Posted on 06/19/2022 6:25:04 AM PDT by ChicagoConservative27
LOL!
BTW,
Assignment #2 is to figure out the leases CX by dementia joe and the type of oil that is.
“How can the refineries be running at 100% today when 2 years ago they were producing surplus fuel but now we are seeing shortages in everything from gas to jet fuel?”
The forces shutdown caused a deep demand destruction scenario. Those refinery that were running close to break even margins were suddenly negative when the demand collapsed. Consequently those refineries were shut down and most were town down never to be used again being sold for metal scrap. The USA lost a million bbl per day of capacity that is never going to come back. The change structural either demand drops and price follows that demand or demand keeps increasing and so does prices that’s econ 1301. More oil is not the answer and won’t be the answer again this is a refined product bottleneck not a supply problem. We will need to import those million bbl per day we could from Russia if the neocon morons had not committed suicide with their boner for Putin bad. Enjoy the suck there is no easy fix drill baby drill won’t help if you just stack the oil up in tanks next to the refinery. Qatar,Saudi or the UAE could build out more refineries and ship the products via tanker but that will take at least 5 years to build out a million bbl per day capacity at a 20 billion or more capital cost. High fuel is here to stay it’s a demand vs supply issue and it’s structural. The only reason fuel as so.cheap in 2020 is demand was suppressed by the lockdowns now that demand is back and we lost so much capacity only demand destruction will put a ceiling on price again that’s freshmen level economics.
“Makes sense. On 1 Nov 2020, right before the election, I paid $1.42/gal for regular at a Costco south of Houston.”
November 2020 was in the lockdowns you cannot compare forced demand destruction to open market spending. I really wish people would understand that forced demand destruction was the only reason fuel prices crashed to under $2 a gallon. It’s not that hard to understand you had the majority of the country forced to stay home,not commute to work, not go out to eat, not take road trips nor were the manufacturers running sucking up diesel to deliver products nor services. It’s not comparable please stop doesn’t help the cause. What is a fair comparison is November 2019 or December before the lockdowns and the forced demand destruction base your comparison on valid economic demand and activity. The refinery bottleneck is the problem now and it’s not a quick or easy fix those million bbl per day is not coming back soon or really ever the capacity we have is what we got and the market will equilibrium based on that new capacity. Demand has just stated to roll over so $4.50 to $5 is where the new market equilibrium is at. Ethanol can be made for $2.50 or less a gallon it sets a fundamental limit on the top end of prices I just filled up with E85 at $3.20 a gallon a nearly two bucks less a gallon than 93 octane. It’s inflated because the market will pay it. I saw people who didn’t have flex fuel vehicles pumping it regardless. My truck and sports car both can run on E85 and have been for months now. While no new refinery has been built since the 1970s E85 grows in capacity every year and it allows crazy levels of turbo boost well above what 9E octane.
Locjdowns didn’t happen till 4/2020 yet prices at the pump were < half what they are now.
Corn in June 2021 was $5.50-—today corn is $8.00.
I suspect the price of E85 is going to be more than $3.20 as the new crop is converted to ethanol.
OK, FWIW, on November 5th, 2019 I paid $1.52/gal at the same Costco.
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