Inflation

[TPS]

Your article stated that gas prices are the highest they've ever been "for this time of year." The articles I posted stated that bets by investors are the highest ever for this time of year, do you think it's just a coincidence?

 

I guarantee you that HFs and other investors will bail from these bets very soon because the combination of higher prices and payroll tax is causing the economy to slow, so oil and gas inventories will rise, and this "mini bubble" will pop, all while the Fed continues to pump more liquidity into the system.

While I expected this little bubble to burst, it looks like someone yelled fire in the middle of Wall Street...

http://www.bloomberg.com/news/2013-04-17/oil-falls-fourth-time-in-five-days-on-inventories-outlook.html

 

[TakeYouToTasker]

While I expected this little bubble to burst, it looks like someone yelled fire in the middle of Wall Street...

http://www.bloomberg...es-outlook.html

Oil, and other energy markets don't respond to inflation and economic downturns the same way other commodities do.

 

Energy prices are driven by anticipated consumption (the better the global economic outlook, especially in developing nations where the demand curve is spiking, the higher the demand, and therefore the prices, of oil and energy will be. When India, China, and Brazil experience strong and sharp economic growth, their energy consuption drives the market. When speculators forsee a sharp global downturn or stagnation on the horizon, they become bearish on oil and energy, and markets for the good become depressed.

[TPS]

 

Oil, and other energy markets don't respond to inflation and economic downturns the same way other commodities do.

 

Energy prices are driven by anticipated consumption (the better the global economic outlook, especially in developing nations where the demand curve is spiking, the higher the demand, and therefore the prices, of oil and energy will be. When India, China, and Brazil experience strong and sharp economic growth, their energy consuption drives the market. When speculators forsee a sharp global downturn or stagnation on the horizon, they become bearish on oil and energy, and markets for the good become depressed.

Hmmm...what happened to your story about the Fed pumping all this money into the economy leading to a 36% rise in commodity prices since 2008? I wonder what that % rate is now....

 

[TakeYouToTasker]

Hmmm...what happened to your story about the Fed pumping all this money into the economy leading to a 36% rise in commodity prices since 2008? I wonder what that % rate is now....

Gee whiz, professor, your argument sure sounds a whole lot better when you distort, strawman, and grossly oversimplify my positions...

[TPS]

 

Gee whiz, professor, your argument sure sounds a whole lot better when you distort, strawman, and grossly oversimplify my positions...

Well, are you going to stick with the story about how Fed "money printing" will eventually lead to inflation, eventually? Or, are you going to finally understand that inflation only happens when consumers actually have more income to spend relative to supply capacity? In other words, the Austrian world view is wrong.

[TakeYouToTasker]

Well, are you going to stick with the story about how Fed "money printing" will eventually lead to inflation, eventually? Or, are you going to finally understand that inflation only happens when consumers actually have more income to spend relative to supply capacity? In other words, the Austrian world view is wrong.

God's honest truth, you are either the smartest dumb guy or the dumbest smart guy I've ever met... but it's definitely one or the other.

 

Either way your reading comprehension is absolute ****...

[Magox]

Let's see here:

 

 

Ample crude supplies, boosted by increased U.S. production, has been met with a pull back in demand for gasoline, now at a 16-year low. The Energy Information Administration said demand for motor fuel fell 1.1 percent to 8.3 million barrels a day during teh eek ending April 12.

 

 

"From the bear standpoint, everything seems to be dovetailing," said Gene McGillian of Tradition Energy. "You have worries that the U.S. economic recovery is really stalling and starting to head lower, and we're having more oil output showing up."

 

The drop in demand pressured oil, as has several reports on declining demand recently, including from the International Energy Agency last week.

 

The EIA also said oil stockpiles last week dropped by 1.2 million barrels, slightly higher than expectations. Supplies of other refined products—diesel and jet fuel—increased by 2.4 million barrels. Analysts had expected gasoline inventories to fall by 600,000 barrels.

"We're still importing over seven million barrels a day," Lipow said. "Our oil production is going up. That's a good thing. Demand continues to grow in Asia, South America, and Africa. We see stagnant demand in the U.S. and declining demand in Europe."

 

Huh, 16 year low for gasoline demand. And TPS says that the economy has been picking up steam.... Boy were you off.

 

 

 

Refinery utiliiziation fell by 0.5 percent to 86.3 percent. But Lipow points out that refining operating has grown. "Refining operating capacity is at the highest level ever reported by the EIA," he said. "In the past week, we processed 15.1 million barrels a day." That compares to 14.4 million barrels last year, and 14 million barrels a day at this time two years ago.

The higher gasoline production has helped gasoline prices fall, a relief to consumers who are also pressured by higher taxes and worries about an economic soft patch. Gasoline prices have been falling on a national basis—at $3.51 per gallon nationally Wednesday, from $3.68 a month ago, according to AAA.

 

 

I seem to remember telling TPS that those refinery shutdowns that he was crowing about earlier were quite normal, of course he disagreed, and of course he was wrong. Here we are at the "highest level ever reported by the EIA" for refining capacity.

 

 

http://www.cnbc.com/id/100650912

 

Just like I've made the point, the equation for inflation is both monetary and about real demand. Right now, China is not growing as fast as many economists had hoped, and that is leading to a huge temporary sell off in commodities, and despite TPS' woefully inaccurate claim that the economy is "picking up steam", we are seeing a slowdown here domestically as well.

 

Oil and commodities will find a bottom some time here soon, unless of course the global and domestic economy continues to weaken.

 

Having said all that, in regards to metals, we've seen similar shake outs like this. Usually the pattern of the metals markets is to make a huge spike every two years, the following years it corrects and forms a baseline, only to take off again for a new push. Will that happen moving forward? I don't know, I haven't kept up with it nearly the way I use to, so I really couldn't say.

I

[TPS]

I also said this from a post at the beginning of the year, after your claims that inflation was significant because the price of gas was 4 cents higher than the same time lasts year: "I guarantee you that HFs and other investors will bail from these bets very soon because the combination of higher prices and payroll tax is causing the economy to slow, so oil and gas inventories will rise, and this "mini bubble" will pop, all while the Fed continues to pump more liquidity into the system."

 

And I qualified my growth remarks at the beginning of the year that the payroll tax and spending cuts would cause the first half to be slow, but the second half is where we'll see growth take off. Don't be so selective .

[Magox]

I also said this from a post at the beginning of the year, after your claims that inflation was significant because the price of gas was 4 cents higher than the same time lasts year: "I guarantee you that HFs and other investors will bail from these bets very soon because the combination of higher prices and payroll tax is causing the economy to slow, so oil and gas inventories will rise, and this "mini bubble" will pop, all while the Fed continues to pump more liquidity into the system."

 

And I qualified my growth remarks at the beginning of the year that the payroll tax and spending cuts would cause the first half to be slow, but the second half is where we'll see growth take off. Don't be so selective .

 

I was commenting to your most recent observation. Which was that the economy from your view was "picking up steam".

 

Also, You said that there were big problems with refinery utilization rates, I told you it wasn't anything that what we typically see every year or two, you disagreed. Now we see that refinery utilization rates are at or near record highs, which pretty much negates everything you said about that particular topic.

 

In regards to the second half of the year. I don't know, we'll see.

[TPS]

 

 

I was commenting to your most recent observation. Which was that the economy from your view was "picking up steam".

 

Also, You said that there were big problems with refinery utilization rates, I told you it wasn't anything that what we typically see every year or two, you disagreed. Now we see that refinery utilization rates are at or near record highs, which pretty much negates everything you said about that particular topic.

 

In regards to the second half of the year. I don't know, we'll see.

Yes, I said the economy was picking up steam in 2012Q4, and the payroll tax increase combined with higher gas prices would slow it down, as it is doing. I said that oil and gas prices were moving up at that time because traders also saw this, and were making their bets. When we were arguing about the gas price article you posted, I concluded with the quote I re-posted, which was dead on.

Regarding refinery rates, I said refineries have closed, and that was one of the issues behind higher gas prices. I believe lybob posted a link to this as well. So your misrepresentation of what i said negates everything you've ever said...

[Magox]

Yes, I said the economy was picking up steam in 2012Q4, and the payroll tax increase combined with higher gas prices would slow it down, as it is doing. I said that oil and gas prices were moving up at that time because traders also saw this, and were making their bets. When we were arguing about the gas price article you posted, I concluded with the quote I re-posted, which was dead on.

Regarding refinery rates, I said refineries have closed, and that was one of the issues behind higher gas prices. I believe lybob posted a link to this as well. So your misrepresentation of what i said negates everything you've ever said...

 

This is what we call revisionist history. I specifically remember telling you that the closures that you and Lybob were citing was nothing unusual. You both disagreed. That's what happened.

[TPS]

 

 

This is what we call revisionist history. I specifically remember telling you that the closures that you and Lybob were citing was nothing unusual. You both disagreed. That's what happened.

Do a little research on what happened several months ago. We said that refineries were actually closing down for good, not seasonal closings. The big change in refining is that the most competitive refiners are the ones that re-tooled to refine the cheaper heavy crude that's coming from shale oil out west. The east coast refineries that closed used the more expensive light sweet Brent and Dubai and were losing money. There is new capacity coming online to refine this heavy crude. The shale oil boom was one of my reasons for arguing that the economy was finally recovering, at least until it was hit by the austerity measures of payroll tax increase and sequester cuts. Edited April 19, 2013 by TPS

[3rdnlng]

Do a little research on what happened several months ago. We said that refineries were actually closing down for good, not seasonal closings. The big change in refining is that the most competitive refiners are the ones that re-tooled to refine the cheaper heavy crude that's coming from shale oil out west. The east coast refineries that closed used the more expensive light sweet Brent and Dubai and were losing money. There is new capacity coming online to refine this heavy crude. The shale oil boom was one of my reasons for arguing that the economy was finally recovering, at least until it was hit by the austerity measures of payroll tax increase and sequester cuts.

 

Payroll tax increase? I thought they just rolled it back like Obama rolled back some of the Bush tax cuts.