U.S. crude oil price tops $80 a barrel, the highest since 2014(cnbc.com)
cnbc.com
U.S. crude oil price tops $80 a barrel, the highest since 2014
https://www.cnbc.com/2021/10/08/us-crude-oil-price-tops-80-a-barrel-the-highest-since-2014.html
78 comments
Yes but this doesn’t adjust for inflation so while it is a benchmark it is still cheaper than it was in 2014.
In real dollars we are currently at about the same price today as we had in late October 2014. The price was falling rapidly that month so the benchmark is the same in real or nominal dollars.
2014 was terrible. A tank of gas could double an old car's value.
Time to go electric!
Our cars are 1961, 1963, 1969, 1996, 2006. Electrifying them would be a notable project.
Presumably you would start with replacing the one with the duty cycle that best fits electric range and charging capability. But you know your situation best, of course.
Shame there aren't 10-15 year old electric cars on the used market. Maybe in another 10 years there will be reasonable used electric options.
Shame there aren't 10-15 year old electric cars on the used market. Maybe in another 10 years there will be reasonable used electric options.
> Presumably you would start with replacing the one with the duty cycle that best fits electric range and charging capability.
We've considered it but the joy in driving these things is largely due to their ICUs.
You're probably right about waiting for used electrics. Need to see what the repercussions are of EoL battery packs.
We've considered it but the joy in driving these things is largely due to their ICUs.
You're probably right about waiting for used electrics. Need to see what the repercussions are of EoL battery packs.
I bought a 2017 Bolt and am eagerly awaiting a brand new battery pack with extended warranty.
Also, I forgot to say in my initial comment, I'm sorry you had to move so far from where you'd clearly rather be. That sucks. :(
Also, I forgot to say in my initial comment, I'm sorry you had to move so far from where you'd clearly rather be. That sucks. :(
Occasionally some people (understandably) suggest that we should outlaw gas-powered vehicles. It sounds like you really love cars so I've always wondered: What's your take on that?
Do you see it as an attack on your passion? Do you see it as inevitable? Do you see it as something you might protest against? As something you're willing to do if the government were to compensate you for it?
I ask because I see how passionate some car enthusiasts get about much smaller things like manual vs. automatic transmissions. I imagine mandated electric vehicles might bother such people.
Do you see it as an attack on your passion? Do you see it as inevitable? Do you see it as something you might protest against? As something you're willing to do if the government were to compensate you for it?
I ask because I see how passionate some car enthusiasts get about much smaller things like manual vs. automatic transmissions. I imagine mandated electric vehicles might bother such people.
Wow. Do you daily drive the ‘60s vehicles? That’s an impressively old vehicle if it’s driven regularly. Still cool even if it’s just a collectible.
Yes to the 69. Son put on a 4bbl intake and it practically idles at 90 - scoots to 120 w/ room to spare.
The 63 has a 6cyl and it'll be on the road next month. He'll sell the 69 right after.
I pulled the 61 off the road for a few weeks while I find a slip yoke. Trans is kind of an oddball.
The 63 has a 6cyl and it'll be on the road next month. He'll sell the 69 right after.
I pulled the 61 off the road for a few weeks while I find a slip yoke. Trans is kind of an oddball.
Presumably you don't park all of these cars at your residence. If so, I can imagine that factors into your difficulty in finding rentals.
Difficulty is entirely due to scarcity of housing.
Our last place only held 3 cars so the others were garaged at a friend's. New place has room. We beat lottery-like odds to get it (& offered 6 mos up front).
Our last place only held 3 cars so the others were garaged at a friend's. New place has room. We beat lottery-like odds to get it (& offered 6 mos up front).
Presumably you don't drive 5 cars regularly.
Three to 4 regularly. It'll be 4 to 6 in a year (6 live here because 4+ incomes gets us ahead of min expenses).
often people with older vehicles pride themselves on continuing to use old vehicles as daily drivers but then also keep a 'stable' of backup vehicles because they are each so unreliable. I fell into this trap for a long time myself, until I realized one reliable vehicle is better than 3 or 4 unreliable ones, even if it's more expensive for one than the other 4 put together.
> often people with older vehicles pride themselves on continuing to use old vehicles as daily drivers but then also keep a 'stable' of backup vehicles because they are each so unreliable.
You aren't wrong which is why I drive the 1996 Toyota. Got it w/ 40k and it's been bulletproof.
The 61 is kind of an heirloom. My new sister's family (found via ancestry) were first owners. We're keeping it from dying.
The 69 and 63 are here because reviving them is cathartic for son #3. They are/will be daily drivers.
You aren't wrong which is why I drive the 1996 Toyota. Got it w/ 40k and it's been bulletproof.
The 61 is kind of an heirloom. My new sister's family (found via ancestry) were first owners. We're keeping it from dying.
The 69 and 63 are here because reviving them is cathartic for son #3. They are/will be daily drivers.
Sell them and buy a couple of electric cars?
If I had that much cash, I'd just waste it on land.
Where do you live that has 400 applicants for a rental??
Not OP, but it’s not uncommon for ‘Affordable Housing’ opportunities in NYC to get over 50,000 applicants for, many times, just 100 units in a building in a matter of days.
Father in law just put my ex on a housing waiting list. As a homeless vet, her wait is at least 5 years.
West Central Florida.
Is that like Tampa and Orlando-ish?
Yes. The housing shortage here is unprecedented. It's also unprecedented in the other markets where it's happening.
note: One major reason for employee shortages is that people can no longer afford to live in many job markets.
note: One major reason for employee shortages is that people can no longer afford to live in many job markets.
Lets not forget about OPEC+. They reduced the supply significantly due to the pandemic and haven't increased the oil supply back to the normal levels. Higher oil prices is causing inflation, not the other way around.
Very true.
And, "inflation" means a lot of different things, and almost never the thing that is of real concern: hyperinflation.
Cost push inflation is different from demand pull inflation, but if we are talking about only isolated sectors of the economy increasing in price, like oil, I don't know why we are taking about "inflation" in general.
And, "inflation" means a lot of different things, and almost never the thing that is of real concern: hyperinflation.
Cost push inflation is different from demand pull inflation, but if we are talking about only isolated sectors of the economy increasing in price, like oil, I don't know why we are taking about "inflation" in general.
Energy powers everything so of course it needs to be considered as part of inflation in general.
Everything except organic local produce is either made of oil, need oil during production, or need oil for shipping. Hardly an isolated economic sector.
Edit: Even the organic local produce was probably brought to you on a gas-guzzling truck.
Edit: Even the organic local produce was probably brought to you on a gas-guzzling truck.
This is increasingly untrue, as we diversify our energy sources.
There's also at least three other things that are very different from the 1970s when inflation did seem to be caused by an oil shortage: 1) we have made massive gains in efficiency in the oil that we do use, and 2) we are unlikely to institute price controls, like Nixon did in the 1970s, and 3) we have a massive amount of fracking capacity that will come online if prices stay as high as they are now.
There's also at least three other things that are very different from the 1970s when inflation did seem to be caused by an oil shortage: 1) we have made massive gains in efficiency in the oil that we do use, and 2) we are unlikely to institute price controls, like Nixon did in the 1970s, and 3) we have a massive amount of fracking capacity that will come online if prices stay as high as they are now.
[deleted]
Do we have any substantial change recently? Nothing, just news on the logistic backlogs, which ironically means we consume less fuel on shipping. Well. Speculation never makes sense.
Oil prices are coming out of depression phase that started in around 2015.
I know inflation is on everyone's mind now-a-days, but oil is still very cheap compared to even 10 years go. Prices have a ways to go up just to get back to non-inflation adjusted numbers from 10 years ago. And adjusted for inflation, $80/bbl is about average for the past 20 years.
https://www.macrotrends.net/1369/crude-oil-price-history-cha...
I know inflation is on everyone's mind now-a-days, but oil is still very cheap compared to even 10 years go. Prices have a ways to go up just to get back to non-inflation adjusted numbers from 10 years ago. And adjusted for inflation, $80/bbl is about average for the past 20 years.
https://www.macrotrends.net/1369/crude-oil-price-history-cha...
Multiple trends combining to reach a tipping point, mainly decreased appetite for capital investment by the west, inflation expectations becoming increasingly embedded and pandemic destabilization constraining supply/strengthening opec.
It's hard to see the era of cheap oil making a sudden comeback in this environment so this speculation doesn't seem unreasonable, though may be a tad overeager since winter is coming.
It's hard to see the era of cheap oil making a sudden comeback in this environment so this speculation doesn't seem unreasonable, though may be a tad overeager since winter is coming.
Wasn't the crude oil price negative a year ago?
What happened?
There was a small decrease of light sweet production during the downturn. When the use rebounded, OPEC voted to keep production growth behind use growth. This helps nurture our steadily rising prices and reduce the chance of blowback from suddenly skyrocketing prices.
At the same time Louisiana production took a hurricane hit and that helped reduce supply a bit more.
At the same time Louisiana production took a hurricane hit and that helped reduce supply a bit more.
Crude oil futures were negative for a single day (if my memory serves me correctly) a little over a year ago. The holder of the contract at its expiration has to make arrangements to actually receive it -- you were getting paid to take oil that was very hard to move and very hard to do anything with at the height of the pandemic.
Obviously, the future where nearly all consumption stopped and everybody stayed in their house for the next 3-5 years didn't happen. The opposite did, and the pricing reflects that.
Obviously, the future where nearly all consumption stopped and everybody stayed in their house for the next 3-5 years didn't happen. The opposite did, and the pricing reflects that.
The negative price was caused by all the storage tanks being full. If you've got no storage you can't take delivery so you have to pay someone to take the oil off your hands.
Russia and Saudi Arabia stopped fighting a price war with each other and the COVID demand slump is coming to an end.
Briefly (like, minutes to hours) and for very specific structural reasons. Negative oil prices were never an accurate reflection of the actual supply/demand equilibria for oil.
Commodities trade at the margin, because there are many times more futures contracts than actual deliveries, but the people that actually take delivery and need these commodities to run their operations, will pay whatever price necessary to get them and not stop production. The effect of this is to make the markets extremely volatile.
The last sentence is not true. The whole point of a futures contract is to hedge risk and allow price discovery. It is true the companies consuming commodities will buy at almost any price but more active trading results in a price more closer to fair market value over time. It’s the same reason why prices for rarely sold items fluctuate widely between sales. There’s no activity to visibly show the change in demand or supply in between.
>The last sentence is not true.
Is that so? In theory, derivatives like futures can increase the efficiency of market clearing. Nevertheless, it is apparent that the price of oil is many times more volatile than the price of downstream finished goods using oil.
Is that so? In theory, derivatives like futures can increase the efficiency of market clearing. Nevertheless, it is apparent that the price of oil is many times more volatile than the price of downstream finished goods using oil.
Yes and it's precisely because futures and forward contracts are being used that is possible. If it wasn't then market uncertainty and fluctuations in the economy would be more instantly reflected in prices of the end user products consuming those commodities. With hedging now you can focus on margin and operations which is the whole point of your business, not predicting the global economy.
On the flip side, the rising cost of crude oil means more demand for alternatives (ie, electric) and investment in non-fossil fuel energy sources.
How so? Almost no energy production in the west uses crude. It's nearly all natural gas, coal, nuke, or hydro. You might make the argument that rising fuel prices raise the price of everything else, but you can make that argument about literally everything, renewables included.
I was referring to transportation sector, not the energy production.
IIRC, 70% of crude oil is used in the residential (truck/car) and commercial sectors. There are some other applicable sectors like roads and lubricants but account for a few percentage points.
In the past increases in crude oil would cause increases in sales of high mpg vehicles. I remember when crude was $100 a barrel, the prius was flying off the dealerships.
With newer technologies and alternative fuel sources (electric), we should see similar trends with electric vehicle adoption if the price of crude should continue to climb.
IIRC, 70% of crude oil is used in the residential (truck/car) and commercial sectors. There are some other applicable sectors like roads and lubricants but account for a few percentage points.
In the past increases in crude oil would cause increases in sales of high mpg vehicles. I remember when crude was $100 a barrel, the prius was flying off the dealerships.
With newer technologies and alternative fuel sources (electric), we should see similar trends with electric vehicle adoption if the price of crude should continue to climb.
Have you looked at Hawaii?
So prices are rising rapidly but we're also facing really high inflation everywhere. I'm pretty naive when it comes to the oil boom/bust cycle, but taking in everything where are we now? I'm working in o&g and we're growing fast, I want to know how to maximize my ability to profit off what's going on if I can before inflation slashes any extra money I make.
How long have you been in the industry? I ask because the last bust was not that long ago, like 2016ish.
The artificial inflation rate finally starts to show some leaks now that oil is going up. If the CPI actually included the things that cost the most, it would have been 5% for a decade. Housing, healthcare, university. Easily the triad of debt burden.
Housing, healthcare, and university are all included in the Fed's measurement of inflation.
Housing is based on rent & the FINANCING cost of owning a home. If house prices and rent go up a ton and interest rates go down - it is possible the way they measure housing costs could be negative.
Since non-homeowners are close to 40% of the population and rent is their biggest expense and many of them are trying to buy a home - this metric is pretty obviously broken for them.
University prices don't have a high weight because they only affect the people currently paying for college (~18M US students - some of them are graduate students going to school "for free" = <5.5% of the population).
Housing is based on rent & the FINANCING cost of owning a home. If house prices and rent go up a ton and interest rates go down - it is possible the way they measure housing costs could be negative.
Since non-homeowners are close to 40% of the population and rent is their biggest expense and many of them are trying to buy a home - this metric is pretty obviously broken for them.
University prices don't have a high weight because they only affect the people currently paying for college (~18M US students - some of them are graduate students going to school "for free" = <5.5% of the population).
Until 2019 housing costs was one of the main drivers of inflation. The CPI had something like 3%-4% housing inflation but there are lots of products with barely any inflation which dragged the numbers to 2% or below.
The amount you pay on your mortgage and the amount that the previous homeowner gets are two different numbers because you have to pay interest on your mortgage. Low interest rates don't really change your monthly payment people the bank simply charges less interest which lets you bid for higher prices on homes. You get a more expensive home without paying more on your mortgage.
The amount you pay on your mortgage and the amount that the previous homeowner gets are two different numbers because you have to pay interest on your mortgage. Low interest rates don't really change your monthly payment people the bank simply charges less interest which lets you bid for higher prices on homes. You get a more expensive home without paying more on your mortgage.
You're forgetting that >60% of homeowners don't own their home outright and can refinance at lower rates.
<7% of homeowners have owned their home for <1 year - the rest can refinance to take advantage of lower rates.
<7% of homeowners have owned their home for <1 year - the rest can refinance to take advantage of lower rates.
The age of pervasive global inflation has started. The global supply shock has led to rising prices everywhere. In addition, the lack of incentive to work as a truck driver etc. in some countries due to free checks has led to wage-push inflation and cost-push inflation.
We might soon get a $25 minimum wage which can end up buying just one fast food burger.
https://en.wikipedia.org/wiki/Supply_shock
https://en.wikipedia.org/wiki/Cost-push_inflation
https://www.investopedia.com/terms/w/wage-push-inflation.asp....
We might soon get a $25 minimum wage which can end up buying just one fast food burger.
https://en.wikipedia.org/wiki/Supply_shock
https://en.wikipedia.org/wiki/Cost-push_inflation
https://www.investopedia.com/terms/w/wage-push-inflation.asp....
There are those who disagree:
https://www.ai-cio.com/news/cathie-wood-the-big-risk-is-defl...
For what it's worth, I personally think she's dead wrong, chiefly because she's forgetting that inflation is primarily a monetary phenomenon. In an environment where governments and central banks are strongly biased in favor of printing money, I see the possibility of deflation as extremely small.
https://www.ai-cio.com/news/cathie-wood-the-big-risk-is-defl...
For what it's worth, I personally think she's dead wrong, chiefly because she's forgetting that inflation is primarily a monetary phenomenon. In an environment where governments and central banks are strongly biased in favor of printing money, I see the possibility of deflation as extremely small.
In an environment where governments and central banks are strongly biased in favor of printing money, I see the possibility of deflation as extremely small.
I'm not saying you're necessarily wrong, but keep in mind that the amount of wealth in our economy is much greater than the amount of money; printing cash doesn't necessarily have as big an impact on inflation as one might think, because most value these days is in assets other than cash. You can see this in graphs of e.g. the M2 growth rate vs the inflation rate over time. If the existence of more cash directly caused inflation then those rates would be highly correlated, but instead they are only very loosely correlated and the M2 growth rate has far outstripped inflation in recent decades.
I'm not saying you're necessarily wrong, but keep in mind that the amount of wealth in our economy is much greater than the amount of money; printing cash doesn't necessarily have as big an impact on inflation as one might think, because most value these days is in assets other than cash. You can see this in graphs of e.g. the M2 growth rate vs the inflation rate over time. If the existence of more cash directly caused inflation then those rates would be highly correlated, but instead they are only very loosely correlated and the M2 growth rate has far outstripped inflation in recent decades.
QE is just the central bank buying treasury bonds with central bank reserves. The private bank that sold its treasury bonds must still find a borrower to create money. It's the availability of solvent borrowers that is the primary driver of money creation.
The central bank's mandate nowadays is to keep inflation low. If there is a risk of permanently high inflation they are going to raise interest rates even if that means choking the economy. The reason why they aren't doing it right now is that inflation expectations aren't high enough in the bond market. It's entirely possible that tapering now wouldn't choke but kill the economy.
The central bank's mandate nowadays is to keep inflation low. If there is a risk of permanently high inflation they are going to raise interest rates even if that means choking the economy. The reason why they aren't doing it right now is that inflation expectations aren't high enough in the bond market. It's entirely possible that tapering now wouldn't choke but kill the economy.
Central banks definitely have demonstrated their willingness to print. However, the Fed's mandate also includes managing inflation, meaning they're unlikely to continue the printing if that contributes higher inflation.
> In an environment where governments and central banks are strongly biased in favor of printing money,
This is literally an argument against people arguing that that bias should be reversed out of fear of inflation, so pointing out that deflation is unlikely to be allowed to happen if the people this is arguing against fail to succeed in realigning policy to fit their preferences is...missing the point.
This is literally an argument against people arguing that that bias should be reversed out of fear of inflation, so pointing out that deflation is unlikely to be allowed to happen if the people this is arguing against fail to succeed in realigning policy to fit their preferences is...missing the point.
>inflation is primarily a monetary phenomenon.
Inflation has not been a monetary phenomenon at all ever since most currencies dropped the gold standard. If that was the case we would have had hyper inflation during QE from 2009. Japan also prints money in excess (for the last 20+ years) and they havent had inflation.
The current inflation (as is with most developed countries) is always due to supply/labor.
Inflation has not been a monetary phenomenon at all ever since most currencies dropped the gold standard. If that was the case we would have had hyper inflation during QE from 2009. Japan also prints money in excess (for the last 20+ years) and they havent had inflation.
The current inflation (as is with most developed countries) is always due to supply/labor.
> I see the possibility of deflation as extremely small.
Which is good, deflationary pressure is devastating.
The low prices that occurred during a deflationary phase look appealing after-the-fact. But the cause of those low prices were the fact that nobody could afford anything close to market price for assets. Inflation slowly erodes purchasing power, but deflation completely erases it.
People who've lived through the GFC remember why houses, cars, and stocks where cheap: because your income could go to zero at any time. Even if you had the money now to buy something, that wasn't prudent. The phrase of the era was, "cash is king."
Which is good, deflationary pressure is devastating.
The low prices that occurred during a deflationary phase look appealing after-the-fact. But the cause of those low prices were the fact that nobody could afford anything close to market price for assets. Inflation slowly erodes purchasing power, but deflation completely erases it.
People who've lived through the GFC remember why houses, cars, and stocks where cheap: because your income could go to zero at any time. Even if you had the money now to buy something, that wasn't prudent. The phrase of the era was, "cash is king."
In particular, QE was the Fed printing money to prevent deflation. (After $4 trillion evaporated in 2008, the Fed created $4 trillion through QE.)
> We might soon get a $25 minimum wage which can end up buying just one fast food burger.
But correlation does not equal causation, and that is not at all the case in countries that have higher minimum wages right now. All the theoretical bloviating by uncompromising capitalists doesn't change that. We don't need quasi-slavery to function as a society in 2021. We just have it because we are addicted to it.
https://www.statista.com/statistics/274326/big-mac-index-glo...
But correlation does not equal causation, and that is not at all the case in countries that have higher minimum wages right now. All the theoretical bloviating by uncompromising capitalists doesn't change that. We don't need quasi-slavery to function as a society in 2021. We just have it because we are addicted to it.
https://www.statista.com/statistics/274326/big-mac-index-glo...
Pandemic recoveries are the new norm? HN told me lumber prices proved inflation just a few months back.
2x4 cost me $3.38 last weekend.
2x4 cost me $3.38 last weekend.
Lumber might not be nearly as bad as it was in May but it's still double where it was in October 2019.
Wages haven't gone up, and prices still went up.
In California they have in 2 ways.
They have increased signing bonuses, starting salaries and some places have expanded their pool of applicants by "reducing" minimum requirements:
https://www.pe.com/2021/07/23/more-southern-california-emplo...
https://www.pe.com/2021/07/23/more-southern-california-emplo...
That makes sense if these price rises reflect real shortages of goods and not just more money in the economy.
Essentially, we are seeing cost-push inflation and it's not clear when it will go away given the supply chain problems.
Essentially, we are seeing cost-push inflation and it's not clear when it will go away given the supply chain problems.
Big yawn. Real oil prices were higher continuously from 2005 to 2014 and somehow life continued.
$50/barrel should be the carbon severance tax anyway.
$50/barrel should be the carbon severance tax anyway.
We're (unwillingly) part of the increasing demand. We had to move & our only choice was farther out. We're driving >5x more than we were 6 months ago.
* only choice = 50-400 applicants for each available rental. Most are statistically unlikely to find anything here at all.