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2021 - Is inflation finally back in the conversation?

Reagan1k

By Reagan1k
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Bateshorn
Bateshorn

The only thing more predictable than the GOP running up huge deficits on tax cuts and military spending, is each one suddenly becoming horrified by deficit spending 5 mins after a Democrat is sworn in

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1 hour ago, jimmyjazz said:

Well, 13 -> 10 MB/d was sort of a cliff.  That was a big drop in supply.

Oh absolutely. But I was under the impression that it dropped off with COVID and was still low (e.g. Biden, "I did that" stickers). That's not the case at all. It's about 10% off the peak before COVID and climbing while oil prices have doubled since then. Looks like global production is 3 million off the peak (about 4% of daily supply).

 

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Blotto

Blotto 23,538

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Cars run on gasoline, not oil. So while the price of oil certainly has an impact on the price of a gallon of gas, refining capacity does as well. New refineries aren't being built for a variety of reasons. We could be producing 30 million barrels of oil a day, but if our refining capacity doesn't increase, those extra barrels won't matter. 

Demand has increased back to pre-pandemic levels, but our refining capacity has not. My understanding is that we are running our refineries at the highest utilization rates ever. If you really wanted to fuck our economy, take a couple of the largest oil refineries off line. Hopefully we dont have a busy hurricane season in the gulf this summer with Cat 5's slamming the refineries.

 

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CHIEF

CHIEF 5,092

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Posted (edited)
2 hours ago, Cheeseweasel said:

Weird that we're only about 2X the oil production for the 50's. You'd think efficiency alone would cover more than that.

When the bottom dropped out in the mid-eighties, it was just cheaper to buy from OPEC. Fracing technology was no where near what it is today, or even a decade ago. I remember my Dad being absolutely livid, that the Railroad Commission was forcing operators in the Permian to plug thousands of wells in the Spraberry and Dean formations. He said it would never be economical to drill those formations again. He was right, based on 1980's technology. It wasn't really feasible to spend R&D money until around 2003-2004 when the Barnett Shale, and robust gas prices came along. That is when technology really took off and new drilling rigs, multi-stage fracing, steerable drill bits, and all of the supporting infrastructure really took off.

The Permian is where companies go to have the greatest success rate. There are tens of thousands of well logs, from the 1930's to the present for the geologists, and engineers to work off of. The whole basin is basically mapped for a 100% success rate. That is what you are seeing at the end of that graph. As long as prices support it, that map will continue the same trajectory, or possibly rise even faster.

It is beyond time to build some new refineries to match what can be produced. Ones that can refine WTI.

CHIEF

Edited by CHIEF
refineries
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gsoda3

gsoda3 3,262

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On 6/6/2022 at 1:09 PM, FirstTimeCaller said:

So oil spiked to $125 when the Russia/Ukraine thing went down. Overnight gas prices jumped to $3.99 at every station in town.

Now oil is close to that level again (still below it), but gas prices are now $4.49.

I am but a simple man of the land. Why is this happening? 

there's a difference between the gas you buy during the summer and the rest of the year-  summer blend vs winter blend.  the difference is mandated by the authorities.  long story short, summer blend is more expensive b/c it contains less butane but it evaporates faster and is more eco-friendly than winter blend.  summer blend usually is sold from beg of may to mid september.  

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Immaculate Vibes

Immaculate Vibes 114

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20 minutes ago, tbone_ said:

Why did we have enough refinery capacity in the hottest economy of all time prior to covid but not enough now?

Energy transition. It’s a choice being made over time, for better or worse. 
 

“You’re looking at committing capital 10 years out, that will need decades to offer a return for shareholders, in a policy environment where governments around the world are saying: we don’t want these products,” he said.

"Capacity is added by de-bottlenecking existing units by investing in existing refineries. But what we’ve seen over the last two years are shutdowns. We’ve seen refineries closed. We’ve seen units come down."

"We’ve seen refineries being repurposed to become bio refineries. And we live in a world where the policy, the stated policy of the U.S. government is to reduce demand for the products that refiners produce," he continued. 

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CHIEF

CHIEF 5,092

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We need fossil fuel, and will need it for decades to come. The idea that we can just snap our fingers and be off of fossil fuels in five or ten years is mind-numbingly stupid. This is a good video that shows that an electric vehicle with the same range as a conventional vehicle (400 miles) has a larger carbon footprint than a conventional vehicle. A conventional vehicle starts off with a conventional footprint of about six tons. A Tesla starts out at 12 tons.

CHIEF 

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FORTY NINE TO ZERO

FORTY NINE TO ZERO 2,652

Posted
Posted (edited)
2 hours ago, tbone_ said:

Why did we have enough refinery capacity in the hottest economy of all time prior to covid but not enough now?

refineries have shut down. shell closed one or two in louisiana and lyondell is closing a huge one in houston 

the the equipment is getting old and outdated. no one wants to spend the money required to update since demand is only going to go down long term. 

 

talked to a high up at the lyondellbasell facility recently a number of factors went into play:

 

they don’t have a direct source oil production like the big players (exxon, chevron, etc) so they can only buy the “leftover” crude, which is not only generally shitty, but the grade of oil fluctuates.  makes it hard to plan things out.

they were banking on keystone XL to change that by supplying low cost crude at a set grade.  we know what happened there

the refinery itself is very old with out of date  equipment. The facility is generally at the end of life and they are not willing to invest in new equipment for two reasons..  

lack of long term growth due to the changing market.

 lack a steady supply of “good” crude (see my earlier keystone comment)

ironically they are making more money now than ever.  so they plan on riding this one last wave before leveling the facility.  the land is very valuable due to being on the port of houston 

 

Edited by ONE YARD
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Hmbre97

Hmbre97 6,308

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4 hours ago, CHIEF said:

We need fossil fuel, and will need it for decades to come. The idea that we can just snap our fingers and be off of fossil fuels in five or ten years is mind-numbingly stupid. This is a good video that shows that an electric vehicle with the same range as a conventional vehicle (400 miles) has a larger carbon footprint than a conventional vehicle. A conventional vehicle starts off with a conventional footprint of about six tons. A Tesla starts out at 12 tons.

CHIEF 

 

The math in this video for the CO2 produced during battery production is very dubious, even being 2 years old. Most studies have put 75kwh batteries at a cost of around 5 tons of CO2 to produce. A Tesla Model 3 long range comes with a 82kwh pack and has 350 miles of range. 

Using current calcs, his chart would look something more like this (and this is not even addressing what info he used to calculate his co2 use over time).

 

 

 

co2chart.jpg

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Blotto

Blotto 23,538

Posted
Posted

image.png.04d0cb3f66f1c8220bd32b4c924e08f7.png

The black line I added in was June of 2021. Yet the Fed just ended QE in March and has raised interest rates all of .75%. Good job Jpow. 

image.png.4212add51a0e5c559ac1ff1f80afee7f.png

Add in the global energy fuckery and its not terribly surprising. There's no magic elixir for fuel prices. At some point, prices will get so high that demand will fall off, but I dont think we're there yet. 

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gmr548

gmr548 16,580

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15% increase in listed rents. The bold is important. That’s asking rents for newly available units.

Most renewals are not brought all the way to market, even by big corporate/REIT landlords. Many are not even close. And most people renew.

In the 5’s may be a slight undercount but that’s almost certainly closer to the across the board reality than 15%.

Owner equivalent rent is just a stupid stat. Most people have no idea.
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Cheeseweasel

Cheeseweasel 26,438

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Inflation is going to turn to recession quickly:

 

The latest Rasmussen Reports national telephone and online survey finds that 57% of American Adults say the rising price of gasoline has affected their vacation plans for this summer. 

https://www.rasmussenreports.com/public_content/business/gas_oil/high_gas_prices_change_vacation_plans

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Wulaw Horn

Wulaw Horn 19,077

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22 hours ago, FirstTimeCaller said:

Looked up U.S. oil production a day or two ago. I thought it was going to have fallen off a cliff the way that people talk and the way that prices have jumped. Peak was around 13 million barrels a day. Now it's at 11.6 and rising.

 

image.png.13358755a460d5cdbdba7f01e1b8589f.png

Dude that looks like a cliff to me bro. Completely vertical descent pretty much from one day to the next of 30%. 

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