oiler1930

Economic Anomalies Explained

natural gas heat content is discounted about 42% to crude, 55% to gasoline, and 50% to diesel, all at the Nymex contract prices. at retail, the discountis higher due to taxes on motor fuels.

congress has the power of the purse, but congress can respond to presidential requests.

How Elastic Is the World's Oil Supply?

I watch the EIA weekly petroleum reports, and have been tracking them for over five years. One key that I use is the number of days' supply, the quotient of crude inventory over daily inputs to refineries. This value ranges from ~.17 to 24 days. In the last year, crude oil prices doubled, while the days dropped from 22 to 19. The reduction in inventory total cost was several billion dollars! Management usually has two discretionary costs, maintenance and inventory. The carrying cost of the current inventories can be tied to whatever return on money you wish, say 4% long bonds, or prime rate; doubled inventory cost carriage can be carried a little more easily by the lowering of inventory quantity by 15%. Reduction of maintenance costs brings piper paying time closer, but is often done to stay our of chapters 11 or 7.

As a corrolary, should prices drop the addition of cheaper inventory quantities lowers the average cost. With a twenty day nominal inventory, turnover is swift, and a larger inventory at a better comfort level is affordable.

Oil Prices, Global GDP, and Net Oil Exports

rbblum

Desert Storm responding to the invasion of Kuwait and the current event in Iraq come to mind as economic wars, not to mention German occupation of Roumania and Japanese seizure of Indonesia, both for sources of oil

Oil Prices, Global GDP, and Net Oil Exports

Speculative booms invariably require some form of cash input. Our cash used to be gold and silver, while today we have fiat money with faith holding it up. When the money supply has a major increase with no offsetting increase in quantity of items of trade, prices are the quotient of money over quantity of goods.

When some folks rant about Arab Oil being the villains, and others say Saudi oil is in fourth of fifth place, with Canada and Mexico being first and second, and Venezuela, Nigeria and Saudi Arabia trailing, the fundamental factor in obtaining imports, for buyers, is to keep transport costs down. Costs on the margin spread to the totality of worldwide production, adjusted for grade of crude, and are pretty much based on landed prices of crude that can be piped to Cushing Oklahoma for delivery against crude contracts. Domestic consumption in producing nations reduces availability for export.

Liquid fuels are ideal for transportation energy, since very little weight is needed to contain the fuel, compared to coal or natural gas. During WW II, German vehicles were fueled with gasified coal or wood in a furnace mounted in the back of the vehicle; our EPA would not permit such a substitute here.

The economics of health care constitute a minefield to discuss. Typical company plans cover the first $2,000,000 net over deductables for the lifetime of employed individuals; I would not care to experience that much misery. Readily available statistics on health care costs are difficult to navigate and I have not taken the time to study same. Adam Smith would be able to make a quantitative assessment of the value added by restoring an individual to good health for the balance of such a one's life; Smith was scornful of the nobility who kept large retinues of servants in totally non-productive status. Trade is necessary to provide what is needed where not domestically available; if trade overall is not reciprocated, some folk have to do without.

Apologies for the parabolic comments.