Until your capital is exhausted, bled dry, and you cannot pay bills or employees, investors flee, and your negative revenues drive you under. 2019-2020 killed a lot of small oil producers, and including a lot of shale as I understand it. People don't work or invest for no returns or negative returns very long.
Inflation is here
- Thread starter Racecarfan2
- Start date
- Status
There are different indexes. CORE inflation will exclude it because crop failures and disease from year to year will impact prices. The CPI has a variety of which food and even energy are included.
https://www.bls.gov/cpi/factsheets/common-misconceptions-about-cpi.htm
It should work like that but it seems not to. I boubht shares of APA in the $3 range when full on panic was going in the oil market. They are an exploratory oil company. They still went up to the $4s and i sold. Its $19.95 today. They kept working at big losses and recovered. The losses for many oil producers are inevitable, lease and loan payments that you cannot get out of unless you become fully insolvent.
If you are Russia or Saudi Arabia for example you are producing around 3 million barrels a day. That is still $75 million a day of revenue at $25 even if your losing money on paper. They won't shut it down because getting something is better than nothing.
Think it's bad now? Better hope the USD is never removed as the world's reserve currency & replaced with the renminbi, yuan, or even the euro-we would be risking Weimar Republic conditions.
Weimar was a completely different situation. Their industrial capacity had been decimated by war, they were forced to make huge payments for WW1 and there was a run on their gold reserves. The major economies are not on any sort of gold standard. In addition all US debt is denominated in USD so the US Treasury could pay off all bondholders tomorrow if it wanted.
Just wait until consumers start going into defensive spending mode and that may be already in progress.
timeline for the defensive spending will commence on September 4,2021, thats when the party is over
Fuel is basically a global commodity and the US government doesn't do anything to control it. It does have regulations which cost money to comply with but fuel prices basically track along with the price of a barrel of oil unless you have some local refinery problem. For real problems, you should look at countries that subsidize the cost of fuel, that's when they run out when their economy is in shambles and there's a black market for fuel as it's being sold for below market prices.
Even when the US was energy independent, I think maybe around WWII and maybe a little beyond, it was still the global price of fuel. Remember, it was the US that cut off oil sales to Japan as the US was a major exporter of oil at the time.
Well total sales are down but sale prices are up.
That’s why lots of adults in their late 20’s are still living at home with parent. Very difficult to buy a house when prices are crazy.
My brother gave his son a substantial cash wedding gift and he put down payment on a house. Without that gift he would probably live in a rental apartment for the next 10 years.
Last edited:
Two of the biggest problems right now in the US
1. The death of expertise - people with little education believe they can Google **** and rationalize complex technical issues.
2. Demonization of our institutions - the belief that all institutions everywhere are always sinister, they have "rigged" everything, and they are not only in it for the money but they are actively and knowingly destroying your life to do so.
Reality - Collectively, our experts get much more right than they get wrong and while some institutions are bad, most are fine/good, and every one of them will from time to time make mistakes which is not justification for why they are all bad.
Last edited:
Can you explain?
Can you explain?
It's been explained multiple times. The US doesn't offer any subsidies for gas sales unlike some other countries. Energy independence doesn't mean anything if you don't control the internal price of fuel, it just floats with the world market.
If others are willing to pump oil out of their ground for less than it costs us to pump ours, let them pump it all out.
When they are out, and need oil, they will buy ours.
If cheap energy is available now, it makes no sense to spend more for something now instead of later.
When they are out, and need oil, they will buy ours.
If cheap energy is available now, it makes no sense to spend more for something now instead of later.
Hermann
Site Donor 2023
According to my former employer and employees, all people are buying is sale items at the grocery store. Went into several stores last Friday with the S.O. even on Friday it was rather quiet in the stores. One of those was WalMart. People may be beginning to wake up to this FOMO.
Don’t hold your breath waiting for them to run out.
You don’t get the energy market. When it comes to energy the US is not in a great position at the bargaining table.
ETA: OPEC has more and it’s cheaper for them to produce.
There is no bargaining table, the US isn't part of OPEC. We beg Saudi Arabia once in a while to pump more oil so it will lower the prices at the pump. But just to reiterate, oil is a global commodity, the refineries are free to buy it from whoever offers them the best price. So are refined products, sometimes excess gasoline is bought from Europe because they prefer diesel over there to gasoline. Delta tried to control the price of aviation gas by buying their own refinery, some years that worked, other years it didn't. They may have just done other airlines a favor by keeping the price of aviation gas low in general instead of having their own cheap supply.
So in 2008 when the housing market crashed and gas was $4.50 a gallon, global oil consumption was at an all time high whereas in 2019 when the US was the worlds largest crude exporter and gas was say $2.50, world usage was at an all time low?
I understand crude being global to a degree, but one can’t help but wonder if it’s pumped, refined, and distributed here that it would be cheaper at the pump than if it was done elsewhere.
- Status
