A Run on Gas

Hi WIP

That's likely your understanding because you don't know how to read charts, apparently. The most drastic measures to fight Covid came in the early spring of 2020. The price of crude dropped to, well at one point, about $20/bbl. However, we're still here and the world continued to operate, but with much different attitudes. Yes, from that very bottom low of early spring 2020, oil began to climb back up. That's what your chart shows and that's what actually happened. But make no mistake, it was due to the Covid reaction that oil collapsed to a price of $20/bbl in 2020.

So when you say it was climbing, yes, from it's collapsed price of about $20/bbl, oil slowly began to climb out of the hole as we adjusted to Covid restrictions. Finally, near the beginning of 2022 things all over the world began to get back to some form of 'normalcy'. However, as stated earlier, during that time of major collapse of oil prices, several oil companies shut down wells and refineries and many have not been brought back. According to a Reuters news article dated May 2022, world fuel demand (that's refined oil products) is back to pre-pandemic levels. However, refinery capacity has dropped 5.4%. So, you figure it out. If we were using x bbls/day before the pandemic and today we are using x bbls/day, but we aren't any longer producing x bbls/day, what's going to happen to the price?

Anyway, you obviously want to blame something else for the high oil prices and that's perfectly ok with me. We will see oil prices fall at some point. More than likely the OPEC+ nations will increase production and it is already being seen that American refineries and oil production is beginning to climb, so this will settle the price of gasoline somewhere around the $2.50-$3.00/gal. price. That's about what gasoline sells for in normal times. But that may yet take 6-12 months.

God bless,
Ted

daninthelionsden said:

You hit the nail on the head. Our youngest son said he will not marry nor will he be giving us grandkids as he can't see bringing kids into this insanity that our governments have wrought upon us.

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Hi daninthelionsden

That attitude of your son's is nothing new. I've heard that for about the last 30 years from various segments of our society. I taught my son a better way. Know Jesus and teach your children to know Jesus and then even when the end does come, and it will, all will be well with them.

God bless,
Ted

miamited said:

Hi daninthelionsden

That attitude of your son's is nothing new. I've heard that for about the last 30 years from various segments of our society. I taught my son a better way. Know Jesus and teach your children to know Jesus and then even when the end does come, and it will, all will be well with them.

God bless,
Ted

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I do believe, the closer the walk with our Lord, the easier it is/will be to tolerate oppression. Our situation is presently full of active oppression. A young person, often, hasn't the spiritual maturity to effectively deal with injustice being blatantly shoved in their face. While it is easy to play armchair Christianity with hypotheticals, it is quite another to live in actual tribulation while taking a real life crash course in forgiveness during this. Please pray for him.

daninthelionsden said:

I do believe, the closer the walk with our Lord, the easier it is/will be to tolerate oppression. Our situation is presently full of active oppression. A young person, often, hasn't the spiritual maturity to effectively deal with injustice being blatantly shoved in their face. While it is easy to play armchair Christianity with hypotheticals, it is quite another to live in actual tribulation while taking a real life crash course in forgiveness during this. Please pray for him.

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Hi daninthelionsden

Yes, well there has always been a certain amount of 'oppression' against God's people. You may not recall, but in the days of Nero, christians were disembowed on pikes and set ablaze to be used as walk lights. You may also not recall that there was a time during the middle ages when many christians were burned at the stake as heretics because they wouldn't submit to the authority of the Catholic organization. In Fez Morocco the muslims at one time carried out a cleansing and it is claimed that the blood was running in the streets to the point that the muslims dipped their caps in it and that is why the caps are red to this day in some middle eastern based organizations. Believers didn't stop having children through any of those times.

It will, of course, get worse. Jesus speaks of a day coming in which there will be tribulation like unto the world has never seen before or ever will again. But that's just what's going to happen. It really isn't any reason for a loving parent not to have children.

Absolutely! Talking about it is easier than living it, but talking about it is how many find answers. Your son, if you raised him to know and understand the truth, should not be afraid of having children because of what he fears may happen to them. Trust me, none of those parents of those 18 precious children murdered at Robb elementary would have had those children had they known the future of what was going to happen to them. But they did, and their hearts will hurt for a time, but it isn't the end of the world and I just don't think its a particularly healthy attitude to live in fear of having children because one is afraid of what they may face. There will be people living upon the earth as the day of the Lord's return draws near and, as they Scriptures tell us, they will be eating and drinking and giving in marriage and living fairly normal lives until that day comes.

God's word promises that if we ourselves believe, and teach our children to believe, that it will be well with us.

God bless,
Ted

miamited said:

Hi WIP

That's likely your understanding because you don't know how to read charts, apparently. The most drastic measures to fight Covid came in the early spring of 2020. The price of crude dropped to, well at one point, about $20/bbl. However, we're still here and the world continued to operate, but with much different attitudes. Yes, from that very bottom low of early spring 2020, oil began to climb back up. That's what your chart shows and that's what actually happened. But make no mistake, it was due to the Covid reaction that oil collapsed to a price of $20/bbl in 2020.

So when you say it was climbing, yes, from it's collapsed price of about $20/bbl, oil slowly began to climb out of the hole as we adjusted to Covid restrictions. Finally, near the beginning of 2022 things all over the world began to get back to some form of 'normalcy'. However, as stated earlier, during that time of major collapse of oil prices, several oil companies shut down wells and refineries and many have not been brought back. According to a Reuters news article dated May 2022, world fuel demand (that's refined oil products) is back to pre-pandemic levels. However, refinery capacity has dropped 5.4%. So, you figure it out. If we were using x bbls/day before the pandemic and today we are using x bbls/day, but we aren't any longer producing x bbls/day, what's going to happen to the price?

Anyway, you obviously want to blame something else for the high oil prices and that's perfectly ok with me. We will see oil prices fall at some point. More than likely the OPEC+ nations will increase production and it is already being seen that American refineries and oil production is beginning to climb, so this will settle the price of gasoline somewhere around the $2.50-$3.00/gal. price. That's about what gasoline sells for in normal times. But that may yet take 6-12 months.

God bless,
Ted

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Maybe I don't know how to read a chart but if you recall those stay-at-home orders and business lockdowns remained in effect for months, not just days.

That drop in price you spoke of lasted only about 3 days. From April 20 to April 23 when it jumped right back up to where it was and then never stopped climbing after that until its peak in March 2022. Within the next 12 months, by March 2021, the price tripled and by October of that same year the price quadrupled from the April 20 price of $20.00 per barrel and five months later (March 2022) it has quintupled to $120.00. That is not a slow climb. Imagine if your homeowner's taxes increased that rapidly.

daninthelionsden said:

This is a little over my head, but do oil futures affect the present price of oil? I just heard dock workers in America are prepared to go on strike. This will affect thirty docks across the country. Sure looks like we're looking at significant shortages in everything, including oil, if this happens.

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I don't know too much about futures. My understanding is they are a projected value where involved parties can contract to buy or sell products. For example, I don't expect to harvest my wheat crop until late July or early August. Right now the value price of wheat is about $10.35 per bushel. Most years will see a decline in wheat values during the harvest due to the influx of new grains. I might look at wheat futures and see a trend either up or down and today decide to contract to sell my wheat at a particular price hoping to either take advantage of higher prices or cut some of my losses if the values drop more than expected.

I know some neighbors that started contracting their crops shortly after the Russia-Ukraine situation to lock in some higher speculative futures prices that were coming out then. Since they didn't actually have their seeds in the ground yet, they were gambling that they will be able to fulfill that obligation. If they don't there are contracted penalties involved.

WIP said:

Maybe I don't know how to read a chart but if you recall those stay-at-home orders and business lockdowns remained in effect for months, not just days.

That drop in price you spoke of lasted only about 3 days. From April 20 to April 23 when it jumped right back up to where it was and then never stopped climbing after that until its peak in March 2022. Within the next 12 months, by March 2021, the price tripled and by October of that same year the price quadrupled from the April 20 price of $20.00 per barrel and five months later (March 2022) it has quintupled to $120.00. That is not a slow climb. Imagine if your homeowner's taxes increased that rapidly.

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HI WIP

So, you do see that there was a significant drop in price in April of 2020. Now, would you care to guess why the price then started to climb? Well, I'll be good enough to tell you. When crude oil dropped to $20/bbl, that's when the refineries started closing down and many wells were taken off line. Because the oil producers took those immediate steps, rather than continuing to just lose money every day, then the price began to climb back up out of the hole. But it took quite a while for pricing to get to a comfortable level again. Yes, the most severe price drop only lasted a few days, but after those few days, crude didn't immediately jump back to $65/bbl.

Trust me, or not, it's all supply and demand. When supply overwhelmed demand and the price of crude plummeted, the oil producers took steps to shut down some of the supply which, guess what? immediately increases demand to some extent. But now you have a half dozen refineries and several dozen wells shut down and that causes the price for what remains to bounce back: https://www.texastribune.org/2020/0...ing-wells-coronavirus-dispute-plummet-prices/

So again, it's basic supply and demand economics, as it generally always is. You seem to be looking at that chart and saying to yourself, "Well, prices plummeted for 3 days and then everything was back peachy keen again. That isn't what the chart shows. And the reason the price began to slowly recover was that the oil producers took a lot of product out of the market. Those same refineries, now that we're fairly recovered, are, for the most part, not back on line to this day. So now we've got the other side of the economic reality. Too much demand and not enough supply. It's really pretty basic economics 101.

God bless,
Ted

Hi Again WIP

One of the problems with your chart, is that it covers too wide a range of years. For example, while it looks like prices jumped back right away, the truth is that it didn't. Crude was trading between $50-$60/bbl prior to the pandemic's effects. If you reduce your chart to look at only the last 5 years, you will see that it took nearly 9 months for crude to recover to the price it was trading before the pandemic. Now, slow is certainly a relative term, but it wasn't nearly as immediate as your chart looks to you that it did. You just aren't able to see how long it is in months when you're looking at a chart that covers 24 years!!!

God bless,
Ted

miamited said:

So, you do see that there was a significant drop in price in April of 2020. Now, would you care to guess why the price then started to climb? Well, I'll be good enough to tell you. When crude oil dropped to $20/bbl, that's when the refineries started closing down and many wells were taken off line. Because the oil producers took those immediate steps, rather than continuing to just lose money every day, then the price began to climb back up out of the hole. But it took quite a while for pricing to get to a comfortable level again. Yes, the most severe price drop only lasted a few days, but after those few days, crude didn't immediately jump back to $65/bbl.

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Crude is the supply the refineries use to produce the end product. When crude prices fell, the refineries were in a position to make tons of profit. Shutting down the refineries would not raise the price of crude, it would have the opposite effect. If the refineries are not refining the oil into useable products, the oil becomes worth less. Supply and demand.

miamited said:

Hi Again WIP

One of the problems with your chart, is that it covers too wide a range of years. For example, while it looks like prices jumped back right away, the truth is that it didn't. Crude was trading between $50-$60/bbl prior to the pandemic's effects. If you reduce your chart to look at only the last 5 years, you will see that it took nearly 9 months for crude to recover to the price it was trading before the pandemic. Now, slow is certainly a relative term, but it wasn't nearly as immediate as your chart looks to you that it did. You just aren't able to see how long it is in months when you're looking at a chart that covers 24 years!!!

God bless,
Ted

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Here's the 5Y snap shot. You can see that the price of crude was relatively stable until 2020. I have to confess I stand corrected. Upon further review I see the drop began toward the end of January in 2020 and then the bottom fell out and it dropped to below zero in April. In other words, they couldn't give oil away. This would be an example of what would happen if refineries cut production and the demand for crude dropped off completely. I do not know if that is actually what happened but that's what the chart suggests could have happened. Crude oil became worthless for a couple days. Then, it jumped right back up again, and continued to climb even though the world was in lockdowns, travel bans, and stay-at-home orders.

Here's something interesting. As I've noted earlier, the one thing that I can find to explain the rising prices of refined fuel is inflation. Here's a chart showing the inflation rates since 2010. Notice how it mirrors the crude oil price chart.

Hi WIP

You really don't understand economics, do you? When crude prices fell the oil producers could only make 'tons of profit' if there were customers willing to buy their product. The whole reason that crude prices fell is because there weren't any customers to buy their product. I don't know where you've been for the last two years, but I've been living right here on planet earth in the United States. I drove through Atlanta about 4:30 in the afternoon, a time when the freeways are generally jam packed with bumper to bumper traffic, there was hardly anyone out there. Traffic was flowing like in some kind of make believe dream world. You could do 70mph on the 285 beltway all day long. So no! Oil producers could not make a 'ton of profit' when oil prices fell because there weren't any customers out there to pay them their 'ton of profit'.

I flew to Oakland CA from Greenville SC shortly after the start of the pandemic. It was actually Easter weekend of 2020. I flew out of GSP airport and there were 7, THAT'S RIGHT SEVEN PASSENGERS ON A 300 SEAT PLANE. I then transferred planes in Baltimore and there were 18, THAT'S RIGHT EIGHTEEN PASSENGERS ON A 300 SEAT PLANE!!!!! I flew from Baltimore to Oakland CA in pretty much my own private jet. When walking through the terminals, it was like a ghost town. All of the little food shops were closed!!! CLOSED!!!!! In the Baltimore airport there was one food place open. That's right ONE!!!!! So, where were all these people that were going to pay the oil producers their 'ton of money'?

In fact, the exact opposite of what you believe is what actually happened. Oil prices cratered because there was no one out there to buy their oil. Oil producers not only couldn't make 'tons of profit' but were forced to close down a lot of their production BECAUSE THERE WAS NO ONE OUT THERE TO BUY THEIR PRODUCT~!!!!!!!!!

God bless,
Ted

Hi agaain WIP

So, in your mind oil trading at $60/bbl in January of 2020 'jumped' right back even though it wasn't until spring of 2021 before it got back to $60/bbl. It must be fun living in your head. Things that take nearly a year to occur happen immediately in there.

God bless,
Ted

WIP said:

Crude is the supply the refineries use to produce the end product. When crude prices fell, the refineries were in a position to make tons of profit. Shutting down the refineries would not raise the price of crude, it would have the opposite effect. If the refineries are not refining the oil into useable products, the oil becomes worth less. Supply and demand.

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One other point. If the refineries have in fact cut production, especially if it no longer meets demand, then we should be seeing shortages around the country.

miamited said:

You really don't understand economics, do you? When crude prices fell the oil producers could only make 'tons of profit' if there were customers willing to buy their product. The whole reason that crude prices fell is because there weren't any customers to buy their product. I don't know where you've been for the last two years, but I've been living right here on planet earth in the United States. I drove through Atlanta about 4:30 in the afternoon, a time when the freeways are generally jam packed with bumper to bumper traffic, there was hardly anyone out there. Traffic was flowing like in some kind of make believe dream world. You could do 70mph on the 285 beltway all day long. So no! Oil producers could not make a 'ton of profit' when oil prices fell because there weren't any customers out there to pay them their 'ton of profit'.

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Then the demand for the oil should be low and that would drive prices down, not up.

I don't think I need to continue this discussion when you are not going to be respectful. Have a good day.

Hi again WIP

Now that you're looking at a more accurate picture with a more detailed chart, you can also see that your claim that it was only 3 days that oil cratered to $20/bbl isn't correct either. If you look closely at your chart, oil hit $25/bbl sometime about early spring and didn't recover to that $25/bbl price for a month. I repeat. You aren't particularly savvy at reading charts. Now, when that price of oil dropped into negative territory, how much fuel do you think the refineries were selling to all those people that were going to make them a 'ton of profit'?

God bless,
Ted

WIP said:

Then the demand for the oil should be low and that would drive prices down, not up.

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Really!!!?? You think? Isn't that what this entire discussion has been about? The price of gas was dirt cheap 2 years ago and now that we've recovered it's gone up and over because production hasn't kept pace with the new demand. I'm glad that you've now got it.

God bless,
Ted

daninthelionsden said:

Are any of you experiencing limits on gas purchases where you live? We went to top off our tanks solely to stay ahead of coming price hikes and ran into panic buying of gas and $50 limits per customer here in Houston.

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Nothing like that here Dan.
But it sure is expensive.
I think it's, like, $8.00/gallon.
The cars get good mileage, but still...
It doesn't seem to stop anyone though.
The traffic is the same as its always been.

miamited said:

Really!!!?? You think? Isn't that what this entire discussion has been about? The price of gas was dirt cheap 2 years ago and now that we've recovered it's gone up and over because production hasn't kept pace with the new demand. I'm glad that you've now got it.

God bless,
Ted

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Production hasn't kept up with the new demand?
What new demand?

Here people are buying electric cars and methane gas?? cars.

Is oil being used for things it wasn't used for a year or two ago?
Here they say it's due to the war with Ukraine and Russia.
Honestly, I've become ultra ignorant and really can't stand much more of this talk.
I mean, the food shortage to come, gas prices, humanity getting in the way of nature,
robotics, etc etc.