Nice post, Nessie.
Iffreeee market energy enterprisesolar panels on my rooftop were affordable, I'd have done that ten years ago. If those solar panels also fueled my plugged-in electric car, I'd be all over that.
Nice post, Nessie.
Iffreeee market energy enterprisesolar panels on my rooftop were affordable, I'd have done that ten years ago. If those solar panels also fueled my plugged-in electric car, I'd be all over that.
I can't tell if you're being really optimistic or pessimistic here.Originally Posted by EyeKhan
But, if I'm reading this correctly, I would argue against the idea that we've suddenly lost the ability to plan for things long-term (and that this is something that humanity/the West used to be good at). If anything, we have more data than ever to build for the long term. But we can also build for the medium-term with much less effort and impact.
The mesopotamians would build inter-generational irrigation systems. Yet those systems took an enormous amount of manpower to literally remake the face of the earth all around them. They also tended to fail in slow-motion.
Our irrigation systems are simpler, easier and lower-impact: we can just build pipes to bring water to farms and work on getting the most from those isolated points of fertilization. Though I realize I may be jumping down a bit of a rabbit hole here.
Don't, I prefer division into discrete, meaningful elements.
#1. I totally love that you've put real thought into this.The aggregate of the development of human society (at least for the top of the pyramid) is an increase in 1) the amount of energy one has at their personal disposal, combined with out-sourcing it to more and more complex devices1 from our own musculature, and perhaps more recently 2) the amount of computational capacity available to the individual, combined with out-sourcing it to more and more complex devices. I think these two could serve as useful starting points for iterating the interests of the species, based on the previous behaviour of the species. An obvious point 3) is the daily caloric intake for each individual, but if 1 and 2 begin failing at a rapid rate, number 3 is soon to follow and the obvious survival angle is also already most likely in dire peril.
1In this sense, a car is more complex than a horse, even though that's obviously not mechanically true.
#2. We've run into a semantic disconnect. By "interests of the species" I'm thinking what our species, if you think of it as an entity in and of itself, is 'interested' in. Survival is all I could come up with, because that's all that life does. So the extent that human society, and how it develops over time, influences the species' ability/ liklihood of continued existance over time defines how much it is in or not in our interests. Looking over your 1, 2 and 3 above:
a. In 1 above you say development in human society = increasing energy availability to what I took as individuals. You separate this energy from food energy via 3, though in your original statement you said that the disproportionate relationship between energy use to food energy produced is a problem. What you do not say is whether you consider increasing energy availability through developing society to be for or against the interests of our species. An argument can be made either way, as making more and more energy available, or using more and more energy to make products and services available, to individuals has its benefits and its costs. Because of where most of our energy currently comes from, the costs are very high - maybe catastrophically so. But energy availability and use isn't by itself a problem, now at least.
b. In 2 you say development in human society = increasing available computational capacity to the individual. I can see the argument for this being an interest of the species, so long as we get around to using it for initiatives to increase the odds our species avoids extinction. However, we also use it for initiatives that don't affect our survival at all (waste it) and use a great deal of it for initiatives that decrease our survival odds. Much more is put toward these uses than the beneficial ones. More is only better if there is a plan to use it wisely.
c. In 3 you say that development in human society = more food available to individuals. Clearly if the entire species is starving, our survival has limited prospects. But does it affect the odds of our survival if the West is well fed and the rest of the world is hungry half the time? If everyone in Africa, Asia and South America starved to death tomorrow, would that matter to Europe? Would our species' odds of survival be affected - better or worse?
A very good question is whether availability of large amounts of energy and computational capacity necessarily increases the survival odds of human civilization. Without these we don't have the threat of nuclear extinction, of radical global climate change, of engineered plague, of gray goo, and so on. Humanity survived quite well for tens of thousands of years without mega-energy use and without any more computational capacity than comes with our brains. Yes it left us vulnerable to mass extinction events --- the Incas may have built the largest empire (at that time) on Earth and acheived a social order that provided more than enough food and material goods to every citizen - all without using the wheel or metallurgy for anything but toys - when Pizarro found them, but they had no ability to re-direct an asteroid that would otherwise wipe out the species. We need lots of energy and lots of computational capacity for that.... It's a good question.
I think you're right. Fossil fuel is easy to find and easy to use, which is why we first started using it and one reason we stick with it even though we know it's causing major problems. The other reason is that money and political power are mutually dependant on each other. Fossil fuels being great big giant sources of money award great big giant amounts of power to those who exploit them. And the exploiters are not about to let speculations about a warming climate force them to give up their money and power. That's why we are where we are today. But with a little engineering and creativity we can get access to all the energy we will ever need - fission to fusion to wind turbine kites to deep moholes to orbital solar all the way up to a full or partial dyson sphere, if our needs get to such a scale. We only burn fossil fuels because our geo-political system is at least in part enslaved to those with strong interest in the status quo.Excuse me? ..... I think we're saying somewhat the same thing through different logic?
I'm wondering if you're referring to the gigantic waste of our economic system or to the exploitation of the weak by the strong (nations) to get access to resources and labor to produce the incredibly wasteful goodies we love so much? Or both?Resources ... their global redistribution is done directly against our long-term interests to a disturbingly high percentage ... for God's sake, if an individual creature handled its energy budget like this, it'd have been selected against ages ago.
You're welcome. I'm simple enough I need things spelled out and I therefore like to extend the courtesy, and assume in my simple way it is needed, whether it really is or not.Yes, this was implicit, but it was nice of you to spell it out.
It isn't optimism. Call it fatalism. If I restrict my thinking to the survival of the species over time I can better roll with the reality that we are:So you're basically willing to bet $Globe on humanity solving its crises to come with just enough warfare? And for the points 1 and 2 above to continue their steady progress after we've ejected enough surplus population? My gods, your optimism puts young Icaros to shame.
a. not going to do anything to address global warming before it's far far too late,
b. that it is probably already too late to avert catastrophe anyway,
c. that humanity as a whole, as a species, is more interested in wastiing our talents, our resources, our potential on material goodies and dominating the 'other' in all his forms than in doing the Big Amazing things we absolutely can do.
It’s the internet. Spell how you want. It's not like he was a god ffs.His name was Asimov
The Rules
Copper- behave toward others to elicit treatment you would like (the manipulative rule)
Gold- treat others how you would like them to treat you (the self regard rule)
Platinum - treat others the way they would like to be treated (the PC rule)
Chaloobi, I haven't had the energy to reply yet and I'm going on a conference trip until next Fri, so my reply will be delayed somewhat!
In the future, the Berlin wall will be a mile high, and made of steel. You too will be made to crawl, to lick children's blood from jackboots. There will be no creativity, only productivity. Instead of love there will be fear and distrust, instead of surrender there will be submission. Contact will be replaced with isolation, and joy with shame. Hope will cease to exist as a concept. The Earth will be covered with steel and concrete. There will be an electronic policeman in every head. Your children will be born in chains, live only to serve, and die in anguish and ignorance.
The universe we observe has precisely the properties we should expect if there is, at bottom, no design, no purpose, no evil, no good, nothing but blind, pitiless indifference.
No problem. Travelling for business.... cool. You're like all important and stuff.
The Rules
Copper- behave toward others to elicit treatment you would like (the manipulative rule)
Gold- treat others how you would like them to treat you (the self regard rule)
Platinum - treat others the way they would like to be treated (the PC rule)
I addressed this in my long reply to Nessus. It's not optimism, more like fatalism while trying to avoid pessimism. We're doing all the wrong things as a species, but at least we're not likely to go extinct, you know? "Alway's look on the brighter side of life...." I don't want to be all downer, so I pick the winner...
The Rules
Copper- behave toward others to elicit treatment you would like (the manipulative rule)
Gold- treat others how you would like them to treat you (the self regard rule)
Platinum - treat others the way they would like to be treated (the PC rule)
Gas prices at the pump rose 0.52 in one month (Sacramento, CA).
It's now over $4.00/gallon in several states.
The US is drilling/producing more than ever, and is a net exporter of *refined fuel*
Some refineries have closed but are still able to keep up with domestic demand.
Speculative trading is estimated (by some sources) to add 20% to the cost of fuel.
I don't think they meant to lump commercial buyers/holders/hedgers in with that definition of "speculators". ie that doesn't include what you do, Decoy.
Commodities Index Funds are relatively new, and means billions of bucks looking for profits (or at least safe haven). That kind of speculative trading can't help but add to prices and throw simple supply-and-demand into a whirling dervish. It also makes prices of food production and transportation so volatile, that it will exacerbate problems in global hunger, hoarding, export bans, and all kinds of other problems.
Social, political, and military problems are much harder...and more costly...to solve than energy problems. So WTF is wrong with us?
Oh yeah, I forgot to add this important tidbit: Vote Gingrich and get $2.50/gallon gasoline!
Last edited by GGT; 03-16-2012 at 05:58 AM. Reason: *
Are you sure the US is a net exporter of crude oil? Because I'm 99% sure that's false.
According to the WSJ (and other sources), we've exported more than we've imported since late 2011.
She's thinking of the reports that the US has recently become a net exporter of fuel. This is mostly because of the refined stuff, and I'm pretty sure we're still a net importer of crude.
Yeah, thanks for noticing my error. *edited previous post
So...we're exporting refined fuel, and consuming less (due to fuel efficient cars and/or consumers deciding to drive less), but the pump prices keep going up. A dime a day, or 50 cents a month. At these rates, the projected $5/gallon by May sounds feasible.
If someone can explain how speculative non-commercial traders aren't part of this....I'm all ears.
Uhm, crude is trading over $100/barrel? People drive more as weather warms? The economy is picking up, leading to higher demand? The big driver, though, is definitely crude prices. ~20% jump since December.
I hate to agree with Cain but there's no conspiracy here (I'm not going to insert his word). Crude has gone up, therefore refined prices have gone up.
It is utterly irrelevant whether or not you guys export refined oil for two reasons. 1: Its a free market, but most importantly 2: Its the price of crude that matters most of all and that's imported.
Speculators are irrelevant. If anything speculators decrease the cost in the long-run. You could outlaw speculators (well you could try) and I would not be surprised if you guys to hit $10/gallon at some stage within a decade.
Because everyone knows that the price of global commodities is based entirely on what happens in the US.
Hope is the denial of reality
Ugh, such an insular view. Where do you think most of the world's oil comes from? Middle east. Where do you think most of the world's political/military problems are? Middle east! Libya has problems with fighting, and oil supply is effectively shut off. Crude prices soar. Japan loses 2 huge nuclear plants, which mean they have to resort to buying up craploads of gas and crude. Prices soar.
Exploration becomes more costly as companies have to resort to harder to drill wells in places like the North Sea. Even if you ignore the socio-economic stuff and the recession, the fact of the matter is that oil and gas is plain getting harder to extract in a lot of places. Oil doesn't just magic up on your shores (Unless you're BP, haha!), companies have to spend BILLIONS to get that stuff out of the ground and processed for your cars etc. It's not as simple as 'Oh, get us some more oil, and make it cheaper, please!'
You complain about speculators raising prices, but they are more likely to balance prices out, and prevent suppliers from just financially raping good ol' Joe American. But here's the thing: You need these companies to make money. You need them to invest into better ways of extracting, processing, supplying. If oil firms go bust, then what? Hamsters on wheels?
How do you expect to run with the wolves at night when you spend all day sparring with the puppies?
- Omar Little
You get the government to take over. It's working great in the workers' paradise of Venezuela.
Hope is the denial of reality
WHAT?
This sounds reasonable. How much money do you think it costs to research, locate, build, drill, pump, process, refine, and ship a barrel of oil, then consider how many barrels of oil each oil producing company creates per day over the course of an entire year, and it could be in the billions...WHAT?
...this is no different than saying people have spent millions of dollars on iPods.
. . .
Absurd, the oil companies just go and stick and pipe in the ground. It should be illegal for them to profit, none of those profits are legitimate.
All true, and I've acknowledged as much. Pump prices always go up just before summer and driving vacations. Not usually a dime a day, or 0.50 a month, though.
We all know crude oil is a global market, with China and India using more and more, while our fuel consumption has gone down. And we know our domestic crude extraction (drill baby drill) ends up on those global markets. The same will be true of Canadian oil sand product piped through the US, on its way to seaports and tankers head to China. Those prices will be determined by "the market", and those are determined by ALL participants. Including the non-holding, non-commercial traders--the speculative day-traders and HFTs--whose profit margins can be hiked by trading more and faster, and creating a different volatility.
But all these things have been true for several years, if not decades! Wars in the middle east, geo-political clashes, transportation routes blocked, OPEC changing output production goals, etc. No one's suggesting oil companies NOT make a profit. They've been able to find ways to maximize production, shut down lower producing rigs/sites, modernize their technology, consider environmental impact, invest in R & D....and STILL make multiple billions and trillions in profits.
I'm not ignoring 'socio-economic stuff and the recession'. But if we're drilling in places like the North Sea, the Arctic, separating oil from sand (!)...while using military ships to patrol sea lanes, if not waging wars based on oil itself...then it's not a stretch to see how speculators can impact the end price. I've never said it's a fricking conspiracybut The Commodities Index Fund and similar "oil-trading financial products" remind me of the synthetic CDOs (MBS and CDS) that pumped the inflating housing bubble, with house-flippers/realtors/mortgage lenders/insurers/re-insurers, tax authorities...and every "investor" becoming a "speculator". That turned out real well, huh.
<I'll remind Rand that refining does matter for pump prices. Look to Alaska as an example of that, where they extract and export crude, but have to import refined gas products at huge costs, including using ice-breaker ships for delivery. That's true for other nations that don't have refineries, and pay premium for tankers of ready-to-pump gasoline.
I just don't get how you think speculators can have a significant long term effect on market prices for oil. Oil futures actually get delivered to you if you don't sell the contract... and if speculators vastly overestimated prices/demand, they would be stuck holding either a large quantity of oil or a large loss. They can't bid up prices for very long without getting burned. Oil is not as simple or as cheap to hold on to as, say, gold or another precious metal. There are costs involved.
Now, that's not to say that in the very short term they can't fleece other investors, but the price actually paid by refining companies is not going to be long affected by speculators unless they can stockpile large amounts of oil (and supply remains inelastic). There's very clear and obvious reasons why the price of oil has gone up that has nothing whatsoever to do with greedy traders and lots to do with political risk and growth expectations. Why overlook the obvious reasons in favor of poorly supported theories?
Paid about $4.20 today. Some of the major refineries on the East Coast are probably going to get shut down, which means we're really beginning to see major regional differences in gas prices in the US. Plenty of energy flowing north-south across the middle of the country, but not much going east-west to the oikophobic coasts.
Ironically, the governor of NY is trying to shut down a nuclear plant in NY that provides something like 10% of electricity to the NY area. I'm sure that will go over well in the summertime.
Glad you finally see the point I've been trying to make about "speculator" types.
A percentage of those trading in oil futures NEVER actually take possession of those contracts. Ever. They only take/make bids, or buy/sell....as non-paticipatory traders, not as participating hedge traders. There is a group whose trades are only on paper (computer) and nothing more. They're constantly selling contracts, even at a loss, because they can NOT actually have tankers of crude oil--or truck loads of corn---delivered to their 'door'. They never take possession of the actual commodity itself. Their clients aren't the oil refineries, gas station owners, farmers, or food manufacturers. They're playing hot-potato with the contract, squeezing out profits from the trading.
The terms "speculator" and "speculation" have been lumped into one big group, when in reality there are different types. It used to be that commodity futures, as trading venues, were limited to qualified participants (members would actually take possession of the commodity, or represented those who would). Those member-exchanges used to be the way "outside" speculators were kept from driving up volatility/costs, or treating trades as a big gambling lottery.
The only analogy I can think of right now are auctions. If you couldn't put the cow in a trailer after you've won the bid, or you weren't bidding on behalf of the guy with the trailer (or farm or slaughterhouse) you couldn't bid at all. You were not allowed to bid/buy the cow from your Cadillac or your phone, only to turn around and hold your own secondary auction to anyone with a trailer, who would actually take possession of the cow...and use it. And you weren't allowed to leave the cow hanging around the auction site, pumping him with anabolic steroids until the next auction, either.
I'm not calling all traders greedy. Just trying to reiterate that all traders aren't the same, and all speculation is not the same. Trading today's money in exchange for real things to be used in the future....is no longer limited to those who will have to take possession of the very thing being traded. Now there are people trading just the paper contracts, the computer algorithms, the volatility, the trades themselves, and the fees/costs that come with every transaction. That group, and that type of trading, does nothing but bid up the prices and add to the costs for everyone else.Now, that's not to say that in the very short term they can't fleece other investors, but the price actually paid by refining companies is not going to be long affected by speculators unless they can stockpile large amounts of oil (and supply remains inelastic). There's very clear and obvious reasons why the price of oil has gone up that has nothing whatsoever to do with greedy traders and lots to do with political risk and growth expectations. Why overlook the obvious reasons in favor of poorly supported theories?
I don't think overlooking a 10-20% added price with no proven value is a very bright idea. Especially if all it boils down to is the mantra that...Wall Street traders are helping Main Street by keeping costs down.
Surprisingly, gas didn't seem to climb to much here over the last week. Paid $4.01 for premium this morning
"In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."
WHAT?!Glad you finally see the point I've been trying to make about "speculator" types.
You completely missed the point! The point is that if you're just trading in oil but never planning on taking delivery, you have to balance your trades. You are stuck selling/buying at a loss if you miss market fundamentals in favor of a speculative bubble. That's why it's different from stocks. In the short term it's certainly possible to monkey with the price and make money, but if you're fighting market fundamentals in the long term, you will lose money. That's why it's unlikely that speculators are driving large price increases in oil or other commodities.
There's speculation that 0presses the k0mm0n man, and speculation that doesn't, right?
Not that I expect you to get it, or anything, but speculation is a bet on the future, period. It's all the same, impact on the k0mm0n man aside. Whether it's speculation on oil prices being higher next month, housing prices being lower next year, or a rookie baseball card being worth a mint in 40 years, it's all the same thing. A bet on the future value of one thing or another - no more, and no less.
"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them."
"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."
-- Thomas Jefferson: American Founding Father, clairvoyant and seditious traitor.
Ah, I thought we were finally talking about the different types of trading and speculation, but apparently not.Commodity futures aren't the same as equity markets, but the participants have changed. The type of "speculators" I mean are the non-commercial players, and the role they play in the price of gas. The increases don't have to be "large", but 10% is enough to screw up a fragile consumer rebound.
The CFTC and energy analysts have been looking into the types of speculation, comparing those fundamentals of supply/demand and bubbles, how it impacts end prices, and writing about it for a while now. There are plenty of web sites (bettermarkets.com is one example) and news sources that explain it better than I've been able to so far:
WASHINGTON — U.S. demand for oil and refined products — including gasoline — is down sharply from last year, so much that United States has actually become a net exporter of gasoline, unable to consume all that it makes.
Yet oil and gasoline prices are surging.
On Tuesday, oil rose past $106 a barrel and gasoline averaged $3.57 a gallon — thanks again in no small part to rampant financial speculation on top of fears of supply disruptions.
The ostensible reason for the climb of crude prices on the New York Mercantile Exchange, where contracts for future delivery of oil are traded, is growing fear of a military confrontation with Iran in the Persian Gulf's Strait of Hormuz, through which 20 percent of the world's oil passes.
Other factors driving up prices include last month's bankruptcy of Petroplus, a big European refiner, and a recent BP refinery fire in Washington state that's temporarily crimped gasoline supply along the West Coast; gas now costs an average of $4.04 a gallon in California.
While tension over Iran has ratcheted up over the last few months, the price of oil and gasoline has leaped far beyond conventional supply and demand variables. Financial speculators are piling into the market, torquing the Iranian fear factor into ever-higher prices.
"Speculation is now part of the DNA of oil prices. You cannot separate the two anymore. There is no demarcation," said Fadel Gheit, a 30-year veteran of energy markets and an analyst at Oppenheimer & Co. "I still remain convinced oil prices are inflated."
Consider that light, sweet crude trading on the NYMEX changed hands at $79.20 a barrel just four months ago, but soared past $106 a barrel Tuesday afternoon, partly on news that Iran would halt shipment of oil to Britain and France. But those countries already had stopped buying Iranian oil. And Didier Houssin, the International Energy Agency's director for energy markets and security, said that "there are alternative supplies that can make up for any loss of Iranian exports," The Wall Street Journal reported.
Still, oil's price shot up because it trades in financial markets, where Wall Street firms and other big financial players dominate the trading of oil, even though they have no intention of ever taking possession of the oil whose contracts they are trading.
Since oil prices are the biggest component in the price of gasoline, pump prices are soaring. AAA said Tuesday that the nationwide average price for a gallon of gasoline stood at $3.57, compared with $3.38 a month ago and $3.17 a year ago. It takes about $6 more to fill up the tank than it did this time last year — and last year's gasoline-price surge helped take the steam out of the economic recovery.
Defining what percentage of today's high oil and gasoline prices is due to excessive speculation, driven by Iran fears, is something of a guessing game.
"I put the Iran security premium at about $8 to $10 (a barrel) at this point, which still puts crude at about $90 or $95," said John Kilduff, a veteran energy analyst at AgainCapital in New York.
The fear premium is the froth above what prices would be absent fears of a supply disruption_ somewhere in the $80 to $85 range for a barrel of crude oil. It means that even with the extra cost put on oil from Iran fears, prices are at least another $10 higher than what demand fundamentals would dictate.
Why? Financial speculators.
What should the price of oil be if left to conventional supply and demand market fundamentals? Canada's the largest supplier of imported oil to the United States, which now actually produces more than half of the oil it consumes. Production and delivery costs for a barrel of oil from Canada are about $75 a barrel. The market-fundamentals cost for a barrel of oil is in that ballpark; above that, speculation sets the prices.
"It's as simple as that," said Gheit, who has testified before Congress and called for regulatory limits on speculation in commodities markets.
Historically, financial speculators accounted for about 30 percent of oil trading in commodity markets, while producers and end users made up about 70 percent. Today it's almost the reverse.
A McClatchy review of the latest Commitment of Traders report from the Commodity Futures Trading Commission, which regulates oil trading, shows that producers and merchants made up just 36 percent of all contracts traded in the week ending Feb. 14.
That same week, open interest, or the total outstanding oil contracts for next-month delivery of 1,000 barrels of oil (about 42,000 gallons), stood near an all-time high above 1.486 million. Speculators who'll never take delivery of oil made up 64 percent of the market.
Not surprisingly, big Wall Street traders on Tuesday projected oil will rise above $112 a barrel; some such as Swiss giant Vitol even suggested $150-a-barrel oil is coming soon. When they dominate the market, as they do, speculators' bids can make their prophecies self-fulfilling.
"These people are not there to be heroes. They are there to make money. It's our fault because we are allowing them to do that," said Gheit. "Obviously these people are very strong, and the financial lobby is the strongest of any single lobby. I've been in this business 30 years, and I can tell you I think this is smoke and mirrors."
What's indisputable is that oil and gasoline are not in short supply, and that demand remains weak. That was crystal clear in the latest weekly energy market update by the U.S. Energy Information Administration_ published last week for the week ending Feb. 10.
"Total products supplied over the last four-week period have averaged 18.3 million barrels per day, down by 4.6 percent compared to the similar period last year. Over the last four weeks, motor gasoline product supplied has averaged nearly 8.1 million barrels per day, down by 6.4 percent from the same period last year," said the EIA, the statistical arm of the Energy Department.
Inventories of stored oil are also unusually high, the EIA said.
"At 339.1 million barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year," the agency said. "Total motor gasoline inventories increased by 0.4 million barrels last week and are in the upper limit of the average range."
Hence, no shortage to explain soaring prices.
In fact, U.S. demand and consumption patterns are so abnormal compared to recent decades that oil and gasoline are both now being exported to Europe, Asia and Latin America.
Exports of U.S. refined product averaged 2.928 million barrels per day over the four weeks ending on Feb. 10, compared to 2.190 million bpd for the four weeks ending Feb. 11, 2011, the EIA said. This category is primarily gasoline, but it includes unfinished oils, fuel additives, ethanol and other blending components.
Similarly, the United States did not export any oil in the four weeks ending Feb. 11, 2011, but in the four-week period ending this Feb. 10, we exported 37,000 barrels.
The export picture suggests that when domestic demand rises, American motorists might be competing with drivers elsewhere for U.S.-made gasoline, which fetches a higher price as an export.
"To the extent that there is this export market that wasn't there before, it is certainly ... keeping prices higher than they otherwise would be," said Kilduff. "Exports were not material. Now they are becoming material."
The White House sought to deflect criticism about rising oil and gasoline prices. Spokesman Jay Carney blamed the prices on "a variety of factors on the global price of oil. They include unrest in certain regions of the world, they include growth in areas like China and India."
Another popular explanation for rising oil prices Tuesday was trader relief that Greece received another bailout payment from Europe. That heightened hopes of a boost in oil demand in Europe as its economy recovers, given that a crisis has been avoided for now.
That explanation doesn't add up.
Last year, when oil and gasoline prices rose and slowed the U.S. economy, the surging prices were explained away by traders who said that oil and other commodities moved inverse to slumping stock prices. Today, oil prices and stock prices seem to be moving in tandem — upward — contradicting last year's justification.
East Coast refiners have seen their profit margins squeezed because they import Brent crude oil from Europe, which has traded at least $10 above crude coming out of the U.S. Gulf region.
Consolidation in the refining sector is another new wrinkle weighing on the oil and gasoline markets. The EIA, in a separate publication called This Week in Petroleum, warned last week that refinery closures in the U.S. Northeast and in some Caribbean countries could crimp supplies along the U.S. East Coast. Refinery closures and strained distribution could drive up gasoline prices on the East Coast until industry players make necessary infrastructure adjustments.
"On paper, refining capacity in the more competitive Gulf Coast and Midwest hubs appears more than adequate to make up for lost East Coast refining capacity. But the Colonial pipeline, which connects Gulf Coast refineries to the Central Atlantic, is already running near capacity levels, so bringing incremental Gulf Coast product volumes to East Coast markets could be a challenge," the EIA said.
(Lesley Clark of the Washington Bureau contributed.)Read more here: http://www.sacbee.com/2012/02/21/428...#storylink=cpy
The reason the East Coast imports from Europe is because of the Jones Act, which stipulates that any cargo traveling between two US ports must be shipped by a US-flagged, US-registered ship manned by US unionized longshoremen.East Coast refiners have seen their profit margins squeezed because they import Brent crude oil from Europe, which has traded at least $10 above crude coming out of the U.S. Gulf region.
Thanks, unions!
How is that legal?
Hasn't been challenged at a place like the WTO as far as I know.
I also forgot to mention it requires cargo carried between US ports to also be carried exclusively by ships built in the US.
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