About those fuel prices…

[dogofwar]

Reducing the number of cars that use gas in 2035 is not having a significant impact on the prices of oil and gas in the short term. If anything, there's evidence that higher gas prices are resulting in more people purchasing higher mileage, hybrid and electric vehicles. By choice.

Won't disagree that national debt is an issue. But not one that's impacting short-term oil or gas prices the way that you describe. Would we have more refining capacity today if corporations had spent the $2 Trillion that we added to our debt by lowering tax cuts in 2017 on new refineries instead of stock buy backs? Maybe - but those businesses chose differently.

Would gas prices be lower if we didn't add to our debt through pandemic stimulus bills passed under the past two presidents? Maybe but for similar reasons that gas prices were lower a couple of years ago: We'd likely be in a deep (and global) recession and/or lockdown (like China) with severely reduced demand for oil and gas.

That our economy is basically open, people are largely driving and living like before the pandemic has created a surge in demand.... but that the pandemic and war are disrupting our global supply chains is affecting supply.

 

[skjl47]

You're welcome to believe what you want. Here's a fact check on the pipeline claim from the Associated Press (https://apnews.com/article/fact-checking-895299166310):

CLAIM: The Keystone XL pipeline cancellation caused the current high gas prices.

AP’S ASSESSMENT: False. The Keystone XL crude oil pipeline wasn’t yet operational when it was canceled in 2021, and wasn’t expected to be running until 2023. Rather, experts say gas prices are high due to other factors such as the global spike in the cost of crude oil and increased demand after pandemic lockdowns ended.

THE FACTS: Social media users are pointing to <The President's> decision to cancel the Keystone XL pipeline in January 2021 as a major reason for high gas prices in the U.S. in recent weeks. Gas prices have reached record highs since Russia’s invasion of Ukraine.

A meme posted on Facebook last week, which now has over 20,000 shares, reads: “Facts: If they didn’t shut down our pipelines we wouldn’t be paying $7 for gas.”

“So the guy who closed the Keystone pipeline on Day one, wants us to believe it’s Russia’s fault for the gas crisis,” says another Facebook post.

This persistent narrative has been spreading on social media since the early days of Russia’s invasion of Ukraine, along with false claims that all other U.S. oil pipelines have also been shut down. That is not the case. Experts tell The Associated Press that the Keystone XL pipeline cancellation isn’t affecting what’s happening in the oil market today. It was never operational when it was shut down, and was not slated to go into service until 2023, according to a press release from TC Energy, the company constructing the project.

“Problem with the Keystone: It’s like saying a highway that was built but never completed is somehow making your commute to work way longer. You never got to ride on that highway. It was never opened. It was never relied on,” said Patrick De Haan, head of petroleum analysis for GasBuddy.com, referring to the Keystone XL pipeline.

The Keystone XL pipeline was intended to be an expansion of the existing Keystone pipeline, which runs about 2,687 miles from Alberta to Illinois and Texas, and is operating. The pipeline extension was designed to carry up to 830,000 barrels of oil a day from Canada and North Dakota to refineries along the Gulf Coast. Biden revoked the permit to continue construction in January 2021, shortly after he took office.

The U.S. is still receiving oil from Canada through other means, like railways and other operational oil pipelines running in the U.S in addition to the original Keystone pipeline, said Ramanan Krishnamoorti, a professor and the chief energy officer at the University of Houston.

Even if the Keystone XL pipeline had been completed, the amount of oil it was designed to transport would have been a drop in the bucket for U.S. demand, experts noted. The U.S. used nearly 20 million barrels of oil a day last year, while global consumption of oil was near 100 million barrels. The pipeline would have contributed less than 1% to the world supply of oil, according to AP reporting.

Hello; Interesting way to twist the Keystone pipeline incident. Of course an unfinished section of the pipeline would not affect physical oil supply until completed. The point has been and continues to be the message (warning) sent to oil companies and investors. Put another way is how such a move affects the "futures" portion of the stock market. Lots of times some event takes place which will not have a direct physical impact for some time but the traders on the stock market react that very same day. Such works both ways. When the pipeline was still under construction the "futures market" had "factored in" the increased supply of crude into refineries.
I see you dismiss the thousands of jobs lost and loss of capitol already invested in the pipeline with the stroke of than pen. The companies involved surely did not miss that part, nor did the workers.

Since we are discussing fairy tale like scenarios, here is another one to consider. There is an idea floating around to make the oil companies pay more in taxes because as bad citizens they are making a profit currently. Part of a "pay their fair share" plan being proposed perhaps. Likely a windfall profit tax of some sort. Here is my take. Any time corporate taxes are increased the corporations pass their increased expenses onto the consumers. It will be a pass thru sort of tax which will wind up being paid by the rest of us.
Now if your company sells tropical fish stuff you may not be able to pass on the increase and stay in business. People likely will just stop buying as much for a non-essential hobby. However, if you sell an essential product such as fuel the story is different. I am retired and have already cut back on some travel. Some folks are not in such a position. A fellow I know has a situation. He lives and works in Middlesboro KY and his wife works in Knoxville TN around 60 miles away. The wife had been making the commute each working day. They have bought a new home in north Knoxville. He plans to reduce his work days each week. He can do such because he is an owner in the hardware store in which he works.
Think of a tax increase on oil related companies sort of like a "sin" tax on tobacco. People still buy tobacco because they are physically addicted and cannot easily quit. I know about this as I was a smoker. Quitting was among the hardest things ever done. We are not addicted to oil in the same way but we have fashioned our society around the use of oil. Something many simply cannnot give up.
(Side note - if the electric grid was up to the extra demand an all EV fleet would need such would be fine. The grid can barely keep up with current demand some days. )
I know of several people personally who live 30 or more miles from their work place. They do not have the option to stay home a few days a week. I do think it is a fault ridden idea to have such a commute. I did so a few times so know from experience. 54 miles one way, 108 total each day, for a school year. Too much can go wrong. My guess is some cannot demand increased pay to cover the increase cost of fuel. They also are likely to not be able to afford to buy a $60K EV. An EV they may not be able to charge up during power blackouts or brownouts.
To restate my point. I contend an increased tax on oil companies/refineries will be passed on to us consumers. Is that idea mistaken? Bet you can find some one to quote saying it is.

 

[dogofwar]

Again, believe what you want.

And if you believe the Associated Press was twisting the facts, how about Reuters (https://www.reuters.com/article/fac...nding-it-was-only-8-constructed-idUSL1N2LA2SQ) or PolitiFact (https://www.politifact.com/factchec...ences-group-falsely-blames-bidens-nixing-key/) or lots of other non-partisan, credible sources?

Hello; Interesting way to twist the Keystone pipeline incident. Of course an unfinished section of the pipeline would not affect physical oil supply until completed. The point has been and continues to be the message (warning) sent to oil companies and investors. Put another way is how such a move affects the "futures" portion of the stock market. Lots of times some event takes place which will not have a direct physical impact for some time but the traders on the stock market react that very same day. Such works both ways. When the pipeline was still under construction the "futures market" had "factored in" the increased supply of crude into refineries.
I see you dismiss the thousands of jobs lost and loss of capitol already invested in the pipeline with the stroke of than pen. The companies involved surely did not miss that part, nor did the workers.

Since we are discussing fairy tale like scenarios, here is another one to consider. There is an idea floating around to make the oil companies pay more in taxes because as bad citizens they are making a profit currently. Part of a "pay their fair share" plan being proposed perhaps. Likely a windfall profit tax of some sort. Here is my take. Any time corporate taxes are increased the corporations pass their increased expenses onto the consumers. It will be a pass thru sort of tax which will wind up being paid by the rest of us.
Now if your company sells tropical fish stuff you may not be able to pass on the increase and stay in business. People likely will just stop buying as much for a non-essential hobby. However, if you sell an essential product such as fuel the story is different. I am retired and have already cut back on some travel. Some folks are not in such a position. A fellow I know has a situation. He lives and works in Middlesboro KY and his wife works in Knoxville TN around 60 miles away. The wife had been making the commute each working day. They have bought a new home in north Knoxville. He plans to reduce his work days each week. He can do such because he is an owner in the hardware store in which he works.
Think of a tax increase on oil related companies sort of like a "sin" tax on tobacco. People still buy tobacco because they are physically addicted and cannot easily quit. I know about this as I was a smoker. Quitting was among the hardest things ever done. We are not addicted to oil in the same way but we have fashioned our society around the use of oil. Something many simply cannnot give up.
(Side note - if the electric grid was up to the extra demand an all EV fleet would need such would be fine. The grid can barely keep up with current demand some days. )
I know of several people personally who live 30 or more miles from their work place. They do not have the option to stay home a few days a week. I do think it is a fault ridden idea to have such a commute. I did so a few times so know from experience. 54 miles one way, 108 total each day, for a school year. Too much can go wrong. My guess is some cannot demand increased pay to cover the increase cost of fuel. They also are likely to not be able to afford to buy a $60K EV. An EV they may not be able to charge up during power blackouts or brownouts.
To restate my point. I contend an increased tax on oil companies/refineries will be passed on to us consumers. Is that idea mistaken? Bet you can find some one to quote saying it is.

 

[skjl47]

Again, believe what you want.

And if you believe the Associated Press was twisting the facts, how about Reuters (https://www.reuters.com/article/fac...nding-it-was-only-8-constructed-idUSL1N2LA2SQ) or PolitiFact (https://www.politifact.com/factchec...ences-group-falsely-blames-bidens-nixing-key/) or lots of other non-partisan, credible sources?

Hello; Went thru the "shut up and do not question your betters" tactic back during the covid lockdowns. I will look over the links later to see how the information is laid out. Several ways to focus on the pipeline situation. The more popular has been to say something such as the pipeline was not finished so could not affect supply and demand. True enough if everything worked on concrete facts only.
The pipeline was a signal about policy. A brutal signal for those directly involved to be sure. Such is the point i make about the pipeline in particular. That the Executive order was done on day one with lots of fanfare and publicity was in itself proof enough that it was a policy signal. I understood that part immediately.

I ask the question again.

To restate my point. I contend an increased tax on oil companies/refineries will be passed on to us consumers. Is that idea mistaken?

Just as an exercise why not tell us in your own words without posting talking points. I have made statements and contentions you appear to disagree with. I have done so without links. Go ahead tell me.

 

[skjl47]

Hello; Another example of how policy can affect things, in this case oil prices. Several countries decided to stop buying oil from Russia. While not a big supplier the market is tight enough for this to make a difference. Oil prices for those who made such a decision have gone up. That decision was a policy decision. Even if the sentiment behind the policy decision to ban Russian oil is considered proper, the result is higher energy prices. Other countries made a policy decision to use Russian oil and are getting it at some discount.

Another point to be made is that Russian oil is being traded in rubles. Saw a chart this morning about how the ruble has risen in value. My sincere hope is this does not lead to a move away from petro-dollars in the oil trade. If the US dollar stops being the fiat currency I and many others are in trouble.

 

[dogofwar]

Posting well-sourced, non-partisan fact checked information from reliable sources like the AP and Reuters is quite different than "talking points" but believe what you will. I'm certainly not going to change them.

Hello; Went thru the "shut up and do not question your betters" tactic back during the covid lockdowns. I will look over the links later to see how the information is laid out. Several ways to focus on the pipeline situation. The more popular has been to say something such as the pipeline was not finished so could not affect supply and demand. True enough if everything worked on concrete facts only.
The pipeline was a signal about policy. A brutal signal for those directly involved to be sure. Such is the point i make about the pipeline in particular. That the Executive order was done on day one with lots of fanfare and publicity was in itself proof enough that it was a policy signal. I understood that part immediately.

I ask the question again.

Just as an exercise why not tell us in your own words without posting talking points. I have made statements and contentions you appear to disagree with. I have done so without links. Go ahead tell me.

Hello; Went thru the "shut up and do not question your betters" tactic back during the covid lockdowns. I will look over the links later to see how the information is laid out. Several ways to focus on the pipeline situation. The more popular has been to say something such as the pipeline was not finished so could not affect supply and demand. True enough if everything worked on concrete facts only.
The pipeline was a signal about policy. A brutal signal for those directly involved to be sure. Such is the point i make about the pipeline in particular. That the Executive order was done on day one with lots of fanfare and publicity was in itself proof enough that it was a policy signal. I understood that part immediately.

I ask the question again.

Just as an exercise why not tell us in your own words without posting talking points. I have made statements and contentions you appear to disagree with. I have done so without links. Go ahead tell me.

 

[dogofwar]

If you believe that the Wall Street Journal (news part, not the opinion part) aren't talking points aren't "talking points," here's a good explanation for why the ruble - for now - is strong:

Russia’s Economy Is Tanking but the Ruble Soared. Here’s Why. (https://www.wsj.com/articles/russias-economy-is-tankingbut-the-ruble-is-soaring-11653559916)

Normally, currencies follow economies up or down. In Russia’s case, government efforts that limited selling and forced buying pushed it higher, so high in fact that it has started to weigh on the economy.

“I wouldn’t have anticipated this,” said Jane Foley, head of foreign-exchange strategy at Rabobank. “But when you put in the capital controls, you’re not looking at something real.”

Russia has been taking steps to weaken the currency and the latest move might have ended the rally. On Thursday, Russia’s central bank lowered interest rates to 11% from 14%, making holding rubles less attractive. That sent the ruble falling 6.7% against the dollar.

Earlier this week, Russia eased a capital control that required companies to change 80% of their foreign-currency revenues to rubles. Now they only have to change half.

In other words, Russia is screwed.

Hello; Another example of how policy can affect things, in this case oil prices. Several countries decided to stop buying oil from Russia. While not a big supplier the market is tight enough for this to make a difference. Oil prices for those who made such a decision have gone up. That decision was a policy decision. Even if the sentiment behind the policy decision to ban Russian oil is considered proper, the result is higher energy prices. Other countries made a policy decision to use Russian oil and are getting it at some discount.

Another point to be made is that Russian oil is being traded in rubles. Saw a chart this morning about how the ruble has risen in value. My sincere hope is this does not lead to a move away from petro-dollars in the oil trade. If the US dollar stops being the fiat currency I and many others are in trouble.

 

[PhishMon84]

Why are gas prices high? "A rare combination of economic and geopolitical forces now manifest themselves at the gas pump. The economy’s rapid recovery from the pandemic created more demand for gasoline, pushing prices higher. Then, the invasion of Ukraine led to a global backlash against Russia, which produces more oil than all but two other countries. So prices went higher again." (https://www.washingtonpost.com/business/interactive/2022/why-gas-prices-so-high/)

Reality is that CORPORATIONS and OPEC could expand production. But they'd lose money if they did.

Reality is also that this is a GLOBAL issue and oil and gas prices are based on GLOBAL MARKETS. So assigning blame to any country's particular political leadership is nonsense. As is the idea that recent, past decisions to build or not build pipelines to export more oil... or to open more drilling now or in the recent past would somehow affect supply in the global market enough to affect things significantly.

So what can governments do to lower prices? Ease taxes on gas (you know the ones that pay for our road repairs), increase supply from the petroleum reserve and pressure oil producers like OPEC and Venezuela to increase production.

What can we do? Drive less. Drive a higher efficiency or electric vehicle.

Filled up my 50-ish mpg Prius for $4.99 per gallon the other day.

This is the most sensible and well thought out description of what we are experiencing

 

[PhishMon84]

The US dollar has been remarkably strong of late:

The U.S. Dollar Index, which pits the dollar against a basket of six global currencies, is hovering around 20-year highs. Since the beginning of the year, the dollar index has gained 8%; and in the last 12 months, it has risen 14%. The dollar index hit a two-decade high above 105 earlier this month and is currently trading less than 3% below those peaks. The dollar has performed even more spectacularly against single currencies: Against the Japanese yen, the dollar has appreciated more than 13% this year alone and gained 36.30% in 14-months against the sterling pound.

https://oilprice.com/Energy/Energy-General/Oil-Prices-Rally-Despite-Strong-Dollar.html (5/29/22)

And the broader US economy is actually quite strong with strong job and wage growth, including gaining a record 6.4 million jobs in 2021, and very low unemployment.

The issue is inflation. So why has inflation grown?

The biggest driver of the cost of gas is the price of crude oil, which has been going up since October and is hovering around $120 a barrel, up from $70 a year ago. Russia’s war in Ukraine led the US and Europe to sanction Moscow, including its crude oil, which made up about 12 percent of the global market. (Before the war, the US got less than 4 percent of its oil from Russia, but those sanctions have affected oil markets globally by making it more expensive for others to access that oil.)

Demand for oil has also bounced back from the depths of the pandemic faster than oil production.

A second major driver of rising prices is the costs of refining crude oil. These costs are also going up: Refineries have shut down in the past few years, outpacing the new refineries being built. And while capacity has increased per refinery, most US refineries are already working at nearly full capacity. In short, demand for more refined oil has approached pre-pandemic levels, but refinery capacity hasn’t kept up.

The final two factors are how much it costs to get gas to your corner retail station and taxes. These are pretty marginal: Although some states have suspended their gas taxes, which pay for road improvement and highways, they make up a relatively small amount of the price.

So what role does the President play?

One thing you’ll notice missing: the president. President Joe Biden’s drilling policies have nothing to do with gas prices.

This hasn’t stopped <some disingenuous> politicians and commentators from pointing to canceled leases in the Gulf of Mexico and Biden’s climate policies as a primary culprit for rising prices. But energy analysts are quick to point out this is not how oil markets work. The White House “can do symbolic things that don’t really lower prices, and they can do really dumb things that are counterproductive,” Bob McNally, an energy analyst at Rapidan Energy Group who served in the George W. Bush administration, told the Washington Post.

Oil supply doesn’t work as simply as turning on a faucet, and the president doesn’t even control the tap. “In the US right now, the constraints are within the industry itself, and have very little to do with any policies from the federal government,” said Sam Ori, executive director of the Energy Policy Institute at the University of Chicago.

Instead, oil companies have been “very reluctant to plow any of that revenue into capital investment for new wells,” Ori added.

What gas prices do — and don’t — tell us about the economy

Gas prices are high. But this isn’t the 1970s.

www.vox.com

So could proposed policies slated for enactment in 2030 or 2035 influence those in the fossil fuel industry not to make these investments? Sure. But it has nothing to do with the present high gas prices.

Another breath of fresh air... indicating a thoughtful and informed voter!

 

[LBDave]

November