Wait… gasoline exports are rising.
By Wolf Richter for WOLF STREET.
With the average price of gasoline edging over the $5-mark on Monday, up 63% from a year ago, according to EIA data, and having gone over the $4.20-mark for the first time ever in mid-March, people are already driving less, and households are prioritizing their most fuel-efficient vehicle. Buying patterns are already changing in favor of smaller fuel-efficient vehicles, hybrids, and EVs, except they’re sold out, while pickups and large SUV have started to accumulate on dealer lots.
Gasoline demand destruction has already set in. In October, November, and December last year, gasoline consumption ran above the levels of the same period three years earlier, in 2018. In the first half this year, for every week, consumption has been lower than in the first half of 2019, the last year before the pandemic shifted everything around.
The EIA measures gasoline consumption in terms of barrels supplied to the market by refiners, blenders, etc., and not by retail sales at gas stations.
Gasoline prices started rising in 2020, hit multi-year highs in May 2021, and continued rising. Then in 2022, prices started spiking…
…and apparently hit the magic number somewhere along the line, and suddenly gasoline consumption started dropping well below the same weeks in 2019, on a four-week moving-average basis.
Summer driving season has begun in the US, and gasoline consumption this year has been rising, but more slowly than in 2019.
The red line in the chart below spans the period from June 2021 through June 2022. The gray line spans the same weeks in 2018 and 2019. Note how in June through December 2021, consumption tracked fairly closely the consumption in the same period three years earlier, in 2018.
In the week ended June 10, consumption amounted to 9.02 million barrels per day (four-week moving average), down by 5.4% from the same week in 2019:
What everyone now wants to know is this: When will demand destruction be large enough to cause a decline in gasoline prices?
It’s complicated by large-scale exports of gasoline by the US to other countries, currently running at over 900,000 barrels per day, which amounts to roughly 10% of US domestic consumption.
Even if consumption in the US continues to decline compared to 2019, foreign demand – higher exports – could make up for it. So we don’t want to get our hopes up that domestic demand destruction by aggrieved and frustrated US drivers alone can put a lid on the price increases.
But if demand destruction in the US is substantial enough and sustained, and supported by demand destruction in other countries, there could finally be an impact.
Exports are very seasonal, usually peaking over the winter when there is less demand in the US, and then dropping sharply over the spring and summer when demand peaks in the US. But this year, over the past three months, exports have been 20% to 40% higher than in the same period last year, right into driving season:
Long-term, gasoline demand in the US is already on the way down. But it’s going to be a slow process. The current consumption level of 9.02 million barrels per day was first hit in July 2000. Gasoline consumption on an annual basis peaked in 2007, and declined for years, then rose again and matched that level again in 2016, 2017, 2018, and 2019.
The higher prices and the shifts by consumers to purchasing smaller vehicles, hybrids, and EVs (including big EVs, such as pickups) now underway will see to it that gasoline consumption going forward is on the decline in the US.
But wait… the industry is already preparing for it. The no-growth nature of gasoline demand in the US isn’t new. Investment in refineries has been put on the back burner, and numerous oil industry executives have pointed that out. The entire industry is striving to keep supply tight to manage the decline in gasoline consumption over the decades and maximize profits during it.
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I was driving on Freeway 405 in south Orange County CA a few hours ago, and it felt like early pandemic levels of traffic. Definitely way below “normal”. Interestingly, the city streets are still packed, which I interpret as still a lot of activity, but people are trying to stay really close to home.
I’m off the 101 freeway in Ventura County. I haven’t noticed a change yet… but you got me hoping!!
Took the train to Ventura to a relatives time share. Getting to the train station afterwards required a wild ride through the Casinos parking lot because of so much TRAFFIC. Beautiful town though.
Main street is back, baby. Let’s support local!
But yes, I’ve noticed less traffic as well. Local gas station is down to $5.89/gal after peaking at $5.94/gal. So we get a nickel discount after about a $4 increase, and it would show as deflation. LOL.
In Charleston County SC, all the side roads and neighborhood roads are quiet by 6:15 after everyone has completed their errands on the way home from work. Big difference from last year at this time.
Haven’t noticed any less traffic in Atlanta….but we are the major city with the lowest gas prices in the U.S.
I live in vacation-ville and it is notable the lack of RV traffic on the local hiways and byways.
I drive a lot for work (with a company car thank god) and high gas prices have been a God send for me. Traffic has been so much better recently.
My man. Don’t you love driving your Tesla to a gas station, getting some Starbucks, and mocking other drivers. And soon empty streets, just like that WEF ad.
Life is no fun without a manual transmission.
God works in great ways
Less on the freeway but looks like the streets are having a free sale somewhere. Dana pt. Looks like the 405 on a friday
For 2 months here in Phoenix I have noticed the same thing. Freeways light but city traffic worse. In the last few weeks traffic very light after 7-8 p.m.
I was on the 134 in the SFV today and I could swear there was MORE traffic than there has been since pre-pandemic times.
all I can say is in Tucson I see WAY MORE TRAFFIC
and it doesn’t seem to let up
at 4pm and 108 it’s bumper to bumper
Your poulation is 2.5% larger than two years ago. Most of them are probably still driving around trying to get their house furnishings.
I live in rural eastern NC. I bicycle throughout our county ~40 miles per day. There appears to be very little traffic on the roads except farm equipment, even on the US highways.
I also believe that big oil is trying to screw over the current administration because of its stance and upcoming policies on fossil fuels.
That’s because your a stupid Democrat. Oil companies aren’t investing because they know the game plan is to put them out of business. Why would you play ball with an administration who’s goal is to put you out of business, it’s just common sense
Mike,
Oil companies, under pressure from their investors, have cut production — the “new discipline”– because they want to keep the price of oil high. Now even the shale oil drillers are making money hand over fist. Hundreds of them filed for bankruptcy when the price of oil collapsed. So now they’re finally in the sweet spot, and they don’t want to blow it again.
Perhaps you haven’t noticed that US oil companies are posting records profits and paying high dividends.
The oil companies in the US slowed production when demand was low. They have still not gone back to 2019 capacity.
There are multiple reasons for that. One of them may, indeed, be unwillingness to invest. One definitely is that they laid off employees and can’t get them back.
You may want to ask about how much is being exported. Let’s not forget that the US is also trying to help replace Russian oil. We don’t use much, but many of our allies do.
Refineries are also not back to capacity. They, too, cut back and are not fully back yet.
Fracking has peaked after a decade of exploration, and materials needed are in short supply.
Quit making everything about politics. It isn’t.
The fact is that demand for oil products is way up, because despite inflation, the economy is booming at the same time oil production is lagging and OPEC + 3 (one of which is Russia) are raising oil prices for no other reason than they can.
One reason oil prices went up over the last year US Russia building its war chest. Despite offering bargain prices to China (as low as $40 per barrel), Russia’s oil profits are the highest ever.
One more thing. Europe- especially Germany – has steadily moved towards renewable energy sources. They have been paying higher prices for a long time.
If the US had continued to move towards renewable energy sources, we would have been a little less dependent on oil and gas.
I love the TV ads pushing more US oil and gas to get off foreign oil. The US has been the biggest producer for a number of years and one of the biggest exporters.
Consider these 2 conficting statements:
1. Prices are up because Biden stopped Keystone. A. That is not true. Keystone is operational. Keystone XL was shut down, but it would have been a parallel line that was still under construction and was not carrying any oil yet. Shutting it down did not decrease oil. B. Keystone transports Canadian oil to refineries in the US South. 80 – 85% of those refined products were being exported.
2. Refineries cannot currently keep up with current oil production. Even if Keystone XL were operational, the additional oil could not be refined.
Don’t believe all the stuff you are hearing or reading. Too much of it is politically based. Try sifting some fact out of all the noise.
And before you accuse me of being Democrat, I held appointed and elected offices for 35 years as a moderate Republican. I am an American first, and I am sick of all the lies and half truths being fed to gullible people for political reasons.
You can’t solve a problem until you identify the cause, and in this case, there are multiple causes, some of which we have no control over.
Sandra Dyl:
Please continue to post. Yours is one of the most refreshing, grounded, definitive, and helpful comments I’ve read in quite some time.
Thank you.
SandraD.-100% with you and TomP., here.
may we all find a better day.
The planet is dying and humanity with it. The current administration is reflecting the will of some of the people. It’s a little selfish since it’s too late and there are too many people like you. We should just not care and let it happen along with cheap fuel for you.
Agreed!
The current energy price spike would have happened regardless of which political party is in charge because the spike is related to money supply, gasoline exports, war in Ukraine, etc. Energy prices are cyclical.
But it’s very dishonest for the left to push for pipeline shutdowns (not just Keystone, they do the same with natural gas, Cuomo shut down upstate NY for fracking), blocking oil and gas exploration on Federal lands and offshore, mandating expensive methane capture, etc, and then act all surprised and upset when prices go up.
And there is howling about profiteering and price gouging now, but where were these same people when natural gas and oil companies hemorrhaged money franking at a loss for most of the last decade? Are they surprised that cyclical businesses need to make hay while the sun shines? And why do they only propose tax reduction for gas when politically convenient.
This is the thinking of economically illiterate people. With different policies, there would be lower prices long-term.
Inflation is caused by to much debt.
“When will demand destruction be large enough to cause a decline in ______ prices?”
It seems like that’s the trillion dollar question in so many areas of the economy.
Won’t happen why sell petroleum products in USA ,when Europe will pay 2-3 times as much . Simple economics
It could happen if people put a concerted effort into fighting back and protesting etc. But probably won’t happen unless prices go even higher.
Exactly which is the reason why in many cases we need what are called export tariffs as a matter of fact before 2015 the United States was not exporting any petroleum at all and it’s been that way since the late 70s you know during that last bad oil crisis.
Not really .. world crude price is consistent. The petrol/gas prices difference is more driven by local tax policy.
So refinery “sales” abroad are more demand than price driven.
I doubt it. As soon as demand lightens, refineries will be taken offline.
I keep a car cover on and go to the store once a month to stock up! ..that’s less than $20
Calling it “demand destruction” is employing emotionally charged words, to elicit some sort of vesceral response. Lets call it what it actually is in economic terms: demand reduction!
Gary Page,
“Demand destruction” is the technical term in economics for this. From Investopedia for your entertainment:
“In economics, demand destruction refers to a permanent or sustained decline in the demand for a certain good in response to persistent high prices or limited supply.”
It was even a term back in the day when I got my MBA.
Yeoman work, Wolf.
Assembling the data for the graphs from hither and yon takes time and effort and some these graphs seem new to me…so they required significantly more work.
Re the Refineries – Biden’s villain du jour, although he seems to prefer keeping his patsy options open by more often merely referring to “oil producers”.
But the truth is, there are few industries in the US that have been complaining louder or longer (decades) about intentional regulatory strangulation.
There hasn’t been an entirely new, significant greenfield refinery in a long, long, long time (1976). That has been known for many, many years before now.
But now, after having been treated like absolute dirt by DC, the refiners are politically attacked for not producing more.
Republicans commonly exaggerate the impact of regulations on production…but in the case of refineries, there isn’t much room to argue about the fact of intentional regulatory strangulation.
Complaints about it were widespread way, way, way before the pandemic.
And, as actual reality has shown, the widely heralded green replacements proved themselves far, far from ready for primetime.
“there isn’t much room to argue about the fact of intentional regulatory strangulation.”
What regulatory strangulation? The fossil fuel industry gets $5 Trillion a year in subsidies and has captive markets all over the planet.
Can’t improve or properly maintain refineries due to environmental or other regulations, sometimes even from the local township? You can sudsidize the hell out of someone, but if you don’t let them do the job you are paying them for they will decay into forced incompetence, cf Boeing.
You have no evidence of refineries not maintained due to environmental regulations. You’re just making it up because your sponsors hate having to clean up their messes.
Boeing cut corners to increase profits. Their incompetence was self-inflicted. Things were different when engineers made the engineering decisions, and not the MBAs.
“All the real talent gets siphoned off into the Arts and Sciences, and that leaves the DREGS to put it all together”
-Bucky Fuller…….sometime during the 60’s
Name two regulations that don’t make sense.
@Bobber
(1) Contra Costa county went above and beyond California’s regulations, which are already strict, “The Air Board’s rulemaking process was flawed and the Board’s actions … conflict with state law and are based on faulty science,” Chevron said in a statement Wednesday.
(2) The environmental regulations that apply to mass produced items also apply to items proced in small runs. For example, bomb designers have to bow to material restrictions on non-lethal naturally occuring elements due to the impact that material could have on the environment. So the next time a nuke is dropped, don’t worry about the environmental impact the lead in there will have on the environment.
@Bobber
The number of worthless and counterproductive regs in medicine are almost incalculable. For instance, HIPAA, ostensibly a law about having portable health insurance, instead lays a vast regulatory minefield that makes sharing of information unnecessarily difficult and has spawned an army of health consultant firms to ensure regulatory compliance. And regs for small business retirement funds are notorious for cost and complexity. Remember the EPA claiming that every seasonable puddle and gully is a “navigable waterway” subject to environmental review?
This stuff is real and has enormous consequences. There are reasons we don’t build infrastructure like we did before 1970.
No they don’t. That is complete unadulterated BS and is besides the point which is about regulatory strangulation.
“No they don’t.”
Google it up yourself.
Fossil Fuel Subsidies – International Monetary Fund
Globally, fossil fuel subsidies are were $5.9 trillion or 6.8 percent of GDP in 2020
You have no evidence of ‘regulatory strangulation’. Whining prattle doesn’t constitute evidence.
The only places with fossil fuel subsidies are places like Ecuador or Venezuela is subsidized.
The lack of a new refinery since ’76 is itself evidence of regulatory strangulation, your spittle-flecked denials notwithstanding.
From Nov 2008: “EPA decision could strangle refinery sale”
“However, Grunberg’s hopes are being dashed by a U.S. Environmental Protection Agency (EPA) decision to withhold hardship relief critical to the refinery’s future.
If Grunberg is unable to obtain EPA waivers to reopen the refinery, he may not be able to close on the $2.2 million sale as scheduled this Friday.”
Una,
That is a *global* figure for all industry aspects…and we are talking about *US* *refineries*.
You can grossly inflate any number by continually shifting the ground of debate.
Una,
Cyto is also correct that you are misleadingly (on a vast scale) including sovereign domestic oil use subsidies in places like Saudi Arabia, Iran, Russia, etc. – where oil is hugely underpriced (relative to world mkt prices) in order to buy off restive domestic populations.
That has less than zero to do with US oil *refinery* regulations.
You are comparing apples and elephants.
5….trillion? In one year?Where does that money come from and where does it go? Hate to think what price per Fallon would be without it
6.8% of GDP in 2020? GDP 86 trillion? Is that world GDP?
According to the IMF: about 8% are direct subsidies. Most subsidies are indirect in the form of tax breaks and, to a much larger extent, the estimated cost health and environmental damage caused by fossil fuels that aren’t incorporated into the price of the fuels.
“Most subsidies are indirect in the form of tax breaks and, to a much larger extent, the estimated cost health and environmental damage caused by fossil fuels that aren’t incorporated into the price of the fuels.”
To be clear, these are tax breaks that other industries get too, and the ‘environmental damage’ is highly debatable. IOW, this is BS and not actually subsidy. Oh look, and environmentalist lied. What a shocker.
Cytotoxic,
I’m just saying where the $5 Trillion figure comes from (actually $5.9 according to the IMF). I looked it up because it’s a substantial percentage (about 6%) of global GDP and I wondered how it was calculated. There’s simply no way governments could or would pay that sum directly. I’m sure the health and environmental damage “subsidy” is subject to debate.
Detail the alleged $5 *trillion* in subsidies.
“What regulatory strangulation? The fossil fuel industry gets $5 Trillion a year in subsidies and has captive markets all over the planet.”
Please cite your source, I would like to review.
But nobody ever talks about the need to reduce auto dependency. In only 12 percent of the US can one get by reasonably well without a car. Those in “the other 88” would be pretty well stranded. Need to move away from the type of development where you have to drive for just about everything.
Brian B:
What % of the population lives in the 12% of the U.S. you cite and what % lives in the other 88%?
@BrianB,
The Census says 3% of the land area is urban, containing 80% of the US population. Sounds like the 3% occupiers could solve the oil crisis on their own since they live so close to each other, even if the other 97% are so selfish. :-)
Well said. The hydrocarbon fuels cheerleaders always manage to accdidentially on purpose forget that. They also always manage to make any interference with polluting for profit as “bad”.
Here’s more info that the public must keep in mind:
The American Prospect
JUNE 16, 2022 BY DAVID DAYEN
Snippet:
With gas prices, “everyone goes immediately to the top of the supply chain, at the crude oil level,” said Moss, “or they go to the pump. Nobody looks in the middle of the supply chain for mischief and bad conduct. It’s a problem in energy and health care and food and agriculture. The middle of the supply chain is strategically a place to exercise market power.”
Full article:
https://prospect.org/environment/hidden-driver-of-high-gas-prices/
These poor oil companies. So pressured and percucuted by the markets and government Struggling to rake in those record profits year after year after year after decade…
Super thumbs UP! Best snark I’ve read this year.
Fracking companies lost billions over the last decade.
Hundreds of billions! Well, their investors did.
High interest rates, falling demand and prediction for lower demand in the future. If demand destruction does result in lower prices, I expect that to be temporarily. Probably more so than the feds temporarily high inflation as cuts in investments in future production will shift balance between supply and demand back in favour of the oil producers and refineries
Inflation is running red hot but in the long term I see deflation as a threat unless everyone becomes millionaire.
It hasn’t even started yet housing,cars food gas still at all time highs . But bet your ass Wall Street is getting out first .BAGHOLDERS
Deflation?….or a retracement of an inflation spike. Different animals.
Who has ever seen deflation? Just look at a chart of the purchasing power of the dollar……
That’s called a deflating dollar hahaha
If you have never seen deflation, you are wet behind the ears and have not been on this planet long enough to have an intelligent opinion. You cannot obtain knowledge through charts, it comes through actual experience.
Jdog, what I have seen:
“Deflation” due to hedonic adjustments.
“Deflation” by substituting of lower quality products.
“Deflation” by shifting production to low-cost countries.
“Deflation” as assets bubbles pops.
I have never seen monetary deflation, that is that the amount of money has decreased.
Jdog,
Some knowledge is best obtained through experience, but the proposition you cannot obtain knowledge through charts is simply not correct. There are many things people cannot experience directly, but can gain knowledge of from reading and charts. I will never experience the Great Depression, but can gain knowledge of the economic calamity by looking at historical charts of employment, GDP, industrial production, etc., from the 1930s. You can obtain immense amounts of knowledge in this manner. Experience is very important and can be even more useful if you have a base level of knowledge from other forms of learning to properly understand and contextualize the experience.
Deflation happens whenever there is a recession. Whenever money is destroyed because of mass amounts of debt default the result is deflation. When you can buy a house for 60% of what it sold for previously, that is deflation. In every recession, there are assets reduced to a fraction of their previous prices in order to raise desperately needed cash. That is deflation. When an asset that has been financed, has its loan defaulted on, the difference between what it is sold for and what was owed is destroyed money. In the past 90 years, deflationary periods have been short in relation to inflationary periods, but the damage done is considerable. If you think we can never have another deflationary period like the great depression, then you are deceiving yourself.
Jdog,
“Deflation happens whenever there is a recession.”
You may be talking about “debt deflation” = debt dies. Or asset price deflation = stock prices go down, house prices go down.
This is NOT consumer price deflation = consumer prices go down.
Demand destruction is just another way of saying making more people poor and poorer.
The nature of our economy for the past four decades or so is like an occasion we observe at the end of every October. You can probably guess the rest.
Deflation (which will never happen) is the only hope for the financially prudent to recover from their losses incurred over the past decade-and-a-half).
I am sadly feeling that.
I remember con men like Chamath Palihapitiya talking about deflation being the main thing to worry about back in late 2020. I think it’s as ridiculous a proposition now as it was then.
The Fed was getting hysterical about “dat ebil” deflation as far back as 2002.
DC knew even then how horrifically bad its financial outlook was, and was preparing the earth/conditioning the public to welcome their inflation (which solves DC’s huge debt problems by making citizens lives worse).
The book “The Fourth Turning “, published in 1997, predicted a Great Devaluation would occur this time around rather than another Great Depression. We are in the period of the 4T now, but this hasn’t been mentioned at all.
I don’t know I’m just a regular guy that has to work his God damn ass off to keep up with this b*******don’t get my kids don’t get new clothes for school I can’t buy extra food for him but boy they can take all my f****** money our government ain’t doing a snow favors this is all a bunch of b******* and it’s killing people I had a friend recently commits suicide because he couldn’t take care of his family thank you government well done
Seriously, thanks for this comment, including the #*$&*. It tells the day to day story for American people these days.
Ccat
I never thought $3 gas would feel good until now.
Last time I filled up it was $3.45 for Premium. Full tank was like $60. Insanity. So yes, $3 sounds pretty good.
Last time I filled up it was $6.50 :(
I have volunteered to drive less but my company still prefers that I come into the office three times per week for performative reasons.
We are paying $7.00 to 7.20 / gallon for diesel these days. On crops that were losing money at $3.50. I am substituting an ATV with a small spray tank and hand tools and my own labor. I really am a farmer and growing tree fruit which gets zero subsidies. We are living off of retirement savings but can’t do that forever.
Ccat:
I expect things (fuel prices) to improve shortly, and for your sake, I hope I’m right.
Hang in there, man!
Also: If you’re growing tree fruit, I hope you have high-margin markets available to you. My wife just came back from the farmers’ market, and said “boy, prices were really high!”.
That’s bad for us (e.g. my family), but good for those local farmers that can pass their high costs directly on to the end-user, and get almost all those margin points.
So YTD, the average demand destruction of gasoline is somewhere between 4-5%, and it’s been dropping since mid-April. This is NOT any sort of forward looking indicator of real demand destruction, something approaching 10%.
As such, the price of gasoline only has one direction to move over the near-term 6-9 months, meaning increasingly higher inflation which will peak between September & the end of the year.
And may I point something out? Why doesn’t ANYONE in any sort of press give any measure of attention to the amount of aggregate demand that’s being created by the 1M+ undocumented immigrants who’ve arrived in the US since 1/20/2021? Certainly, the politics of this can be addressed elsewhere. I’m just talking about the economics of it all. That’s a lot of new mouths to feed, housing to provide, gasoline for cars, healthcare etc. I mean nobody wants to even entertain this as a modest X factor for maintaining higher inflation than anyone thinks possible. And multiply this by 4x and what have you got?
You’ve got an ENORMOUS amount of demand that wouldn’t be in the US economy otherwise. And it seems to be taboo to discuss or maybe I’m just overestimating its effect on inflation.
Yes, but m,any of them work for lower wages and benefits. Deflationary. As was the addition of cheap labor in China.
Heh heh, yeah – but it’s so easy to blame desperate hard-working people for American self-indulgent consumer entitlement, achieved through militaristic chauvinism and raping the rest of the world to feed its crass materialism.
You really know how to go off topic don’t you?
Gratuitous screed randomly blaming undocumented immigrants for inflation is what was going off-topic.
The article was about demand destruction in gasoline. But some people can’t resist a little bit of unrelated talking-point mental masturbation ranting about undocumented immigrants.
I’m not here to blame or talk politics.
Feel free to provide meaningful insight into why an extra 4 million mouths to feed, shelter to provide and gas to transport people around is deflationary. It’s not. Again, my point is putting politics aside.
You bring up an issue that is one of the most divisive and hate generating culture war exaggerations of the extreme right wing. But not to be political.
Yeah, sure, right…
“… maybe I’m just overestimating its effect on inflation.”
Yep
Well, talking about obscenely subsidized, grotesquely inflationary and corrupt industries, drifter *prof*…
In a 3.6% unemployment environment, just about everyone is getting a pay raise which BTW has nothing to do with increased demand for all sorts of goods & services like gasoline, housing, etc.
Inflation is being caused by overall excess demand that in large part is due to excessive spending on the part of Congress & QE from the Fed but increasing the head count in the US, especially in a way that’s hard to quantify isn’t deflationary in any way shape or form.
Try again.
Bull shit. Inflation is caused by one thing and one thing only. That thing is printing more money than the production of goods and services. The excess printing is done to cover excess government spending when government irresponsibly borrows and spends like money is something that just appears from thin air. A few trillion here, and there, and soon you have run away inflation that causes massive suffering and poverty among the working class. But hey, the rich really don’t mind, it is just another opportunity for them to buy up assets at bankruptcy sales for pennies on the dollar.
Jdog…
So inflation has nothing to do with tightening supplies, supply lines being disrupted, and a war in Europe and corresponding sanctions?
Kurtis,
The G has been repressing interest rates (via money printing and other techniques) for a lot longer (20 years) than the supply constraints you list (last year or two).
Also, altering the *entirety* of the ratio between existing real assets and money supply has a much more sweeping effect on inflation than transient supply constraints in select, individual industries.
The incredibly fast surge in interest rates is indicative of just how much the Fed has been distorting things.
The second the Fed took its lead ass off the scales, Treasury rates more than doubled in a few months.
That is the best measure of how lead ass’ed the Fed was with its money printing.
Cas,
Oh I fully understand the consequences of a ZIRP environment.. but it’s interesting how high inflation has been measured only in the past 16 months.
Meanwhile my HI, cost of housing, education costs, and food costs have been inflating the past 25 years.
I was replying to JDog’s contention that the inflation is ONLY caused by money printing. Which is a bit off the mark.
Kurtismayfield
There is a difference between inflation, and temporary price fluctuations due to irregularities in supply and demand.
In a non inflationary environment, supply will increase when prices are increased by natural market pressures.
Long term inflation is caused by an imbalance in the amount of money printed and placed into circulation via credit, and the amount of goods and services produced. The long term inflation in the US is due to irresponsible government deficit spending, that does not increase productivity. Period.
Unless those people are buying “undocumented” gasoline somehow, their demand and consumption is included in these figures.
If your point is that we don’t count them in our population figures, that just means the per Capita demand destruction is even larger than these numbers imply.
My point is simply that over Biden’s presidency there well may be upwards of an additional 6 million people living in the us undocumented. At no point in my statement am I saying that it’s the primary cause of inflation. My point is that all the extra demand will make it harder for the Fed to tame inflation.
But like I fully expected, everyone replying to my post is acting like I’m an ignorant, xenophobic person which I’m not trying to be. I’m not downplaying supply chain issues, Ukraine, gas prices, wage spiral, etc. Rather, I’m simply making what I feel is a reasonable point that it seems like everyone is unwilling to consider.
Jay-then i hope you’re working like hell for mandatory card check and won’t complain when wages subsequently rise and dividends drop-someone’s been hiring the ‘low labor-cost/hard-working’ immigrants for many decades, now, and those doing the hiring are your fellow citizens…
may we all find a better day.
Great article.
As you said, the market for oil is more foreign than domestic. Is it safe to say big US oil is capitalizing on the foreign oil market? And also when the president released oil reserves onto the market, I heard that a portion of the reserve went to the EU. Anyway, what I’m trying to say is when Trump filled the reserves with negative oil, and now Biden is releasing reserves for a price….I bet America made some good money. Trump bought the dip and Biden sold the hip. They are good market timers if I’m correct. :)
This reminds me, indirectly, of Fed Chair Benjamin Strong in the 1920’s keeping credit too loose too long (in the USA but internationally), to help his pal Montagu Norman, and the Bank of England, thus the UK, out of the latter’s deflationary problems. That had come from Churchill in his then-post in UK government (exchequer I think), clinging too tightly to gold, which was ravaging the standard of living of workers. The result of the loose-long credit (once 1920s innovations were wearing off and financialization shenanigans set in, flagrant overselling of shaky Wall Street inovations) was a little thing called the Crash, followed by Great Depression. Oh, and the greed of investors played right into the “go go” times.
The purpose of the strategic reserve is to provide a bank of fuel in the case of war or other national emergency. Not to cover the political ass of some bumbling incompetent fool who screwed up the world oil markets with his asinine policies.
“Inflation is being caused by overall excess demand that in large part is due to excessive spending on the part of Congress & QE from the Fed ”
What part of this did you not understand? Like I replied above to another user:
My point is simply that over Biden’s presidency there well may be upwards of an additional 6 million people living in the us undocumented. At no point in my statement am I saying that it’s the primary cause of inflation. My point is that all the extra demand will make it harder for the Fed to tame inflation.
But like I fully expected, everyone replying to my post is acting like I’m an ignorant, xenophobic person which I’m not trying to be. I’m not downplaying supply chain issues, Ukraine, gas prices, wage spiral, etc. Rather, I’m simply making what I feel is a reasonable point that it seems like everyone is unwilling to consider.
Gasoline cost is Now the ” common denominator “of the prices of everything Else !.
Next may be Electricity anything connected to make the world go round.
Best workaround is to be filthy Rich ! Like J. Powell then problems are solved and cost make no difference
Without ENERGY, there is NO economy!
True, for every unit of GDP equals one unit of energy. If not, then fraud abounds.
Jerome Powell is a person of very modest means and is paid less than $200,000 for his services each year to the Federal Reserve.
Hahahahahaha…”very modest means” hahahaha, that’s a good one. Based on filings, his net worth is estimated to be $20 million – $55 million. “Very modest?” Do we already have that much inflation?
I have seen estimates as high as $80 million, though it’s hard to know what the truth is. That being said, I’d bet his own policies have increased his net worth by 8 figures, easy. He could pay $100 per gallon and never even bat an eye.
Theft
If Powell’s worth is a required disclosure and he can’t get within 3-5% of his assets, that explains his shitty management of the economy.
J Powell is just the latest political familiar/huckster of a long line of them in that job.
The Rotted Hobbit currently at Treasury has plenty to answer for.
And Zimbabwe Ben Bernanke, he of credentialed arrogance, certainly deserves to be personally introduced to a helicopter and altitude.
And let’s not forget the “Maestro”…
They were all the ideological forbears of the inevitable inflationary disaster.
Thank god MMT will save us all…/s
If you have a few million $ (or more) and know exactly when/how to trade the Fed’s moves (b/c you are the Fed!), you don’t need a salary…
If he survives the revolution,which I believe is imminent,people in the trenches are pissed
Interesting side note. Truckers are pretty much at the mercy of truck stops. Hard or impossible to maneuver big rigs in small stations. Many, many truckers are taking extra risks to save on fuel. Some buy stolen fuel, untaxed fuel. Some even use containers not made for fuel, buying at cheaper legitimate stations. Caught between a rock and a hard place. I understand why.
There is zero excuse for any such criminal activity.
Oh, I agree with that. It is a big problem that I deal with a lot. I was just stating the fact that it goes on. Also very dangerous to deal with. Fuel thieves are serious, therefore dangerous. I know.
No excuse for blue collar criminals. White collar crime however is so much more profitable and less likely to be prosecuted.
How do you know it’s stolen?
Higher prices, produce less for greater profits.
That’s why they used to have antitrust laws.
I predict record breaking bonuses for petro officers coming up, while consumers take it up the *SS even deeper.
George Carlin’s big red, white and blue d*ck up America’s….
Corruptions a bitch
For a different perspective, read Chevron’s recent letter to Biden.
Chevron’s CEO is precisely one of the guys I was referring to when I said oil companies are not investing in refineries because US gasoline consumption is declining, and they want to manage that decline and keep prices high. He said that.
Was he pumping his own gas into his 15 YO Civic when he made that statement?
True, without laws passed by Congress that would prevent executive orders that interfere with development in the oil arena, the days of refinery developments are over.
DawnsEarlyLight,
RTGDFA: demand for gasoline is declining — peaked in 2007, and matched that peak in 2016-2019, and is now falling off a cliff. Why would you need more production when demand is falling???
The only thing that is increasing in terms of gasoline is EXPORTS.
Who in their right mind would invest 10 billion dollars in a new oil refinery when the government is telling you, that you are the enemy and that they are going to put you out of business?
Stupid decisions have stupid consequences.
But hey, why worry about it? According to Al Gore we are all dead now anyway.
@WR
What if the hypothetical new refinery made gasoline at lesser cost than currently existing refineries? And/or could be built to refine oil into products besides gasoline? Never no mind if those existent refineries started falling apart on account of age.
I read the article, but how can you tell if demand is declining or supply is declining? Wouldn’t both look the same on your graph?
I read an article last week (on your favorite site: zerohedge) where OPEC+ is actually having trouble increasing demand.
If there is not enough supply, gas stations run out and people can’t fill up. We’ve had some of that in 1973. We have none of that today. There is plenty of supply. Supply disruptions mean you CANNOT GET IT.
There are supply disruptions in new vehicles, and many people cannot buy what they want. They can order it and wait for months. That’s supply disruption. People need to differentiate.
Yes, gasoline consumption declined due to increasing prices! Wonder why? How about stop exporting 25% of our products for company greed, instead of the normal 5% leading up to the start of decreased consumption and increasing price. We could always use a Presidential order to stop this. Who needs refineries with the latest technologies anyway. Where’s that green oil when you need it.
How much of the secular decline in gas consumption is related to increased fuel efficiency mandated by government regulations? Are total miles driven (by IFCE vehicles) declining or increasing?
Those regs, while laudable, are still govt regs that squeeze the fossil fuel industry and demotivate their investments in things like refineries.
Actually, I think high gas prices also hurt your local station. Many are closing the pumps down late at night because of fuel theft. I know my regular station is doing just that because it happened to them. They also told me that the sales inside the store have dropped during regular business hours. Might just be a coincidence.
In my neck of the woods, you either use a credit card or walk in and hand them cash.
Fake credit cards could be a thing if they still allow non chip cards.
They park a van on top of the main tank and siphon gas out of the ground. No pump necessary. It’s been all over the news.
Harrold,…………….Yes, if the station is open you could give them cash. If the pumps were turned on, you could use a card.
“I think high gas prices also hurt your local station.”
Marbles, I think high prices are going to hurt other retailers. A lot of people have to buy regardless of the price, e.g. commuters, and the extra money they have to pay for high-priced gas is money not spent elsewhere.
Makes sense to me anyway.
Hi energy prices hurt all consumers of everything, because everything takes energy to make and energy to transport to the consumers.
Which is why “just buy an electric car” is so pathetic. Do they have any idea how much fossil fuel it takes to make all the parts that go into an electric car and get it to the consumer? Do they have any idea what percent (vanishingly small) of energy used in food production is not fossil fuel energy? Do they have any idea how much fossil fuel it takes to produce the electricity to charge their GDF batteries? Electric cars solve nothing. NOTHING. They are all about virtue signalling.
Just pathetically dumb.
Maybe the government should shift some of the oil production subsidies to refinery subsidies. Also send the justice department to probe any antitrust schenagins.
Because I am getting tired of being told gas is still high because of insufficient refineries and/or all the refineries unexpectedly going into maintenance at the same time.
Tired? Call your elected representative. See if they give a hoot.
Wolf, how do you never mention climate catastrophe in these gasoline-focused articles? We need total demand destruction – total replacement by electric. Increased, or even just constant, use of gasoline will render our world increasingly uninhabitable.
It took a while to switch from horse and buggy to the automobile, and we didn’t even have to shoot the horses. Slow down a little, we’ll get there.
Time is a luxury we don’t have. We’ve mostly wasted the last 30+ years.
And I nominate Americans for having wasted more fuel (and linked resources) on empty, absurd vanity than anyone in the history of humankind. It is still startling to watch this absolute nihilism having been normalized, on every block in the country.
Off topic…
A friend of my father joined the horse cavalry right after the first world war. When they transitioned to armor… the entire regiment rode out with a bridle, saddle blanket and a 45. Each man shot his horse in the head and then they marched back to the barracks.
There were a lot of drunks in the barracks for the next few months.
Yep, just think on how both Obama and Al Gore both bought beach front houses because they know most of the climate catastrophe info is a load of crap.They both did a, do as I say but not what I do moment….
Saying that, when the Vikings called Greenland, Greenland, in the year 980 because there was much less snow than now and decided not to call it Whiteland, I guess it was because they were all driving big SUVs, which was very naughty of them. History can be a bitch………..
Anthony,
You say – ” the climate catastrophe info is a load of crap”
I say that’s hilarious.
You say – “Greenland, in the year 980 because there was much less snow than now”
I say that’s hilarious.
Your fox news update and talking points lack reality!
Climate change is like cancer. If you can feel it or see it, you’re likely in bad shape. But it’s also like a freight train in that, it will take a long time to slow down.
If we do absolutely nothing to stop climate change (No EVs, no LED light bulbs, 0 green energy like solar or wind or nuclear accross the entire planet), then Obama’s house will be under water by around 2100. Obama is 60, he’s got about 10-20 years if he’s lucky.
Greenland not being full of ice in 980 has 0 to do with climate change. We are pumping carbon dioxide into the air at insane rates. Turn on your car in your garage and tell me carbon dioxide is good for you.
Not a Moron? Carbon MONOXIDE is in car exhaust emissions.
Carbon Dioxide is CO2, which helps plants make oxygen through photosynthesis.
Simplistic non-scientific description, but you get the picture.
Climate change is like cancer. If you can feel it or see it, you’re likely in bad shape. But it’s also like a freight train in that, it will take a long time to slow down.
You say that as if you’ve been through this 3 or 4 times.
Why is there never any data on greenland? It’s a really big country and not that far north. Why is it all blocked out on google earth?
To give the average person perspective on the rest of the world on a flat plane…
Google up different map types ( there are a ton) and you’ll see Greenland displayed different ways…
Azimuthal equidistant live weather maps are weird.
too many folks’ perception of the various land/ocean areas of our planet (and the absolute b—-h inherent in presenting a 2d conformal vs. equidistant projection) lies mentally fixed in that good ol’ Mercator (distance) projection they saw in elementary school.
Gotta use an actual globe for the reality of how big/where things are…
may we all find a better day.
hm, now that i think a bit more about it, possessing only a 2d mental map of the world might explain the unusual perturbations of a flat-earther’s philosophy…
may we all find a better day.
Does electric actually benefit the environment or does it just shift the problem to a murkier realm, a few notches more distantly removed from the obvious problems of fossil fuel?
Where does electricity come from? Rubbing inflated balloons against billions of heads?
As long as you put a filthy lithium strip mine in Africa where child labor toils, and black smoke-belching diesel earthmovers rape the land where no virtue-signaling soy bois have to look at it, s’all good.
Electricity comes from about 75% coal and hydrocarbons.
In the US, it was about 60% last year: https://www.eia.gov/energyexplained/electricity/electricity-in-the-us.php
Just get rid of half the population of the US, and you can be the first volunteer!
I’m sure some of these green geniuses have looked into harvesting humans for food. Tastes like chikin’.
It’s not a binary, where one side is simply right, and the other all wrong. But many pin-sized crania want to wish that anything in the world was that simple. And that it could be folded into one example. Clue: that is a brain defect, it is housed in the skull: the need to feel smart therefore powerful, far beyond the capacity of the tiny brain chip. Total delusion, outside of occasional sheer luck being right. Having legions of suckers like that is how the spectacularly powerful get there.
Beyond meat is people!
Remember Soylent Green?
Phleep:
The “not being binary” knife cuts both ways.
DC-the term used by New Guinea cannibals is ‘the long pig’. (turns out there are some trace elements vital to human survival lacking in the NG ecosphere, and only available through a species that carries them-fellow humans…).
may we all find a better day.
(okay, can’t resist another old one:
two cannibals are sitting down to dinner. One says to the other: :y’know, i’ve never liked my brother-in-law.” The other answers: “…oh for goodness sake, just eat the potatoes, then…”).
apologies.
Covid was supposed to take care of population control = don’t have to pay for old sick people in nursing homes
And, you know, nearly a million died of it in America, so you would think there were a lot of what Wolf calls “demand destruction” as well- but prices have marched up and up non-stop.(and birth rates are in decline as well)- so does that mean the demand has been sustained by undocumented aliens?
MarMar – The problem is that the transition needs to be managed well. There is limited capacity of BEV manufacturing for the US. We lag way behind Europe and China. It will take a decade to transition all cars.
Instead of giving tax breaks for BEV purchases to consumers, why dont we set much higher fuel economy standards and then stop the practice of allowing companies to buy credits so they can continue to sell ICE cars? More stick, less carrot.
We need to tell car companies that if they dont transition to electric, they will be out of business -fast.
And one other thing. High gas prices make energy companies rich. Is that who we want to reward? Really? It would be much better policy to force oil producers to pump their oil reserves now, or lose it. That will increase production, but drive down prices. Then we add a gas tax that is used to transition the electric grid to higher levels of renewable energy. Because a Tesla that is powered by dirty electric generation is no better than an ICE car (there is a study that proves this).
The government policies and spending on clean energy are mainly a boondoggle for companies to get rich. In China, they restrict registrations for vehicles that are not BEV. That works real well because you either make BEVs or you do out of business. Fear is a better motivator than greed. And it doesnt increase the Federal deficit.
MarMar,
STOP DRIVING IMMEDIATELY. NEVER DRIVE AGAIN. NEVER FLY AGAIN. NEVER SIT ANYONE ELSE’S CAR AGAIN. Walk or ride your bicycle. Because YOU are the demand that is screwing up the climate.
YOU are in charge of demand destruction. As long as YOU are being moved around by something that burns fuel, YOU are the demand. And where there is demand, there HAS to by supply, or else the whole system blows up. But YOU and all YOUR buddies can stop generating demand — don’t be transported by anything with a motor in it — then supply can back off, and it will.
Cutting off supply, while demand is still there, will just make a bunch of oil industry investors rich.
Why is this so hard to understand?
Next time you fly anywhere or drive anywhere, swear up and down that you will never ever complain to OTHERS about the “climate catastrophe” because YOU are responsible for it. Do some serious navel gazing instead.
“YOU are the demand that is screwing up the climate.”
The Bentley runs on hydrogen. I don’t like to bring it up because people think I’m gloating. The companies that do conversions tend to go bankrupt so if you do it yourself it’s basically from a personal need to screw the oil companies.
“Do some serious navel gazing”
Last time I did that I fell in and didn’t reappear for six weeks.
Self -reflection doesn’t help me because I just end up with clever rationalizations for my bad behavior.
I don’t fly and when I drive (rarely) I usually use an EV, FWIW.
But regardless – it’s weird for you to yell at me for asking you to simply mention the very bad effect of the lack of demand destruction.
It is not a binary. Voluntary lowering of demand is the best risk management from all perspectives. I haven’t flown in 25 years. I drive little enough that my carbon footprint is negligible. I am a productive contributing member of modern society. Managing ourselves ethically is our only hope. Otherwise this or some other technology will eat us alive. It can totally be done right, consistent with a good standard of living, and individual choice, indeed a much nicer place for most folks to live. You’re welcome.
The yelling on behalf of a specific lifestyle is faith-based. Just because a set of technologies came into being doesn’t mean we all have to heedlessly waste them in some smooth lockstep forever, with zero inconvenience.
How about Kantian ethics: if everyone did a given behavior, would things be OK? Or screwed up? Has neoliberal capitalism eaten your critical brain that badly?
MarMar,
You don’t get it, do you?
You hijacked my comment section with your freaking complaint.
Don’t complain that I refuse to waste my breath barking up your tree. Instead, stop using anything that uses energy. That lowers demand for energy. DO YOUR PART, and don’t complain to me about it.
Wolf, although you don’t say it explicitly, the implicit message of your article is that demand destruction is a bad thing. I’m simply trying to point out that at the very least it has some good aspects!
Imagine for instance an article detailing the “demand destruction” the tobacco industry is experiencing, as if that was a purely negative phenomenon.
There is nothing in that article that says that demand destruction is a bad thing. On the contrary. The article was about whether or not this demand destruction is enough to bring down prices, which would be a good thing, if you ask most Americans.
The average gasoline price chart above shows very clearly that the parabolic price surge has occurred since late Feb. 2022,which happens to be when the sanctions on Russia were imposed. Those sanctions removed from the European market a significant amount of supply of gasoline and diesel fuel among other things. By trying to partially alleviate Europe’s supply shortfall the US government is producing a supply shortfall and inflationary spike in the US. This is clearly a direct result the abrupt supply destruction of prior imports from Russia and Ukraine and all the bulls–t about how the US and others van replace it has been proven false.
Demand destruction is a euphemism. Its a destruction of middle class wealth in an amount sufficient to make enough of the class feel too poor to afford to buy things. Since a truce us unthinkable, that is the chosen remedy.
1,000,000 up votes to Wolf.
Completely agree. Be the change you are advocating by changing your behavior.
I hate to tell you MarMar but it’s way too late to do anything about it because the positive reinforcing feedback loops have already been triggered. You and everybody here should just calm down and enjoy what little time we have to the best of our abilities.
Some people aren’t resigned to fatalistic nihilism, thanks.
MarMar,
Don’t worry. People will always find ways to eventually make the world uninhabitable. They’ve been working at it for thousands of years, and it will eventually pay off. There is no such thing as a world that does not contain a majority interest of control by bad actors. I promise you, the world will be dead before the population reaches a trillion humans. Make it two trillion to be conservative if you believe in unicorns.
Each electric vehicle contains about 400 pounds more aluminum and about 150 pounds more copper than a conventional car
Lithium—now well-known because of car and grid batteries—has seen prices soar nearly 1,000% in the past two years. Prices of copper and nickel, more widely used, are up 200% and 300% respectively over the same period. Aluminum, the second-most-used metal on earth after iron ore, is up 200% and trading at a 30-year high
Less than 1% of all cars on global roads are battery-electric. ING determined in late 2021 that a double-down on electric-vehicle goals would alone soak up about half of all current aluminum and copper production and about 80% of global nickel output.
Electric cars exist and they are useful for getting groceries and coffee around town if you own a place to charge it but their overall utility compared to ICE is largely a fantasy. Hybrids make sense. Trains and ships have been hybrids since forever. Try pulling some serious weight with an all electric ford pickup. You’ll get about 90 miles range.
Don’t get me wrong, I love smalll light electric vehicles, especially electric bikes, but the idea that they will one day replace ICE is a comical pipe dream. And no one in a Tesla ever waves at me in my 69 Impala. So screw those poseurs.
Now that I think about it, no one in a Tesla seems to drive with the windows down. Probably the covid.
While I’m at it, B pillars should be banned. The best looking cars have no B pillar.
We need some laws to improve the aesthetic of modern vehicles because all these cookie cutter shoe shaped media mobiles are visual pollution and I’m offended.
They keep the windows rolled up because they don’t want to smell your leaded gasoline.
I wish, Maybe they are afraid of my zinc additive everywhere they go.
Different places, different needs and different solutions.
I am in the process of buying a new car. A Kia e-Soul. WLTP range is 452km, should translate to at least 250km in all driving conditions. That is sufficient range.
For day-to-day use charging at home and at the summer house. If driving cross country on holiday it is sufficient too, the charging stations are closer between than 250km.
Ok, on some days when everyone leave town for their mountain cabins there can be a que at the charging points but that is about that.
As for the car aesthetics or lack thereof, I want an ATAE Munroe to replace my Land Rover. 😉
Future energy density improvements in EV batteries may reduce the distance problem. What doesn’t make sense today can potentially make sense in the future.
All being hoarded and manipulated by chinese
Mar Mar
To match the 2,000 cars that a typical filling station can service in a busy 12 hours, an EV charging station would require 600, 50-watt chargers at an estimated cost of $24 million and a supply of 30 megawatts of power from the grid. That is enough to power 20,000 homes
The average used EV will need a new battery before an owner can sell it, pricing them well above used internal combustion cars. The average age of an American car on the road is 12 years. A 12-year-old EV will be on its third battery. A Tesla battery typically costs $10,000 so there will not be many 12-year-old EVs on the road. Good luck trying to sell your used green electric car!
Imagine a Hurricane evacuation in FL….will all the EVs get as far as Jacksonville and then try to ALL RECHARGE somehow?
“an EV charging station would require 600, 50-watt chargers at an estimated cost of $24 million”
I think maybe you mean 500W or something, which would be 300KW. I have a 350W inverter in my trunk. It ain’t gonna charge 7 teslas.
300KW of electrical capacity does not cost $24 million, maybe 4-6% of that. I’ve built a 300KW facility. So, if it cost, say, a million per 300KW continuous load that’d be 600 million dollars for 600 300KW charging stations and I don’t think even that would be enough. I bet there are 300 gas stations just in Portland metro alone.
Either way it’s infeasible to charge cars as efficiently as dispensing gas. The time involved and the non comparable energy densities of gas vs a battery makes universal EVs a form of political psychosis.
I bet we could design a system of swappable battery packs. Pull in, a robot arm swaps out your used battery with a fresh one, and you are on your way. You pay a fee like at a gas station. The used battery goes into the charger.
You’d need a standardized battery system across all manufacturers. But we do it with other parts, we could do it with batteries.
elbowwilham, EV batteries are not like the batteries in your flashlight. EV batteries are heavy (2,000+ pounds), they have a dedicated liquid cooling system built into the frame of the 9,000 small batteries that are wired together. Plus, the battery has an electrical interface connected to the controller/inverter and the charge port. Not something that is swapped out quickly or safely for that matter.
Then, there would be the ownership issue since the car and battery were bought and titles as a unit.
Then, swapped out batteries would need a special charging and inventory station and a vehicle or other means of moving these one ton plus fragile battery systems around and to somehow store them.
Swappable batteries would indeed be hideously complicated. For hydrogen fuel cells, however, a working swap system for cars could be envisaged. In the same spirit as the gas bottles for RV’s.
However, seriously discussing the use of hydrogen in vehicles seems to be verboten. It’s batteries or nothing.
For the moment.
Plus toxic battery disposal,might be possible in 20 years to engineer battery’s = alien technology
Strange, I haven’t heard of much battery swapping on electric cars here. Mostly the battery lasts the 10 year or more the car last. That modern cars are designed for 10 year+ service line is another matter.
No. EV batteries have an 8 year warranty and go from 300 to 500K miles before replacement. And therefore, no you won’t be on your third battery after 12 years. I have been driving them over a decade and my batteries show no significant degradation. And I don’t read of a significant number of people with problems. I can sell my used EV for a very good sum. My second one that I bought used went up since I bought it 2 years ago. 600 50 watt chargers? Now they are 350 watts and only used of trips since a major amount of EV charging is in the garage. I haven’t heard of any EVs stranded in the hurricanes. Kind of a myth like cats can’t get down from trees.
Good grief, that again.
MarMar,
My Suburban runs on discarded oil from McDonalds. I keep it idling while I’m in Costco. Doing my part to keep the landscape grease free. Cheers.
My Man!
And the exhaust smells like french fries too!
However, in certain states using such oil as fuel is illegal (can’t get their gas taxes).
Wolf Street and residents aren’t really big on talking about climate change except as it impacts the economy, which is logical, since it is an economics site, and also fine, as not everywhere has to be everything to everyone.
And honestly, it is a bit rude to show up somewhere and demand to know why your host isn’t talking about the stuff you want to talk about.
Where the hell do you think electricity comes from? Most of it comes from the burning of fossil fuels. Now, every time you convert one energy source to another you lose efficiency. That means burning hydrocarbons to produce electricity then transporting the electricity over lines to charge batteries is much more polluting than if you just burned the hydrocarbons to power transportation to begin with. Anyone with a background in engineering knows this fact, but there are still millions of idiots who think that electricity comes from thin air, and that their electric vehicle has a smaller carbon footprint than a petroleum powered vehicle. And no, the vast majority your electricity is not coming from solar or wind, and never will.
Argonne National Laboratories tells me the carbon footprint of an EV is lower than an ICE vehicle after only 13500 miles. ICE vehicles waste 60 percent of their energy to heat. Pretty easy for an EV to be more efficient than that. I sure enjoy my EVs 3 cents per mile fuel cost. You should try it.
If “catastrophe” means 1.5 degrees increase in global temperatures, there are about a dozen other things that will be a greater threat in the lives of most people.
The idea that we can live as we do and fix this with light bulbs and Teslas and windmills is garbage. There are a few billion people in Africa, India, and Asia who aspire to a better living standard. They will do that in the manner that is most cost efficient. They matter more than anything you and I can do.
We can’t stop this from happening. You can live in a cave if you wish but people will not purposely decrease their living standard for the small possibility of 0.2 degrees less heat. This is a fact and I don’t see anything that changes it, but I do see a bunch of virtue signaling elites jetting around and buying beach homes trying to find a way to spin your guilt into personal wealth and influence.
Yes, the climate is changing and will change. Well off societies will have the best capacity to respond. It’s way more important to improve the standard of living for all people than to virtue signal while jetting around like Al Gore.
“Investment in refineries has been put on the back burner”… I think the last new refinery in the US was in the 70s? Meanwhile the Chinese have built refineries, and supposedly Chinese “Independent refiners operated at less than half their capacity in April”…
Look at the demand for gasoline in the US — chart above. Then find a chart for gasoline consumption in China. Even in the 1996, my first time in China, there were hardly any cars on the road in China. I mean, what roads. Now these huge new expressways have turned into parking lots.
So, runaway demand. Some destruction of that is good, right?
China gets all the oil it wants from Russia now!
Supposedly the Chinese could refine more and export it (diesel in particular?), but they’re not. If that’s true I’m not sure why they wouldn’t refine and export, given current refining margins.
Thanks for your articles. Must reads!
I don’t know about refining, but as for exporting, if I were them, I’d be building up their strategic reserve for the future shooting hot war.
I wouldn’t increase exports just to obtain more fiat USD. Why do they need any more of that?
Good analysis!
I have 2 cars: both EVs. Now I am trying to get rid of my second EV and sustain myself on ebike .
Charging is all free for me.
It’s a dream for me.
With the way the battery packs mount on the bottom of cars, I think it’s fairly easy to drop them off? They are heavy and stuff, but I wonder if it will become a thing to steal the EV batteries like it’s a thing to steal catalytic converters.
You can’t remove them with a sawzall. There are coolant tubes and connections that are fragile if you have any intent on using the battery pack as a whole. For cells, maybe – but you have to dismantle both high voltage packs to do so.
Not a place for amateurs. Snoop around “electrified garage” for a sampling of what is involved.
The batteries weigh so much that interchangeable batteries are an impossibility. And if the industry increased the energy density, well, then, Shazaam, you have an even more explosive energy storage than current batteries.
These cars weigh a lot too. Essentially all pproduction Teslas weigh more than my old 69 Impala. Some weigh more than half a ton more. GVWR on Impala is 3800 lbs. Who’s paying for that road maintenance?
5,390 lbs – Model X Plaid
5,185 lbs – Model X Long Range
4,766 lbs – Model S Plaid
4,561 lbs – Model S Long Range
4,416 lbs – Model Y Long Range/Performance
4,065 lbs – Model 3 Long Range/Performance
3,582 lbs – Model 3 Standard Range Plus
2,723 lbs Gen. 1 Tesla Roadster
otishertz,
All modern cars are heavy. My Infiniti G37 4-door (now gone), which was about the same size as a Model 3, weighed close to 4,000 lbs
It’s a dream till the batteries need to be replaced.
I have nothing against EVs. They make sense. My issue is that I am a diy-er –I have the tools and skills to do most of my own repairs on ICE cars. I don’t know how many of those skills transfer to EVs, or even if that’s allowed.
I read that EV manufacturers do not want owners to fix their own automobiles. A conundrum…
Electrocution SUCKS
Just wait. There will be loads of code “cracks” out there fix and work around problems with old electric cars.
Parts replacement is no worse than any other new car. The greatest hurdle will be as for any new car to obtain the part, but expect some genereic computer modules to show up.
Nice virtue signaling, jon. Do you also not bathe? Water is precious you know.
Great job Wolf.
I’ve been watching the EIA data too. If I am correct, then diesel and gas prices will decline slightly next week, and then go back up for the 4th weekend.
After that, though, I see declining prices in oil, diesel and gas all the way through October.
Coincidentally, that is also the period in which the inflation mirage will begin disappearing as core inflation measures begin comparing recovered prices with last year’s recovering prices instead of comparing recovered prices with depressed recession prices, as has been the case since October 2021 and up until now.
Prices didn’t recover a lot in June 2021, but the difference may finally sell the “inflation peak” narrative that was torpedoed by high gasoline and diesel prices.
By August we will be talking about how the Fed is “whipping inflation,” even though that is also a mirage
😄
If we get rid rid of those pesky rural people and everyone lives in cities this will work.
It is much more cost effective to get rid of the pesky city people. More bang for the buck….
10 year Bond yields quietly dumped in 2 days from 3.5 to 3.19 now…
Imagine that,ppt probably sobered up to reality of government interest payments going to 1 trillion a year ,keep working harder get less.
enough
until the next inflation rate report next month. Expected to be more around 9% or even higher until September. B/c of expected lag in rising rate the inflation response will be 6 to 12 months. it was more than 18 months under Volcker in ’80s.
I was on the freeway between Sheboygan and Manitowoc on Monday. Traffic seemed normal for a weekday, but a lot of tractor-trailers.
Going off on a tangent here, I passed two dealer parking lots that were packed with brand new travel trailers, the sort where you need an enormous pick up truck to pull. It looked like standing room only in the lots (but no people present).
Just to let you know, in this crazy world, The UK is exporting Gasolene to the USA as it’s more profitable after taxes….
Fossil fuel markets are routinely gamed on a global scale. It’s more profitable that way, and they can always pay most politicians to complain about something other than industrialized corporate profiteering.
On a side note, more than demand Natural gas will be spiking, slowly, throughout the year, unless there is short term end to the Ukraine war.
Inflation news has side lined the Zelensky ‘show’
Natural gas (slowly replacing coal) is necessary to run the electricity generators by public utility companies, in manufacture of fertilizers!
Now USA has planned to LNG to Europe, prices for Natural gas will be set by global prices! It went from less than $3 btu to $9 btu!
They may have a little trouble getting the LNG on ships.
The Freeport LNG terminal you refer to is just one of many terminals. There are lots of them that are working just fine:
https://wolfstreet.com/2022/06/07/wondering-why-the-price-of-natural-gas-is-suddenly-so-damn-high-the-booming-us-lng-export-industry/
Actually, the Europeans are going to have trouble unloading the LNG transport ships as they are short actual terminals.
You are correct, the problem in Europe is they do not have the infrastructure to depend on seaborne LNG. They really did not think this through. They will eventually have to capitulate, because Russia is not going to give them gas that they are not being paid for.
All Russia wanted in the first place was to be paid for their gas, that is not unreasonable. Expecting them to continue supplying gas when they are not being paid for it is apocalypticly stupid.
Wall St or their sycophants always clamor and broadcast their positive narrative, to investors to buy into ‘dips’ b/c it has been OVERSOLD! This is how yesterday’s mkt climb was. Most retail investors fall for it, instead looking at it from long term perspective.
Traders are different, They zig-zag within a day or days. I trade mostly PUTs (shorting, inverse ETFs with some hedges) b/c the general trend is down with expected bounces along the way. My long term investing has become bare minimum! These days are dangerous for those in retirement or those close to with 5 yrs, unless they have hedges.
This coming BEAR will be unlike any other before. Main culprit overwhelming, humongous mountains debt(public & private), every where throughout the world!
I keep reading that there are lots of cash swashing around, mainly by the Wall ST shills & sycophants. Bottom 50% don’t have 1000 bucks saved for emergency. Many even don’t have $400 in savings! Just look at the recent growth in Consumer credit especially revolving type! Majority living on barrowed money, just like our Govt!
sunny129: you are a regular ray of sunshine.
This is NOT Weimer Germany 1923, presently. But we are about to see where the personal finance stats go. A clock is ticking. Stress test. Margin call. Is there an alternative to maxing the credit cards and dragging personal finance out of that wonderful state the technorats (typo, and it stays) say the consumer is in?
Therein (if it hits the middle class hard) lies the strongest basis for expecting a reawakened Fed put, hence, considerable inflation for a considerable time. It will be a balance of miseries if so. One team will promise the magic elixir of tax cuts and tougher law enforcement, the other, paper bailouts for the underwater masses. Fun for all!
Not exactly Weimar but has that Weimar flavor and smell.
Wiemar was not a result of monetary policy, it was the result of reparations.
Hyperinflation is not a monetary phenomena, it is the result of a massive loss of goods to purchase, and people willing to pay any price to obtain what little goods there are available.
Of course it is politically incorrect to put the blame of millions of starving people on the so called civilized countries that won the war…..
Yeah man, that Ukranian Holomodor was messed up.
Just claim bankruptcy on credit cards ,corporations do it all thr time then ,start over no debt after they wiped out investors ,this system won’t last long
‘Therein (if it hits the middle class hard) lies the strongest basis for expecting a reawakened Fed put,’
First Fed has to ‘contain’ inflation, which has popped up, after 40 yrs of deflation. That wouldn’t be that easy. Since there is a lag time 6-12 months from the last rate hike, Fed is going fumbling round to ‘jaw bone’ a number(?) to soothe the Mkts.
With debt already at 9 Trillions, who in right mind, want stimuli or QE? before mid term elections Foreigners are already reluctant to but T bills b/c what US did to Russia’s 350 Billion reserve at Fed. That was really bad move which will come back to haunt. May are trying to stay away from SWIFT if possible. China is developing their own!
The consolation is it TINA, b/c other currencies in worst position except Rubel!!
^^^this^^^
(buy)” puts and inverse ETFs”
There is only a lot of debt, not cash. Most supposed “cash” is just someone else’s debt and all of it is subject to default.
There is also virtually no “cash on the sidelines”. That’s also mostly debt which needs to be sold to someone else to obtain actual cash.
I’m wondering about this issue of consumer credit growth. Federal Reserve data (from 1980) show that “Household debt service payments and financial obligations as a percentage of disposable personal income” has been at record lows the last couple of years.
(search “Household Debt Service and Financial Obligations Ratios”)
Maybe someone can explain? Has inflation and rising income been factored in calculating current nominal consumer credit growth?
Also, it might be more informative if the consumer credit information was parsed into income categories.
I’ll take a stab at explaining it after reviewing the data that you reference.
In recent years, consumer debt has been low, and overall consumer debt as a percentage of disposable income has remained in a narrow range for the last 40 years.
I was surprised to find that data.
Recently, meaning over the last three months, consumer debt has suddenly ballooned.
I think it’s very rich people loading up with a LOT OF debt very quickly.
You are correct in saying that an income filter of that data would be helpful.
The reason I give for saying that it is a lot of very rich people loading up on a lot of debt is because they have the MEANS to do that.
But then, if that is true, then, WHY are they doing that?
My theory is that extremely filthy rich spoiled brats are ANGRY, very angry, at Joe Biden and the Democrats. How dare they turn off the firehose of free money flooding the casino stock market? How dare they propose raising taxes on the filthy rich?
They will show us! They will cause a recession! They will load up shell companies with massive amounts of debt and then bankrupt them. They will keep playing pump and dump and attempt to lure institutional investors into tanking pension and 401k funds.
I think extremely rich people, including the oil company shareholders are doggedly doing everything they can possibly do to crash the economy before the election this year. They will be fine.
I don’t think it will work. Everything that they are doing is actually creating opportunities for smaller investors IF the smaller investors understand the game afoot. It seems about two thirds of the investors aren’t investing based upon the alarmist spam being spread by oligarchs and their paid professional liars.
I want to hand it to YOU, for being one of those voices who speaks up and says “But the DATA says something different!”
Gee, you mean taking $95 to fill your tank vs. $45 is hurting peoples ability to afford to travel…. Whoda thunk it.. I guess elections do have consequences.
“I guess elections do have consequences.”
Bad things happen when too many people are too blindly focused on gun fetishism, religious extremism, and keeping women in their place.
I’m seriously concerned about the agendas and competency of both teams. Maybe more gridlock is better than too many fools all crowding one side of the boat, which then threatens to capsize.
“I’m seriously concerned about the agendas and competency of both teams.”
Next year you’ll only have one team to complain about, but that would be a bad idea.
We will have a correction up ,because the boat is way overloaded to the down side
Government in general is a bad idea, but that being said, the team on the field right now is the worst in the terms of competency ever. Ever. Ever. No one can deny the rapid pace at which things have gone straight to hell. And it is only going to get worse going forward… Of course it is all Putins fault… LOL
Might want to go to the doctor and get that monkeypox treated before it destroys what little of your brain is left. Maybe you can share a scooter with Marmar! He needs treatment as well, been huffing on unicorn tailpipes for too long.
Iona is why I quit Facebook
I have no earthly idea what your third insult was about.
As usual, you completely ignored the other side of the equation.
I’m going to go out on a limb here and suggest that 75% of US households would like and need to save $50 on gas a couple times a month, especially if a majority do not have $500 for an emergency expense according to polls. I think that means demand destruction.
We got rid of a lying corrupt deficit-loving wannabe autocratic in the last election. I’ll take the higher gas price, thank you.
Great article. I always trust data over media narratives. With all the blame for high gas prices going (predictably) to the POTUS, is there anything he could do to “incentivize” increasing domestic supply by reducing exports? Honestly curious what any POTUS could do. Why approve a bunch of new drilling if it’s all going to get exported?
He could have started by not spooking the oil markets by cutting off the land leases and publicly stating that he was going to end oil use in the US.
But hey, if you voted for this crap, you are getting exactly what you deserve. The proof of any agenda, is the consequences.
If high prices cause people to use oil more efficiently, reduce unnecessary travel, and buy more economical vehicles, the high gas prices could be the best thing that happened to us in a long time. Yes, elections do have consequences, this time favorable. Plus, as a bonus, our democracy is intact.
If you think the current economy and the coming recession is favorable, then your grip on reality is suspect. And we have not had democracy intact in this country for a long long time…
Bobber:
The U.S. is not a democracy. It is a constitutional republic.
A democracy is two wolves and a sheep deciding what’s for dinner.
It is no longer a constitutional republic, or a democracy. It is a dictatorship run by special interests.
Augustus Frost has pointed out that people will have to start doubling up to save on rent or to pay for a mortgage. Maybe even tripling up. This should lead to more cars parked out on the streets and in front yards. Garages are used to store junk and a charger. As EVs become more popular, I envision a single charger inside the garage with multiple leads routed out to the street and front yard from underneath the garage door and charging several EVs simultaneously.
What percentage of the population has a garage?
When that time comes people will only be able to afford a gas or electric bike.
In CA ADU’s are becoming the new thing. Basically that is turning single family housing into multi family housing by converting garages or splitting square footage to make separate units out of a single home.
That should do wonders for living standards and parking. Of course the standard of living in CA basically went away a long time ago.
How come that multi-family housing is bad in CA?
In Europe town houses, semi detached houses, low rise apartment buildings and a multitude variations on the theme multi-family or dense housing is common and work just fine.
Having space has always been considered a luxury. Of course having a long lineage of peasantry, the common people of Europe have never really lived in any sort of luxury, so they really do not know the difference… Most would come here in a heartbeat if they could.
“What everyone now wants to know is this: When will demand destruction be large enough to cause a decline in gasoline prices?”
Actually, what I would like to know is when higher gas prices will reduce traffic where I live sufficiently so that there isn’t ridiculous congestion so much of the time.
Dude, just move next to a Hyperloop terminal.
New to this site, . Impressive Wolf !
A little off topic but , if we assume a $3 per gallon in 2006 , that would imply $4.35 per gallon in 2022 inflation adjusted , which is close to the pre Russia/ Ukraine war price . When viewed in this context , and add a 15% war premium , $5 per gallon looks in line to me .
Just spitballing, seems like a change in industrial policy might be called for to avoid energy repeatedly whipsawing the economy. Something like long-term government contracts to purchase refined products. Perhaps a reverse subsidy provision where refiners are paid to decrease output over time to meet climate goals.
You mean like let the government control the oil companies, like in Russia and Saudi?
Nothing more than a term purchase agreement ensuring that capital expenditures will be recoverable. Not unlike commitments to buy a minimum number of new fighters. But, to satisfy climate concerns, could additionally provide that the refiner gets paid in the event that alternatives or radical conservation replaces the need for refined products. Different people could maintain different opinions about whether that clause ever gets invoked.
Government is on shoring business back to American,economy should boom in 3-5 years ,oh wait there are no workers ,because tech was more important than blue collar .seems to be biting them in the ass . Politicians = no common sense
Wait a minute
How is the shortage of workers the fault of the government?
I’m amused. People seem to think that making babies, raising children, and setting marketplace prices are all functions of the national government!
Maybe if rich people didn’t hog all the money that they didn’t earn, and instead paid fair wages for work, then maybe people could afford to have children.
And maybe if rich people didn’t demand 60 hour work weeks for substandard wages, and threaten termination for taking time off, then people could take a larger role in educating their children and preparing them for careers in needed professions.
And maybe if rich people could somehow be restrained from ripping us all off in every conceivable way, then we wouldn’t be paying the robbers sky high prices.
It seems that the lazy, spoiled rotten criminal brats are the problem. You can vote to remove politicians from office. What do you do about people who are filthy rich and who think committing felonies against us is “playtime fun?”
Do you like it when they laugh in your face? Is it some kind of humiliation fetish that you have?
“Wait a minute
1. How is the shortage of workers the fault of the government?
2. I’m amused. People seem to think that making babies, raising children, and setting marketplace prices are all functions of the national government! ”
——————————————————
1. Create an environment where you can generate more income from not working than working. Give away free money with few, if any, obstacles and oversight and be *shocked* that it’s rife with fraud.
2. People having children is a sign of hope for humanity. Both of my kids “opted out” because they don’t like the direction the world is going.
Raising children: What thinking person would send their children to a school where a 4 yo is subject to indoctrination about sex and made up genders?
The ranting about costs… what does a government control? See #1. Spending what the government doesn’t have being injected into the economy through deficit spending.
Oligarchs? People line up to be fleeced. Street hustlers take advantage of the same pigeons as the oligarchs, just on a more limited basis.
Ain’t rocket surgery.
Yes, put government in charge, because they do such a wonderful job with everything else they do. The scariest words you will ever hear is we are the government and we are here to help……
Government can be really effective, but in the US we’ve underfunded it, created a web of bureaucracy and removed ways to get rid of ineffective people, to name a few issues, and many laws are virtually unenforceable because of all the detail and loopholes written into what should ultimately be straightforward, simple policy, so the underfunded, understaffed agencies tasked with enforcing them have no chance of navigating them in the first place. This is all fixable if we vote everyone out of office (and I mean Dems and Republicans, they ALL suck).
UNDERFUNDED IT! You seriously have to be joking! Government is the most over funded institution ever created. Government basically steals all the money provided to it and then screams for more. After it has robbed you of a large percentage of what you earn, they provide basically nothing. Can you even conceive of how much money the government steals? To put in in perspective the federal budget is the equivalent of a stack of $100 bills going from the earth to the international space station 15 times. And exactly what are you getting for that? Not much of anything.
Jdog: Perhaps if you’re looking at the total, but if you’re looking at agencies that actually provide services to people and aren’t bloated departments that spend whatever just for the sake of joyking themselves off (e.g. military spending), then yes many departments are underfunded or, like I said, mismanaged and tied up with bureaucracy that’s designed to make them ineffective and wasteful. Government as an institution needs serious reorganizing, but the funding to many departments and services within the government requires a major boost. Let’s steal from Goliath to pay David.
Government is a train wreck. Its only purpose is to grow itself.
The people employed in government are utterly incompetent and most are woefully corrupt.
Anyone who thinks government is the answer to anything is living in a fantasy world.
Government is the problem, never the solution.
Let’s see
Baby formula shortage
Skyrocketing gas prices
Affordable housing shortage
Computer chip shortage
Oh yeah, the oligarchs are doing a bang up job, aren’t they? They managed to turn all those problems into more billions that they stuff in their pockets while they STICK IT to the rest of us. And they pay professional liars to blame it in Democrats
Why have any government at all? Crypto-fascist liberatarians will help usher in an age of oligarchic kleptocracy led by an authoritarian dictator.
That’s working out great in Russia, right? No more political strife. Just throw political opponents out of windows.
Yeah I’m sick and tired of stupid Reaganite dogma. Was sick of it 40 years ago.
In every single example you give, it is government, that caused those problems. Baby formula, FDA’s fault, Gas prices, Bidens fault. Affordable housing Congress fault. Computer chip shortage, Department of Health’s fault. IN EVERY single instance these problems are caused by the incompetency of government.
Government is a train wreck, and a curse on the American people.
Don’t worry Thomas, Elon will save us. /s
The price of gasoline in Germany is over $8.00/gallon.
The U.S. is a net exporter of refined petroleum products.
As an oil field ages, the well pressures fall, the gas to oil ratio rises and the field peaks in production. North Sea oil production peaked c. 1999-2001.
Americans now learning why almost no one in Europe drives an F150. We adjusted to higher fuel prices a long time ago. It’s about $2.50 a litre here.
Amen jdog.
The phrase “Underfunded Government”
has to come from a government employee!
One making a triple digit salary and enjoying benefits and retirement the average private worker will never see…
Im/Jdog-well, private industry in ‘Murica that did previously, intentionally and enthusiastically divested themselves from providing those ‘benefits and retirement’ back in the ’80’s/’90’s. Little wonder that some thinking folks might head to a workplace providing a more secure future for themselves and their family (we won’t get into that many government functions are there to attempt-for better or worse-to deal with the everpresent mass social issues that business is beyond loath or capable of touching…).
may we all find a better day.
Government considers itself royalty. Government employees think they are better and deserve more than the citizens they are supposed to serve. Power corrupts and government power corrupts absolutely.
Jdog-your mileage has obviously varied, but you could use the same words about corporations, or even any person you encounter that you don’t care for (in a world stuffed to the gills with at once magnificent/miserable humanity…).
may we all find a better day.
Right now you can see signs of demand destruction everywhere…
…except in the actual data.
Up in Massachusetts, traffic at Mass Pike tools is shattering pre-pandemic records.
Perhaps demand destruction will arrive soon in my neck of the woods; but it certainly is not here right now.
Look to boats too! Boat launch parking lots that were overflowing for a few years now are now half full on a busy day. Really amazing how quick the gas prices pumped the brakes on people taking their boat out.
I am not sure that it is wise to link market shortages with “inflation.” There is plenty of oil in the ground… there are just different factors influencing whether it gets pumped out of the ground and delivered to refineries/gas stations.
-Saudi Arabia (and OPEC generally) dropped oil production by a couple million barrels a day (10-20%) starting at the end of 2020. Worked out fine for them since the other 80-90% has gone up 300% in price. Lately they have worked their way back up to 10 million barrels… after 18 months of eliminating excess inventory in the supply chain. But they still are not back to the 11 million barrels a day they were producing in November 2018.
-Iran has had to stockpile oil rather than sell it due to the sanctions put back on them four years ago. They now have nearly 100 million barrels sitting idle on tankers or in fuel farms across the globe.
-Russian fuel has been heavily sanctioned since late February for obvious reasons.
-US oil producers have had a series of regulatory hurdles put in their way by the Biden Administration as part of their green energy initiatives. It is not realistic to expect them to throw caution to the wind and start drilling new wells when any of the three dictatorships above (Saudis, Iranians, Russians) or the Biden Administration could leave them holding the bag (again). According to the EIA, for now oil companies are tapping the thousands of Drilled But Uncompleted (DUC) wells that they drilled by the bucketload during the two previous peak drilling periods over the past decade. The rig count is going up and the inventory of DUCs is down by a third from 2019… so EVENTUALLY they will have to dig new wells. But that may take more time than people are comfortable with.
Obviously high fuel prices EVENTUALLY become “consumer inflation” since the trucks, trains, and ships that move goods from Point A to Point B are now paying twice what they did three years ago. That said, nothing the Federal Reserve is going to do will increase oil production.
I just got a letter today saying the University of California retitement program menu will no longer hold companies that offer fossil fuel reserves as of June 30. I woder if that had anything to do with the dumping of those stock market assets on June 17?
This may not be when it happens, but at some point, dwindling demand will drive a massive collapse in the availability of gasoline due to stations closing. It may taper on a linear curve for a while but at some point it will just collapse.
It’s called REDUCTION IN DEMAND. God almighty… I’m so tired of the sensationalized language.
Get educated. “Demand destruction” is the technical term in economics for it, and has been ever since I took my economics course when I got my MBA back in the day. Just because YOU don’t know something doesn’t mean it doesn’t exit.
You could have just googled it. It would have spared you from displaying your ignorance.