Capitalism, The Fed and Economic Policy

tempo_n_groove said:

Cropduster-80 said:

tempo_n_groove said:

Cropduster-80 said:

tempo_n_groove said:

Cropduster-80 said:

static111 said:

mickeyrat said:

https://apnews.com/article/russia-ukraine-inflation-health-germany-elections-d873521f8b165774de3902439dd5a6ee

 

Russia-Ukraine war Inflation Elections COVID-19 Global trade Economy Prices Vienna National elections OPEC Government and politics

OPEC+ makes big oil cut to boost prices; pump costs may rise

By DAVID McHUGH

Today

FRANKFURT, Germany (AP) — The OPEC+ alliance of oil-exporting countries decided Wednesday to sharply cut production to support sagging oil prices, a move that could deal the struggling global economy another blow and raise politically sensitive pump prices for U.S. drivers just ahead of key national elections.

Energy ministers cut production by a larger-than-expected 2 million barrels per day starting in November after gathering for their first face-to-face meeting at the Vienna headquarters of the OPEC oil cartel since the start of the COVID-19 pandemic.

The group said the decision was based on the “uncertainty that surrounds the global economic and oil market outlooks.” Saudi Energy Minister Abdulaziz bin Salman stressed the group’s stated role as a guardian of stable energy markets.

“We are here to stay as a moderating force, to bring about stability,” he told reporters.

Oil is trading well below its summer peaks because of fears that major global economies such as the U.S. or Europe will sink into recession due to high inflation, rising interest rates and energy uncertainty over Russia's war in Ukraine. The OPEC+ decision could help member Russia weather a looming European ban on most of Moscow’s oil, but its impact will have some limitations because countries in the alliance already can’t meet their quotas.

---

RUSSIA-UKRAINE WAR

Live Updates: Russia-Ukraine War

Putin signs annexation of Ukrainian regions as losses mount

Experts: Russia finding new ways to spread propaganda videos

Ukraine nuclear workers recount abuse, threats from Russians

U.S. President Joe Biden considered the OPEC+ decision “short-sighted while the global economy is dealing with the continued negative impact of (Russian President Vladimir) Putin’s invasion of Ukraine,” White House press secretary Karine Jean-Pierre told reporters aboard Air Force One.

“It’s clear that OPEC+ is aligning with Russia with today’s announcement,” she said.

Bin Salman rejected questions referencing the reaction in Washington or implying that OPEC was assisting Russia, saying the discussion was in a nonpolitical “silo” where the focus was prudent management of oil markets.

Following a token trim last month, Wednesday's decision is an abrupt turnaround from months of restoring deep cuts made during the depths of the pandemic. As demand rebounded, global energy prices have swung wildly since Russia invaded Ukraine, helping fuel inflation that is squeezing economies worldwide.

Part of the OPEC+ cut is “on paper” because members already can’t supply enough oil to hit their allotments, said Gary Peach, oil markets analyst at energy information firm Energy Intelligence. “Only about half of that is real barrels,” he said.

A cut with oil near $90, which is “a comfortable price for all producers,” might not sit well with customers, but the oil ministers are “looking into the tunnel of recession ” that could lower demand in coming months, Peach said. “They decided to pre-empt that.”

The recent fall in oil prices has been a boon to U.S. drivers, who saw lower gasoline prices at the pump before costs recently started ticking up, and for Biden as his Democratic Party gears up for congressional elections next month.

Biden has tried to receive credit for gasoline prices falling from their average June peak of $5.02 — with administration officials highlighting a late March announcement that a million barrels a day would be released from the strategic reserve for six months. High inflation is a fundamental drag on Biden’s approval and has dampened Democrats’ chances in the midterm elections.

Oil supply could face further cutbacks in coming months when a European ban on most Russian imports takes effect in December. A separate move by the U.S. and other members of the Group of Seven wealthy democracies to impose a price cap on Russian oil could reduce supply if Russia retaliates by refusing to ship to countries and companies that observe the cap.

The EU agreed Wednesday on new sanctions that are expected to include a price cap on Russian oil, meant to starve Putin's country of money for its war machine. It comes amid an energy crisis created by Russian reductions in natural gas supplies to Europe, whose leaders accuse Moscow of retaliation for their support for Ukraine and imposing of sanctions.

Russia “will need to find new buyers for its oil when the EU embargo comes into force in early December and will presumably have to make further price concessions to do so,” analysts at Commerzbank said. “Higher prices beforehand — boosted by production cuts elsewhere — would therefore doubtless be very welcome.”

International benchmark Brent has sagged as low as $84 in recent days after spending most of the summer months over $100 per barrel. U.S. crude rose to $87.64, and international benchmark Brent went up to $93.21 after the decision.

___

Associated Press reporters Chris Megerian and Josh Boak in Washington contributed.

Funny how once the prices are high all the old expensive gas sitting in the ground has to be sold before the prices fall, but if prices are low and the price of crude goes up the price at the pump goes up instantly...

Gas prices are sticky when crude oil prices go downward

part of that deals with lag time and price futures. You are buying at one price and then the price goes down after you bought it, you are still selling it at that higher price

when prices go up, you instantly raise prices to reflect the future price you are paying for next months delivery 

that deals with gas pricing at the retail level (gas stations)

Gas has been notorious for raising prices at the jump and lowering them at a much slower pace.

I saw a bit by Andy Rooney when I was a kid of him buying 1 gallon of gas and asking for his 1/10th of a cent back.  They are still stealing that 1/10th, lol.

That’s what I’m saying. It’s true 

There are a lot of steps, a lot of separate companies, and a lot of time before a gallon of oil is extracted, shipped, refined, shipped again, and put in a gas station tank. It’s not a simple A to B transaction where you can directly correlate a spot price of crude to a price per gallon 

most of these contracts are made way into the future so an oil field is delivering it no matter the current market price.  When the spot price of oil went negative during covid it basically meant they had all this oil coming out and no buyers. You had oil tankers sitting in lines outside ports waiting for buyers so they could offload. The price at the pump wasn’t negative. There are still a lot of costs involved in transporting and refining so it’s separate in a sense from a spot price.  Gas prices went down. It wasn’t free 

They always profit so they know what they are doing.

“They” isn’t a singular thing. It’s lots of companies along the chain 

And no they don’t if you are referring to a big oil company. They have negative returns. Big oil was the worst performing sector for close to a decade until recently. It hasn’t been good at all or profitable compared to many other sectors.  Investors were pissed and that’s who any corporation has to please 

The amount of layoffs that have happened in oil and gas is astounding.  They are still reducing headcounts even today it’s short sighted for sure but they are trying to generate big returns when they can.

a looming recession or an inevitable oversupply will send prices and profits crashing again. Happens all the time 

I'm well aware of the past decade and why anyone in oil is reluctant to go back to lower prices.  I have even told people about their current business model and why the hell would you want profits to go down after a decade of crap.

Cropduster-80 said:

tempo_n_groove said:

Cropduster-80 said:

tempo_n_groove said:

Cropduster-80 said:

tempo_n_groove said:

Cropduster-80 said:

static111 said:

mickeyrat said:

https://apnews.com/article/russia-ukraine-inflation-health-germany-elections-d873521f8b165774de3902439dd5a6ee

 

Russia-Ukraine war Inflation Elections COVID-19 Global trade Economy Prices Vienna National elections OPEC Government and politics

OPEC+ makes big oil cut to boost prices; pump costs may rise

By DAVID McHUGH

Today

FRANKFURT, Germany (AP) — The OPEC+ alliance of oil-exporting countries decided Wednesday to sharply cut production to support sagging oil prices, a move that could deal the struggling global economy another blow and raise politically sensitive pump prices for U.S. drivers just ahead of key national elections.

Energy ministers cut production by a larger-than-expected 2 million barrels per day starting in November after gathering for their first face-to-face meeting at the Vienna headquarters of the OPEC oil cartel since the start of the COVID-19 pandemic.

The group said the decision was based on the “uncertainty that surrounds the global economic and oil market outlooks.” Saudi Energy Minister Abdulaziz bin Salman stressed the group’s stated role as a guardian of stable energy markets.

“We are here to stay as a moderating force, to bring about stability,” he told reporters.

Oil is trading well below its summer peaks because of fears that major global economies such as the U.S. or Europe will sink into recession due to high inflation, rising interest rates and energy uncertainty over Russia's war in Ukraine. The OPEC+ decision could help member Russia weather a looming European ban on most of Moscow’s oil, but its impact will have some limitations because countries in the alliance already can’t meet their quotas.

---

RUSSIA-UKRAINE WAR

Live Updates: Russia-Ukraine War

Putin signs annexation of Ukrainian regions as losses mount

Experts: Russia finding new ways to spread propaganda videos

Ukraine nuclear workers recount abuse, threats from Russians

U.S. President Joe Biden considered the OPEC+ decision “short-sighted while the global economy is dealing with the continued negative impact of (Russian President Vladimir) Putin’s invasion of Ukraine,” White House press secretary Karine Jean-Pierre told reporters aboard Air Force One.

“It’s clear that OPEC+ is aligning with Russia with today’s announcement,” she said.

Bin Salman rejected questions referencing the reaction in Washington or implying that OPEC was assisting Russia, saying the discussion was in a nonpolitical “silo” where the focus was prudent management of oil markets.

Following a token trim last month, Wednesday's decision is an abrupt turnaround from months of restoring deep cuts made during the depths of the pandemic. As demand rebounded, global energy prices have swung wildly since Russia invaded Ukraine, helping fuel inflation that is squeezing economies worldwide.

Part of the OPEC+ cut is “on paper” because members already can’t supply enough oil to hit their allotments, said Gary Peach, oil markets analyst at energy information firm Energy Intelligence. “Only about half of that is real barrels,” he said.

A cut with oil near $90, which is “a comfortable price for all producers,” might not sit well with customers, but the oil ministers are “looking into the tunnel of recession ” that could lower demand in coming months, Peach said. “They decided to pre-empt that.”

The recent fall in oil prices has been a boon to U.S. drivers, who saw lower gasoline prices at the pump before costs recently started ticking up, and for Biden as his Democratic Party gears up for congressional elections next month.

Biden has tried to receive credit for gasoline prices falling from their average June peak of $5.02 — with administration officials highlighting a late March announcement that a million barrels a day would be released from the strategic reserve for six months. High inflation is a fundamental drag on Biden’s approval and has dampened Democrats’ chances in the midterm elections.

Oil supply could face further cutbacks in coming months when a European ban on most Russian imports takes effect in December. A separate move by the U.S. and other members of the Group of Seven wealthy democracies to impose a price cap on Russian oil could reduce supply if Russia retaliates by refusing to ship to countries and companies that observe the cap.

The EU agreed Wednesday on new sanctions that are expected to include a price cap on Russian oil, meant to starve Putin's country of money for its war machine. It comes amid an energy crisis created by Russian reductions in natural gas supplies to Europe, whose leaders accuse Moscow of retaliation for their support for Ukraine and imposing of sanctions.

Russia “will need to find new buyers for its oil when the EU embargo comes into force in early December and will presumably have to make further price concessions to do so,” analysts at Commerzbank said. “Higher prices beforehand — boosted by production cuts elsewhere — would therefore doubtless be very welcome.”

International benchmark Brent has sagged as low as $84 in recent days after spending most of the summer months over $100 per barrel. U.S. crude rose to $87.64, and international benchmark Brent went up to $93.21 after the decision.

___

Associated Press reporters Chris Megerian and Josh Boak in Washington contributed.

Funny how once the prices are high all the old expensive gas sitting in the ground has to be sold before the prices fall, but if prices are low and the price of crude goes up the price at the pump goes up instantly...

Gas prices are sticky when crude oil prices go downward

part of that deals with lag time and price futures. You are buying at one price and then the price goes down after you bought it, you are still selling it at that higher price

when prices go up, you instantly raise prices to reflect the future price you are paying for next months delivery 

that deals with gas pricing at the retail level (gas stations)

Gas has been notorious for raising prices at the jump and lowering them at a much slower pace.

I saw a bit by Andy Rooney when I was a kid of him buying 1 gallon of gas and asking for his 1/10th of a cent back.  They are still stealing that 1/10th, lol.

That’s what I’m saying. It’s true 

There are a lot of steps, a lot of separate companies, and a lot of time before a gallon of oil is extracted, shipped, refined, shipped again, and put in a gas station tank. It’s not a simple A to B transaction where you can directly correlate a spot price of crude to a price per gallon 

most of these contracts are made way into the future so an oil field is delivering it no matter the current market price.  When the spot price of oil went negative during covid it basically meant they had all this oil coming out and no buyers. You had oil tankers sitting in lines outside ports waiting for buyers so they could offload. The price at the pump wasn’t negative. There are still a lot of costs involved in transporting and refining so it’s separate in a sense from a spot price.  Gas prices went down. It wasn’t free 

They always profit so they know what they are doing.

“They” isn’t a singular thing. It’s lots of companies along the chain 

And no they don’t if you are referring to a big oil company. They have negative returns. Big oil was the worst performing sector for close to a decade until recently. It hasn’t been good at all or profitable compared to many other sectors.  Investors were pissed and that’s who any corporation has to please 

The amount of layoffs that have happened in oil and gas is astounding.  They are still reducing headcounts even today it’s short sighted for sure but they are trying to generate big returns when they can.

a looming recession or an inevitable oversupply will send prices and profits crashing again. Happens all the time 

I'm well aware of the past decade and why anyone in oil is reluctant to go back to lower prices.  I have even told people about their current business model and why the hell would you want profits to go down after a decade of crap.

Interpretation of their duty to investors is the problem, across all sectors.  

structurally it’s a weak spot. You are pressured to have short term gains even at the expense of long term profit and stability.  The amount of selling assets to create revenue only to buy it back at a higher price later is crazy 

boom and bust of oil makes that weakness more clear, but it’s a weak spot in all publicly traded companies 

in 2013/2014 There was a project my wife worked on and they haulted construction on a gas plant expansion due to bad financials.  They had to pay the labour 1 year severance to delay. So they paid them to do nothing, got it off the books then resumed one year later with the same people. They paid maybe a thousand people (or some obscene number)  for a year to do nothing.  Cancelled all the material contracts at a penalty and re bought the exact same items the next year 

books looked good and they paid way more in the long run. That’s what investors wanted 

Cropduster-80 said:

tempo_n_groove said:

Cropduster-80 said:

tempo_n_groove said:

That is one of the dumbest business models I have ever heard of...

I don't see how in any financial report overpaying for materials and labor and essentially paying DOUBLE the labor is in anyways good?

Let’s cook the books now so it looks good for a year?

I didn’t understand it either.

one time non repeating cost on a quarterly statement then the rest of the quarters are clean.

the next year when profits increase then you increase your spending on the project and stay in the black

or something like that.  It’s legal but not efficient use of money long term 

it’s almost like floating a check 

Cropduster-80 said:

tempo_n_groove said:

Cropduster-80 said:

tempo_n_groove said:

Cropduster-80 said:

tempo_n_groove said:

That is one of the dumbest business models I have ever heard of...

I don't see how in any financial report overpaying for materials and labor and essentially paying DOUBLE the labor is in anyways good?

Let’s cook the books now so it looks good for a year?

I didn’t understand it either.

one time non repeating cost on a quarterly statement then the rest of the quarters are clean.

the next year when profits increase then you increase your spending on the project and stay in the black

or something like that.  It’s legal but not efficient use of money long term 

it’s almost like floating a check 

I get why but in the end it did cost them more and that doesn't make sense...

I'm wondering how the workers were compensated.  Did they actually get paid?  I can't see the employer having them sit at home for a year?  I'd put them on another project.

Man I have a ton of questions about this...

It was operations in a foreign country. Oil companies often have to hire “x” amount of local workers in order to get permission from the government.  

It was those workers. Permission to operate in that country required the severance so yes they got paid 

there are also rules like we build this facility and we have permission to operate it for 25 years, then ownership reverts to the government 

That’s why they produce as much as they can as quick as they can regardless of oil prices. Some money is better than no money and they can’t sit on it forever because they won’t own it forever. 

So saying they don’t produce because prices are low is misleading. They do as they often don’t really have a choice 

nicknyr15 said:

tempo_n_groove said:

Anyone else tightening their belts?  The price of chicken has now reached the price of dumb...