Can’t Win For Losing
So, Money magazine tells us thatOil jumps $4 on Fed, supplies:
NEW YORK (CNNMoney.com) — Oil prices set a new record high Wednesday, jumping over $4 on an expected interest rate cut from the Federal Reserve and dwindling supplies in the United States.
U.S. light crude for December delivery jumped $4.15 to settle at a new record of $94.53 a barrel on the New York Mercantile Exchange, topping Monday’s record close of $93.80 a barrel. Prices rose as high as $94.74 in intraday trade, surpassing crude’s all-time record trading high of $93.80 a barrel, also set Monday.
…
Earlier this morning, the Energy Information Administration said crude stocks fell by 3.9 million barrels last week. Analysts were looking for a gain of 100,000 barrels, according to a Dow Jones poll.
The drop in crude stocks came at the same time that refiners scaled back operations, running at just over 86 percent capacity.
Distillates, used to make heating oil and diesel fuel, rose by 800,000 barrels, while gasoline supplies increased by 1.3 million barrels. Analysts were looking for a 1 million barrel drop in distillate supplies and a 400,000 barrel gain in gasoline stockpiles.
So, the “analysts” were off on the crude stock by 4 million barrels, off on distillates by 1.8 million barrels, but only off by .9 million barrels on gasoline.
Perhaps the fact that refiners are only running at 86% and therefore don’t need the crude explains that drop, and the the increases in distillates and gasoline may explain why the refineries are scaling back, but remember the price of gas is high because the evil environmentalists won’t let the oil companies build the new refineries…that they apparently don’t seem to need.
So, while your credit card and mortgage rates will drop [yeah, right, like that is going to happen] you are going to be paying more for energy of all kinds, and everything imported will cost more as the value of the dollar drops. And people wonder why consumer confidence is in the sewer, having already left the in-house plumbing behind.
8 comments
…I never did apply myself properly to all those required economics classes in college. I blame that for being the reason I can’t come up with any useful understanding of why the drop in the prime would affect the price of crude…
An interest rate cut means it’s cheaper to borrow money which theoretically increases inflation and causes prices to rise. Cetera paribus and all that.
Why do I get the feeling it’s 1927 instead of 2007?
The price of gasoline jumped up this week, supposedly in response to an increase in the price of oil, but the report says that the stock of gasoline actually rose 1.3 million barrels. The “law” of supply and demand says that this should cause the price of gasoline to fall, but oil and the corporations that deal in it don’t obey any laws. In addition the price is for oil delivered in December, so there is no change for the oil that has been delivered for refining today, but it is an excuse to raise prices.
Notice how everything is an excuse to raise prices.
While trying to deal with the mortgage crisis, the Fed is screwing up everything else. Send out the auditors and clean up this mess.
Instead of the Resolution Trust that was set up to clean up the S&L mess, Congress should create the Financial Inquisition with the power to use “enhanced interrogation” techniques on the officers and boards of the mortgage lenders. The guilty should be hung from gallows outside their corporate offices as an object lesson to others – real penalties for real crimes with millions of victims.
Again in a fit of prescience, I wrote appropriate doggerel back in September 2004, when oil first peaked over $50 a barrel. That fact and $2.67 (or thereabouts) will get me a gallon of regular unleaded in my neighborhood… I can’t run my car on doggerel.
That’s 12¢/gallon cheaper than here, today. The price has jumped a dime in the last week.
It is still too cheap all things considered but here in Georgia it hit $2.909 yesterday. I imagine by the weekend it will be over three bucks. It was $2.699 on Monday. Another few bucks a gallon and we might see some investment in alternative transportation and some serious research into alternative energy sources.
Actually, most of the “research” needed has been done and we have moved from science to engineering. They production costs need to come down, put that will only happen when the volume of production increases.
A lot of experiments need to be conducted to find the missing pieces, but we already know which pieces are missing and that’s the hard part.