid that is unprecedented in our recent history too, that makes its full influence unobvious, IMO.

          Not denying you might be right — but I think we have to wait until the Covid shock is really over before we’re going to really get clearer insight.

          No surprise at all the a P&G exec would say he expects price increases to last. He hopes competitors will pay attention to work together with him. He hopes margins will be better in the future. And he would be putting himself in a difficult position if he said he expects prices to be temporary– and they turn on not to be.

          Of course you could be right about inflation cause– but I’m just not as sure as you seem to be about other factors.

      • Swamp Creature says:

        When you have these shortages and then the products start appearing on the shelves, you are so glad to get the product that price no longer matters. You pay what ever the traffic will bare. That’s how things work in the real world.

    • Mira says:

      Now boys .. 😁
      Who’s gunna hit the cocky on the head so we can go up the pub?😎

  2. Nick Kelly says:

    Am I losing it or was it just a month ago WTI hit 74 or double 2020 average of 35? Today 82 +.
    A lot of people better hope than Engel is right and we’re heading down to 25$. Oil is an input to everything, whether feed stock or combustion.

    I think 100 is closer but we’ll see.

    • Wisdom Seeker says:

      2020 is the anomaly. Today’s oil prices are normal for the 2015-2019 period.

      And adjusted for general inflation, Oil is only about 2/3 of what it was from 2008-2014.

      There’s a fair amount of overhead supply overseas, and demand is being constrained, but for both supply & demand there’s a lot of politics involved.

      NatGas, on the other hand, remains very cheap (after inflation) by historical standards even after doubling since January… Only 1/2 or so the 2003-2008 price range.

    • VintageVNvet says:

      Generalizing on the basis of insufficient information is really and truly a challenge for most folks, ”I have known.”
      SO, either qualify the comment, or describe clearly the information forming the basis, eh?
      Really and truly NK, please read ALL of the article(s) before making comments,, or, in the case of Wolf’s Reports, listen to it all…
      Other than that, appreciate your usual northern and well read of history POV…

      • Nick Kelly says:

        You got me. No idea what you mean. WR mentions oil.
        My point of view that oil is heading higher and thus contributing to the inflation that is WR’s ongoing thesis is admitted as such in last two lines as an afterthought.

        The gist of the comment is data. WTI was 74 at most 2 months ago and is over 82 today. Is your complaint that the data is wrong or that the doubling of oil price is irrelevant to the economy?

        Re: policing comments for relevance, what do you make of the one ending thus: ‘Don’t go near medicine or the military, some people literally live in a world of their own.’

        Medicine? In an continuum of relevance, if you are marking on the curve, can I get a C- compared to this one?

        • Paulo says:


          Agree oil is going up. My son and many friends work in the Alta patch and companies there are scrambling for workers in an attempt to adjust. Not bodies, but skilled trades and professions. Their outlook is long term. My best friend from childhood is a retired engineer. He just finished a 1 year contract commissioning a new project, basically taking it apart, testing everything, and writing the operating manuals. He would have made a minimum of $1500 per day, plus living out accommodation with a per diem and flights home. This is simply not done in a projected downturn.

          Conventional drillers etc, still down and have been for years.

        • VintageVNvet says:

          ABSOLUTELY NK,,, or maybe even better with help from WR!
          Reminded me of my first exam in the hard core chemistry class at UCLA; my score was 38/100
          Turned out a couple days later it was the high score on ”the curve”… and all the TAs started to look at me very strangely,,, one even proposed!!
          Never did figure out how they wanted me to respond, including offers that came from Stanford, CalTech, etc., all of which I declined, mostly because they apparently wanted me to work hard, and continuously ,,,
          As opposed to the ”Occasional FLASH of Brilliance” concept, eh???

    • Jackson Y says:

      WTI is up 10% month-to-date, and has been up around 1%/day on most trading days.

      CPI inflation was flat M/M in October, November and December 2020 as enhanced UI benefits expired & the winter virus wave hit.

      Barring some unexpected crash, headline annualized CPI is likely to break 6% by year end.

    • Swamp Creature says:

      This oil price spike is of no concern to me. I couldn’t care less if it goes to $100/barrel. It was at $140/ barrel back in 2008 and I had to commute 80 miles back & forth to Dulles Airport every day. I survived. That was really painful. One advantage is there will be less cars on the road. I currently take all my car expenses off my taxes as an expense.

  3. JustTruth says:

    Asleep, brain dead “normies” are in for the shock of their lives. Its time to wake up people.

    • josap says:

      My neighbor who watches no news is complaining about high gas and food prices. So just about every working person has noticed.

      • Anthony A. says:

        Jo, it’s hard not to notice. I was in WM today and 1/2 gallon of common bleach was $3.32. Nuts. I mean, come on….it was $0.99 two years ago.

        • COWG says:


          COVID gouge…

        • Bobber says:

          I don’t follow prices that closely, but I did notice last weekend that it cost $20 more to fill my gas tank at Costco than it did a few months ago. I also noticed that prices at a restaurant went up $5 per plate at a restaurant I visit periodically. Plates that were $13 last year are now $18. That’s a 35% increase.

        • Swamp Creature says:

          Vegetables and fish haven’t gone up that much even with all of this inflation. I’ve check the prices today vs a year ago. Virtually no inflation! So I’m now switching to a diet which is as close to being a complete vegetarian + fish but not quiet. I still enjoy some lamb chops and some breakfest sausage. I’ve cut out beef and steaks altogether because of the expense.

      • historicus says:

        ask him how he voted

        • MCH says:

          Seriously, do you still think it makes a difference? S^2D^2 applies here. Just the programs change and the names, not the ending.

  4. Chuck Ponzi says:

    Gotta ask with all the shortages and plant shutdowns how does $TSLA keep hitting new records? Is Elon Musk a magician or a charlatan? Anybody know how many cars without parts he’s counted as finished goods?

  5. Seneca's Cliff says:

    People have been predicting it for 40 years but now it is here. It is not just the hangover from Covid but a combination of factors from increased energy prices, more expensive materials, and the cost of pollution which is acting to decrease global industrial output. This is not a blip or a kink ,it is how things will be going from now on. Fewer cars, fewer happy meal toys and fewer plastic halloween goblins on the roof. Industrial production is now on a long downhill slide. I expect in 5 years the average Joe will look back with amazement that he could have ever afforded a car or powered recliner chair.

    • COWG says:


      Average Joe has been lied to over and over again…

      Nobody has ever bothered to tell these people that you really can’t live a lifestyle on $30k a year that you can on $130k a year, no matter what the tv says…

      I agree, those days are coming, thankfully…

    • Bobber says:

      I think it’s more likely that plastic sales and general production will rise exponentially until Earth becomes uninhabitable. The current focus is on GDP.

      For example, Senator Manchin from Virginia seems to think we should burn coal until it is gone, regardless of environmental considerations. Why doesn’t he use his current leverage to get an obscene amount of renewable energy infrastructure funding for his state? Any areas reliant on coal production should be re-positioned to manufacture renewable products or other less damaging products. There should be huge stimulus in areas that are negative impacted by a continuing coal transition. It would be an easy sell for Manchin, given his leverage, but I guess of few coal CEO’s like the gravy train and are willing to scorch the Earth to do what’s easiest.

      • J7915 says:

        The sad thing is that Manchin &Co keep harping about the debt the great grand children will have? What about no raw material for important industries?
        The chemical industry, pharma etc. was build on coal for its raw material, what substitutes are on the horizon?

  6. Nemo 300 BLK says:

    Regarding oil, an article in the WSJ this weekend said Wall Street is betting on $200/barrel of oil in 2022. Obviously, if oil only hits $150 a barrel, we will have big problems.

    • Auldyin says:

      OPEC and Russia are managing supply to stabilise the price at a level which will allow current producers to maintain stable production near current volumes pending an outcome to the Green versus hydrocarbon future debate. Stability, stability. MSM stories spook the spot market and Vlad has to increase supply. That annoys him. Ditto gas.
      I’m guessing this winter of our discontent is designed to focus the mind of the public on the realities of existing on planet Earth short of hydrocarbons. Hopefully reason will prevail and we’ll get back to a glorious summer of business and hydrocarbon investment as usual.

      • COWG says:



        No matter the posturing, the last thing any oil producing country wants is pain at the US pump…

        Stability keeps the US politicians and wing nuts out our their dachas, tents and villas…

    • BigAl says:

      @Nemo 300 BLK

      Wall Street, as a whole, is not betting on $200/barrel oil yet.

      APA, XOM, etc. would be trading at much higher prices if they were…

    • Augustus Frost says:

      Oil was at $147 in 2008 which was noticeably more adjusted for price changes.

    • Swamp Creature says:


  7. rjs says:

    part of this looks like a seasonal adjustment payback to me….the July manufacturing index increased by 1.4% to 99.5, largely due to a seasonally adjusted 11.2% increase in the output of motor vehicles and parts, because a number of vehicle manufacturers canceled their normal July shutdowns because vehicle assemblies had been constrained by a persistent shortage of semiconductors over the prior months; without the large July seasonal adjustment, i figured actual vehicle assemblies fell by around 20% in July…
    here’s the “Seasonal Factors for Domestic Auto and Truck Production” from the Fed:
    i had expected a reversal of most of that +11.2% in August, but it was less than half…so this might be the rest of it…

    • Wolf Richter says:

      If you look on the chart #1, you will see the developments over the longer term… how production, despite all the zigzags, has been dropping ALL YEAR. Sure, seasonal adjustments can and do go awry, but you gotta look at the chart that goes way beyond seasons, and you will get the trend. This wasn’t about a 1-month decline.

  8. KGC says:

    The quick rush to be seen as doing something politically in regards to climate change is having (as usual) unforeseen consequences. High oil prices will favorably impact Russia, Iraq, and Venezuela; allowing those regimes to spend more on actions to so dissention in the West, Middle East, and South America.

    Likewise they will add to the costs carried by the average citizen, who in most cases had no vote on the actions directed by those public figures.

    Add to that the Trillions of dollars being demanded by lesser developed countries to comply with such regulation (completely without oversight or any possible penalty for non-compliance) and what we have is a situation that’s going to look a lot like the EU’s attempts to make those countries comply with their established economic controls, a task that has never met it’s original goals but has been delayed, excused, and basically ignored for over 20 years, but which has cost the citizens in those countries to pay for a huge, expensive, layer of bureaucracy, look like amateurs.

    • Auldyin says:

      So are you saying the Russian ‘Regime’ is more effective than the USA ‘Regime’ ?
      Just askin’

      • Seneca's cliff says:

        Imagine if you will, a doubles chess match with Putin and Lavrov on one side and Biden and Harris on the other. Perhaps that answers your question.

        • Nick Kelly says:

          It’s poker not chess and P @ L will have to be better players because they have much weaker cards. One of them being the ruble, or deuce, against dollar’s ace.

        • Auldyin says:

          Kudos! Metaphor of the month!

    • Depth Charge says:

      I never thought we’d see a more corrupt, incompetent administration than Shrub II. But what we have in charge now is by far the worst in history. It’s like Jimmy Carter on a crackpipe.

      • Nick Kelly says:

        Baby, you just had the most corrupt admin EVER.

        Which former Pres had to settle a 25 million claim for fraud just before taking office? Then had to pay a fine and fold the phony Charitable Foundation, which had never registered and collected money illegally for a decade.

        Not that it didn’t make contributions. It donated 150K to the Palm Beach Police Ball. The Founder’s share was zero, he donated his phone time to raise the cash. The police then decided to hold the gala at Mar a Lago, for which they paid 350K.

        Then right out the gate of the Admin, the Inaugural event was ripped off. To this day millions unaccounted for. Not just doubling the venue prices. Just disappeared.

        These are a tiny selection of the trifles btw. For the serious stuff, where the foreign policy of the USA was sold, you have to find out why a suddenly blockaded Qatar, would suddenly decide to finance 666 5 Th Avenue, which was approaching foreclosure. And then suddenly be unblockaded.

    • josap says:

      I did not know that Congress had voted and the Pres signed the new Green Bills (as part of BBB bill) already.

  9. InE says:

    We are in the final phase of a 80 year debt supercycle. A debt jubilee is coming.

    • Depth Charge says:

      That’s my fear – all of the debt junkies get to keep everything and not pay for it, and savers and responsible people like myself with no debt get burned.

    • Augustus Frost says:

      Forget it, the public’s debts aren’t about to be discharged as you imply. If that happens, those people will be shut out of the credit market indefinitely.

      Don’t be fooled into thinking that today’s and recent manic conditions remotely are normal. In any kind of sane financial environment, a noticeable proportion of the population wouldn’t be able to borrow from anyone except the mafia or a loan shark and rates for cars and mortgages would be and will be much higher.

      No, there really isn’t something for nothing and all savers aren’t going to sit by and get plundered forever. They will leave the jurisdiction if they have to and take their assets with them.

  10. davie says:

    I wonder if these companies have considered running third shifts.
    Or maybe it’s just that nowadays jacking up prices in an anti-competitive environment is more profitable than producing.

    • Wolf Richter says:

      If you cannot get the semiconductors to build vehicles, it doesn’t matter how many shifts you have with nothing to do. They’ve CUT shifts because they cannot get enough parts.

      • MCH says:

        One wonders… do you think they can build old style cars today? The ones that didn’t have all of those fancy chips shoved in them?

        • Wolf Richter says:

          They can build anything. But the vehicles won’t be highway legal. And not that many people still know how drive something like that. Some sample questions that might arise:

          “What’s that third pedal over there on the left for?”

          “What’s this keys for?”

          “Where is the start button?”

          “Did I just back over my dog?”

        • Swamp Creature says:

          I talked to a dude who was a mechanic at one of the big auto dealers in the suburbs of the Swamp. He told me for about 5K you can have a lot of this electronic crap removed from your vehicle. Aftermarket dealers are going to make killing doing this. I particularly wanted the dashboard top screens removed because they blocked my vision of the road.

          Reminds me of the electronic smoke detectors that were installed when I built a second bathroom on the second level. They cost me about $2K to install in all the rooms. I didn’t want them. I recently hired an electrician to remove all of them and put battery powered smoke detectors in their place, for another $2K. Lost $4K to get back to square one.

  11. wisoot says:

    Manufacturing production happened to drop to the same low in 2009 as 2020. Beyond funny. Man made crisis. Hope yall enjoying the cartoons!

  12. Roger Pedactor says:

    The headwind against humanity is heralded by the gentle breeze of high hydrocarbon prices.
    “Good.” Say the green mafia.

    And so began the antihuman era of humanity.

    We are killing all reliable energy sectors in the name of I don’t know what. Fusion?

    That doesn’t exist yet. No new nuclear (despite molten salts being incredible tech in their own right.)

    Wind and is unreliable. Solar is environmentally damaging. Geothermal?
    Hydro is environmentally devastating in its own right.

    So what is it here? I really wanna know what is the end game?

    • VintageVNvet says:

      Gravity RP!
      Free, plentiful, always present, etc.
      Bright young theoretical physicists working on harnessing it as we comment.

      • Nick Kelly says:

        I assume you are joking but not everyone will.
        Trivia: Roger Babson, famous for predicting the Great Crash and founder of first business schools, believed incorrectly that gravity could be ‘harnessed’. These ideas come under the heading of perpetual motion machines etc., that the patent office will no longer consider, as they violate fundamental laws of physics.

    • Paulo says:


      We could all use (North America) about 1/2 the energy we do today and still live well. This morning I met a couple in a new Toyota Tundra. They drove up to my neighbourhood 50 miles…each way 50 miles, so the wife (as he phrased it) could get a picture of some elk. They drove all around the Valley and then asked where else they could go to see elk? Sunday drives, daily shopping for forgotten items, clothes never worn, toys left outside….all wasted energy. My favourite is the green whale watching tour with twin 200 hp Yammies, or maybe the Volvo carrying kayaks.

      • Old School says:

        Yes that’s true, but many people sold their time to work hard and need to get out and enjoy freedom a little. I don’t have much of a problem with the middle class enjoying themselves as long as the rich and famous ride around in 2 mpg personal jets.

    • K-Agri says:

      RP – The end game is just perpetual rent seeking by solar and wind companies, many of which are ESGs owned by the very politicians implementing the necessary legislation to make these companies “profitable” . There really isn’t any other explanation.

      If environmentally friendly energy creation was truly the goal, we would all be using gen 4 nuclear fission plants by now. It’s unfortunate that the majority of people don’t understand fission, and the media love a good scare story about it.

      In terms of importance, the discovery of nuclear power is comparable to the discovery of fire by early humans. Both were orders of magnitude ahead of all other energy sources available at the time, in terms of energy density. The discovery and use of fire changed human history, nuclear power can too. The demonization of nuclear power today would be akin to a cavemen decrying the use of this new fangled fire technology because it burned down a few caves!

      • Roger Pedactor says:

        I agree.


        The people capitalizing on crisis after crisis are always the same. We can’t get out of our own way and there is literal indoctrination of antihuman sentiment going on in nearly every generation now.

        It’s insane to me, especially considering what’s possible with existing tech.

        Luckily, my power here in Florida is mostly solar and nuclear and my entire home is electric minus my backup Genny which is propane.

      • Depth Charge says:

        I know that batteries aren’t the future. Just search “lithium strip mining” and hit “images.” The land rape is shockingly bad. This doesn’t even get into the nasty chemical process to create the batteries. It’s not about the environment, it’s about GREED.

        • drifterprof says:

          Now you’re making me feel guilty about my lithium battery powered tools.

        • Wolf Richter says:

          Depth Charge,

          Check out mountain-top coal mining and pit coal mining, right here in the US. Massive amounts of it too. Then check out the tar sands oil operations. Lots of goodies out there, in terms of “land rape,” as you correctly call it. There are no free lunches with energy.

        • MCH says:

          There is no free lunch with anything. Those fancy iPhones, yeah, they rely on lots of dirty elements that has to be extracted. Fortunately, we have outsourced that cost to China and elsewhere.

          I get the strangest feeling that I am seeing Morlocks and Elois here.

        • LeClerc says:

          BEVs have many inputs that are extracted from mines, which in turn need fossil fuels to operate.

          For example electric motors contain copper, which ICE cars don’t need.

          Coal mines and shale extraction methods also pollute, but this fact does not reduce the environmental impact of a broad adoption of electric cars.

      • Auldyin says:

        Don’t worry about it. If they get their ba**s frozen off this winter their ideology will be suitably modified.
        UK has seed invested in a fusion reactor plant to produce actual energy. Someday, someday.

      • Nick Kelly says:

        Nukes may REALLY change history. The H bomb is the only weapon never used. There are about 30 K of them.

        I support all the concerns about averting climate change next century but they make optimistic assumptions.

        Related: several of the new arrivals in the nuke club bought their reactors after promising not to use them to enrich uranium and make bombs. E.g., India and Candu reactor. The Canadians SEEM to be unwitting, the French have sold equipment to Pakistan with no other use than enrichment.

  13. historicus says:

    Is it a surprise we have lost our self sufficiency?

    All we heard was “Trade Deficits Don’t Matter”….yet they are a clear indication of dependency on foreign supplies.

    Light bulbs, spark plugs, light switches, shoes, belts, golf clubs, basketballs, clothing, ……

    And its just starting….

  14. historicus says:

    Production and manufacturing dropping as energy costs soar…and every union in the country about to strike to cover the inflation leap.

    Central bankers and central planning…….creating a false world to pump assets….and now the ramifications…….full blown.

  15. Truckman says:

    There is any level of inflation you like, depending on whose stats you wish to believe.
    If inflation is as bad for the average person as people like Shadowstats reckon, then either the debt levels will skyrocket, or spending will plummet, and/or wage demands will skyrocket.
    We won’t have to wait more than 6-12 months to find out, given current existing levels of indebtedness.
    All I see around me (Eastern Canada) is people cutting expenditure rapidly and taking advantage of all the credit they can get. The genuine bargains are gone in a day, everything else stays on the shelves. Around 15% of people don’t seem to care what happens to prices, everyone else is deeply worried.
    All the Canadian sales and economic data seems to show decreasing sales, expenditure about 3.5% below pre-Covid, and consumer credit back to pre-Covid levels. The Q3 2021 data is all bad.

    • The Real Tony says:

      The reason of course being no Canadians who didn’t need stimulus money got stimulus money. This is the big difference between Canada and America and the reason for inflation coming out of America. Obviously sales will keep on falling in Canada not rise.

  16. Ron says:

    Why you all comment on this warren Buffett,s son just got citizenship in Columbia rich won’t be here when we the commeners slaughter each other figure it out

  17. Crush the Peasants! says:

    Job creation under the war criminal president was particularly abysmal. The Labor Secretary then – Mrs. Mitch McConnel. And so it goes.

    • NJGeezer says:

      There wasn’t one “war criminal President”, as they are all guilty of the same crimes. Including the recently-departed Colin Powell.

    • Nacho Bigly Libre says:

      TDS boy?

      I can understand other labels – jerk, bully, hypocrite. But war criminal? Seriously? That’s one area that sets him completely apart from other presidents.

      It’s easier to start wars as a US president – humongous defense budget, huge arms lobby, warmonger deep state, desensitized citizens.

      He didn’t start any new wars. Abraham accords, NK peace treaty. Successful withdrawal from Iraq. Complete opposite of a war criminal.

      • Old School says:

        T didn’t get into war because he is by nature skeptical of people’s motives. Didn’t believe all the warring BS the security state sells. Colin wasn’t skeptical enough so got stabbed in the back selling CIA BS at UN.

        • Swamp Creature says:

          That presentation at the UN to sell the War in IRAQ was the worst thing I’ve ever seen a man do. I was in the Intel community then and I suspected the whole presentation was total bull s#it. I was right on the money. He has the blood of all the Americans that were killed or wounded on his hands along with all the other gangsters in that administration.

        • doug says:

          I watched it live. He did not believe it as he was saying it. Easy to discern. He had a fuzzy picture of an oil/gas tanker and called it a missile launcher or something. I remember being floored watching it.
          His future changed that day for the worst, but the damage to the USofA was much greater.

        • Swamp Creature says:

          The agency I worked for helped put the presentation by Powell to the UN together. I was sick to my stomach for weeks.

      • Nick Adams says:

        NK “peace treaty”? that’s generous. Peace treaties require Senate confirmation. Whether the 2 ballistic missiles NK just launched toward Japan this week were a violation of the previous president’s “beautiful letters” or not (his own term, not mine), I don’t know.

        • Nacho Bigly Libre says:

          Wolf removed my previous response. Too political perhaps?

          So here is another comment, this time in beige color.

          “Peace treaties require Senate confirmation.”

          Only Congress can authorize/declare a war. Hasn’t stopped any president from starting one. No point getting hung up on semantics.

          Whole world saw him putting his own life in danger by crossing the Korea border at DMZ. Compare that to the presidents who send brave men and women to risk their lives.

          Two ballistic missiles are the result of current administration’s policy (or a lack of it). For everyone’s sake hope it doesn’t get worse.

  18. MF says:

    We’re at the mercy of monopolies. It’s not just semiconductors. This is a shortage of everything.

    When you have unrelenting consolidation in industry after industry over a 40 year period, with all manufacturing in each dependent on a single supplier, this is what you get.

    When supply is tight, prices rise. Scarcity drives demand into an inflationary mindset. We’ve had free money (handed to the already-rich, of course) for 20+ years. But only now that consolidation has finally matured and hit us full force do we see the results.

    Covid exposed the fragility in the system. It didn’t cause it.

    • Depth Charge says:

      What we have is billionaires who have gained complete control over the entire world, and are playing games now (rocket boy, etc.). They are also hoarding and buying up every asset they possibly can. There was a class war. Guess who lost?

      • Truckman says:

        Point of order: Most billionaires have no class ;)
        This round of the class war ain’t over yet,
        and the war itself probably never will be.

  19. Coffee says:

    Since many cars built this year wont be ready for sale until next year due to the chip shortage, will these be sold as a 2021 discounted new car or will car companies forgo the 2022 model year?

    • Depth Charge says:

      The VIN tag for a vehicle is assigned before it is built. Part of the number in the VIN refers to the year in which it was built. There is no way to change the VIN and year built. A car is built the year it is built. You cannot try to say it was built the following year when it was not.

      • endeavor says:

        With rising msrp’s and little if any depreciation, model year won’t matter much in the short term.

    • Wolf Richter says:


      Depth Charge is correct.

      In addition, model years are not calendar years. For example, many 2022 models are already being sold in 2021.

      So the years that Depth Charge is talking about are “model years,” not calendar years. And the model year stays with the vehicle no matter when the vehicle was sold. This is the year that is listed in the title document of the vehicle.

      • Depth Charge says:

        I’m sorry, Wolf, I should have specified “model year” as well as “build date.” The sticker inside the door has the VIN (with the appropriate model year), as well as the actual month and year of the build – both of which cannot be changed as far as I am aware.

    • Seneca’s Cliff says:

      It will be a hoot when people roll in to the Ford dealer in 2025 when the new trucks arrive. But they will be 2020 models with shiney new chips. The lot boys will be furiously trying To buff out the paint so it won’t look oxidized from sitting for years at the Wayne County Fairgrounds. Before the test drive the salesmen will have to chase the squirrels out of the cab and hand you a special adapter so your IPhone 27 can plug in to the obsolete sound system.

      • Ford just sent me an email, they have F150s and I can search the inventory. Pretty sure there will no negotiating the price, supply chain problems and all, wink wink. High 30s to high 40s. They have em all in stock.

        • Depth Charge says:

          You must be in some podunk area, because all of the big dealers on the west coast have almost nothing. The huge Ram dealer which normally carries about 1,200 Ram pickups has less than 100. The Toyota dealer which usually has 200-300 vehicles has 40, and on, and on, and on.

          This is not going to end anytime soon. In fact, I could see these problems stretching into 2023 very easily. The reason being that the entire production model has proven to be a failure. “Just in time” does not work, but what took decades to build will not be changed overnight, even if they wanted to (which they don’t).

        • Seneca's cliff says:

          Near me is a big Ford Dealer, and they have a very big separate sales lot with its own sales building. This lot is all decorated with a faux western them including wood fences, and one of those Big Texas type signs over the entrance to the lot that says “Truck Ranch”. I went by there yesterday and the only thing on the Truck Ranch were some tumbleweeds and a couple of used rangers, a weird purple 150 with a short bed and one of those ugly Subaru’s with the tiny bed in back.

      • El Katz says:

        It’ll be even better when the “wrap guard” melts into the paint after sitting in the sun for evah.

  20. No shortage of stocks on Wall St. Booyah. Are investors worried? The supply shortage is a crisis too good to waste. (Just raise prices) Earning compression? Nope, none here. Economy slowing? On Grubhub and Donnie, and Powelie and Yellen. The market always tells the truth. There is plenty of money and if we have to sell debt to make it real, then we will, and there are plenty of buyers.

  21. Swamp Creature says:

    Our friend David Stockman authored a book “The Great Deformation” which I read cover to cover. It covered events going back to FDR and before. We need another sequel “The Great Deformation 2.0”. I think there is enough material in the last 8 months to publish another 500 page book based on this 8 month period alone. If we went back further say to Feb 2020 and the beginning of the pandemic we would have to make the book 1000 pages.

  22. SpencerG says:

    It is amazing how fast a natural disaster can leave the headlines. Hurricane Ida hit 8 weeks ago and the only time that it gets talked about is when analysts mention the causes of gasoline prices going up.

    I have been working a project in New Orleans this week… a city that is 100 miles from the actual coastline. It looks like it has been hit by artillery. Forget roofs being damaged… there are CONCRETE buildings with giant holes in them. I cannot imagine what it looks like the further into South Louisiana (the oil producing areas) you go.

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