Steve Bull's Blog, page 228
May 17, 2022
The US Can’t Make Enough Fuel and There’s No Fix in Sight
[image error]The US Can’t Make Enough Fuel and There’s No Fix in Sight(Bloomberg) — From record gasoline prices to higher airfares to fears of diesel rationing ahead, America’s runaway energy market is disquieting both US travelers and the wider economy. But the chief driver isn’t high crude prices or even the rebound in demand: It’s simply too few refineries turning oil into usable fuels.
More than 1 million barrels a day of the country’s oil refining capacity — or about 5% overall — has shut since the beginning of the pandemic. Elsewhere in the world, capacity has shrunk by 2.13 million additional barrels a day, energy consultancy Turner, Mason & Co. estimates. And with no plans to bring new US plants online, even though refiners are reaping record profits, the supply squeeze is only going to get worse.
“We are on the razor’s edge,” said John Auers, executive vice president at Turner, Mason & Co. in Dallas. “We’re ripe for a potential supply crisis.”
The dearth of refining capacity has dire implications for both US consumers and global markets. At home, retail gasoline prices continue hitting new records, exacerbating some of the worst inflation American households have ever seen. Meanwhile, the East Coast is on the brink of a diesel shortage that risks crippling already strained supply chains that have disrupted the flow of everything from grocery staples to construction supplies in the last two years.
The factors fueling the refining shortage won’t surprise anyone: With demand for gasoline and jet fuel practically vanishing during the height of the pandemic, companies closed some of their least profitable crude-processing plants permanently…
…click on the above link to read the rest of the article…
There might not be enough electricity to go around this summer in Michigan. That could require planned outages
Creative Commons/Https://Creativecommons.Org/Publicdom... power grid operator for Michigan and 14 other states says there may not be enough electricity to go around this summer, especially in northern states. That increases the risk of planned power outages.MISO, the operator of the electric grid that includes Michigan, is warning there may not be enough electricity to go around this summer, which is forecast to be warmer than usual. That could mean controlled outages as an emergency measure.
MISO says the summer peak forecast is 124 Gigawatts, with only 119 GW of regularly available generation.
The group’s seasonal assessment indicates “capacity shortfalls in both the north and central regions of MISO and leaving those areas at increased risk of temporary, controlled outages to preserve the integrity of the bulk electric system,” according to JT Smith, executive director – market operations at MISO.
MISO said it has never taken the step of implementing controlled outages in Michigan before.
DTE said it has extensive preparedness plans in place in the event of a “regional MISO issue.”
The utility said it will be bringing its new 1,150 MW gas plant online in June, and said it has a large number of customers on voluntary interruptible rates whose service can be curtailed, if necessary, to maintain system reliability.
Consumers Energy said it is confident it has a reliable supply of energy to serve its customers, and “we will answer the call” if MISO asks utilities to take any actions on the hottest summer days.
The utility said it is prepared to ask large industrial customers to use less energy, and, if necessary, to ask all customers to voluntarily reduce energy use.
Nowhere to Hide
Investors don’t need to be told about the recent stock market crashes. The Dow Jones index is down 12.5% since early January. The S&P 500 is down 16.1% in the same period. The Nasdaq Composite is down an even more spectacular 26.5% this year. It lost more ground today.
This puts the Nasdaq solidly into a bear market (down 20% or more from an interim peak) while the Dow and S&P 500 are both in correction territory (down 10% or more from an interim peak).
The Dow was up slightly today, but the S&P was down again. On current trends, the S&P 500 may break into bear market territory in a matter of days with the Dow not far behind.
This collapse coming so soon after the market crash of March 2020 may surprise some investors, although this outcome was predicted in my last book The New Great Depression, published last year.
We could get into the reasons for the recent market swoon, like the Fed’s taking away the punch bowl, but the reasons almost don’t matter at this point.
What truly is surprising is that the stock market is not alone in its recent dismal performance.
The Great Crypto Crash
U.S. Treasury bonds, foreign currencies, gold and other commodities have all declined sharply side by side with stocks. There are good reasons for this, including the prospect of a recession that could cause stocks, gold and commodities to fall in sync.
Still, the market carnage doesn’t end there. The biggest collapse among major asset classes is in Bitcoin and other cryptocurrencies.
The price of Bitcoin has fallen over 55% since last November, when Bitcoin peaked at around $69,000. As I write this article, Bitcoin is trading at $29,647.
…click on the above link to read the rest of the article…
Inflation and soaring gas prices have forced a North Carolina logging company to shut down after 37 years in business
As of Monday, gasoline cost $4.491 per gallon, per the US Energy Information Administration.Johner Images/Getty ImagesA logging business in North Carolina is shutting down over accelerating inflation and soaring gas prices.“I haven’t talked to a logger in the last few years that is actually making money,” its owner said.A family-run logging business in North Carolina is shutting down after being unable to cope with accelerating inflation and soaring gas prices.
Bobby Goodson, who set up Goodson’s All Terrain Logging 37 years ago, said that he couldn’t find a way to keep the business running.
“I haven’t talked to a logger in the last few years that is actually making money,” Goodson said in a video posted on his YouTube channel on May 10, where he announced that he was closing his business.
Goodson said that he was going to start selling off his equipment. “I can’t park the stuff for six, eight months, a year waiting for the economy to turn around,” he said.
Fuel prices have been soaring in the US as a result of post-pandemic demand and the conflict in Ukraine. As of Monday, regular gasoline cost $4.491 per gallon on average, up $1.463 from the same time a year ago, per the US Energy Information Administration, an increase of nearly 50%. Though crude oil prices have eased recently, oil refiners have become a bottleneck in the energy market, pushing up gas prices.
“When you got a fleet of trucks, and you’re running probably 700 to 800 miles a day, a truck is going to get five miles to the gallon,” Goodson told News Channel 12, an ABC-affiliated network. “That fuel increase kills you. And so I didn’t see any way out.”
…click on the above link to read the rest of the article…
Cutting Off Russian Gas Would Be “Catastrophic”, German Industry President Warns
As we detailed yesterday, almost two months after Europe rushed to declare it would impose unprecedented sanctions on Russia in response to Putin’s invasion of Ukraine with no regard for how such sanctions would boomerang and cripple its own economies, the old continent which was and still remains hostage to Russian energy exports, is finally grasping the underlying math which was all too clear to Vladimir Putin long ago.
The European Union’s executive arm said yesterday that the currency bloc’s economy would expand about 0.2% this year, with inflation topping 9%, as governments struggled to replace the imports.
This severe stagflationary scenario is highlighted by Siegfried Russwurm, president of the Germany’s biggest industry association BDI, warning that the cessation of Russian gas deliveries would have a dire effect on the German economy.
“The consequences of cutting off Russian gas supplies would be catastrophic,” he told tabloid Bild am Sonntag in an interview published at the weekend.
Russwurm added that cutting off Russian gas would deprive businesses of fuel in Germany, forcing businesses to close production lines.
“In this situation many companies will be completely cut off gas supplies. In many cases, affected businesses will be forced to stop production, some businesses may never be able to start again,” he warned.
Europe’s “sudden realization” of just how destructive pushing through with full-blown sanctions will be, somewhat similar to that of Elon Musk who “learned” about the millions in Twitter spam accounts only after bidding $44 billion – is why over the weekend, Bloomberg reported that the European Union is set to fully water down its so-called sanctions and to offer gas importers a solution to avoid a breach of sanctions when buying fuel from Russia while satisfying President Vladimir Putin’s demands over payment in rubles.
…click on the above link to read the rest of the article…
May 16, 2022
Now We Are Being Told To Expect Food And Diesel Shortages For The Foreseeable Future
If you think that the food and diesel shortages are bad now, then you will be absolutely horrified by what the globe is experiencing by the end of the year. All over the planet, food production is being crippled by an unprecedented confluence of factors. The war in Ukraine, extremely bizarre weather patterns, nightmarish plagues and a historic fertilizer crisis have combined to create a “perfect storm” that isn’t going away any time soon. As a result, the food that won’t be grown in 2022 will become an extremely severe global problem by the end of this calendar year. Global wheat prices have already risen by more than 40 percent since the start of 2022, but this is just the beginning. Meanwhile, we are facing unthinkable diesel fuel shortages in the United States this summer, and as you will see below there are “no plans” to increase refining capacity in this country for the foreseeable future.
If you had told me six months ago that we would be dealing with the worst baby formula shortage in U.S. history in the middle of 2022, I am not sure that I would have believed you.
But that is precisely what we are now facing. One young couple in Florida searched stores in their area for four hours and couldn’t find anything…
When Erik and Kelly Schmidt, both 35, went into a Central Florida Target store this week to buy their usual baby formula, Up & Up Gentle, for their five-month-old twins, they found an empty shelf.
The pair then embarked on a half-day journey in search of formula, any formula, and their quest didn’t end there. “We spent over four hours going to every Target, different Walmarts, different grocery stores, just finding absolutely nothing,” Erik Schmidt said.
…click on the above link to read the rest of the article…
US Gasoline Prices Hit New Record Amid Refinery Bottlenecks And Tight Supplies
US retail gasoline prices soared to another record on Monday as global refineries struggled with adding new capacity ahead of the driving season.
Before diving into Goldman Sachs’ new commodity note explaining how global refining will be tight for the foreseeable future, last week, Saudi Energy Minister said, “the bottleneck is now to do with refining … many refineries in the world, especially in Europe and the US, have closed.”
Goldman’s commodity analyst Neil Mehta outlines a rash of refinery retirements, reduced Russian energy exports, recovering jet fuel demand, and tight global inventories for products, particularly diesel, have supported higher retail fuel prices.
Mehta points out US product inventories are below a 10% five-year average, refining utilization rates are below normal, global natural gas prices are high, and demand for diesel remains robust.
US product and total inventories are well below a five-year average.
US refining utilization struggles to increase as the driving season begins.
“We believe the oil market needs to price to demand destruction, which will drive the least elastic prices, such as those for distillate, higher,” he said, adding tight inventories could last through this year and well into 2023.
While the demand destruction has not begun yet (from what we have seen in the data), the price adjustments for refined products is starting to reprice drastically (in barrel equivalents below for easy comparisons)…
A lack of refinery capacity is the culprit of rising fuel prices. The average cost of US gas prices at the pump on Monday morning is $4.483 and $5.56 for diesel.
Today’s refinery bottlenecks may suggest that even higher prices are ahead this summer as the driving season begins.
Deforestation and world population sustainability: a quantitative analysis
Abstract
In this paper we afford a quantitative analysis of the sustainability of current world population growth in relation to the parallel deforestation process adopting a statistical point of view. We consider a simplified model based on a stochastic growth process driven by a continuous time random walk, which depicts the technological evolution of human kind, in conjunction with a deterministic generalised logistic model for humans-forest interaction and we evaluate the probability of avoiding the self-destruction of our civilisation. Based on the current resource consumption rates and best estimate of technological rate growth our study shows that we have very low probability, less than 10% in most optimistic estimate, to survive without facing a catastrophic collapse.
Introduction
In the last few decades, the debate on climate change has assumed global importance with consequences on national and global policies. Many factors due to human activity are considered as possible responsible of the observed changes: among these water and air contamination (mostly greenhouse effect) and deforestation are the mostly cited. While the extent of human contribution to the greenhouse effect and temperature changes is still a matter of discussion, the deforestation is an undeniable fact. Indeed before the development of human civilisations, our planet was covered by 60 million square kilometres of forest1. As a result of deforestation, less than 40 million square kilometres currently remain2. In this paper, we focus on the consequence of indiscriminate deforestation.
Trees’ services to our planet range from carbon storage, oxygen production to soil conservation and water cycle regulation. They support natural and human food systems and provide homes for countless species, including us, through building materials. Trees and forests are our best atmosphere cleaners and, due to the key role they play in the terrestrial ecosystem, it is highly unlikely to imagine the survival of many species, including ours, on Earth without them…
…click on the above link to read the rest of the article…
Just a hint from the mainstream that limits precipitate rising oil prices
Last week a Bloomberg writer at the very end of an article explained that the “only solution” to high gasoline and diesel prices is recession. While I would not accuse the writer of advocating degrowth—this would be too radical for a mainstream business publication—his analysis points to a key and obvious cause of today’s high prices for oil and other commodities: There isn’t enough of them to go around.
There’s an old saying in the oil industry that the solution to high prices is high prices. The logic is that high prices will do two things: 1) Reduce demand as those who cannot afford oil products at high prices will cut back and 2) incentivize more exploration and production as companies seek to increase production to take advantage of high prices.
The big question today is whether the second mechanism can actually ramp up oil production enough to bring down prices. In a recent survey a large number of oil executives said their production plans do not depend on current prices. Many cited the desire of investors in publicly traded companies to receive larger dividends and benefit from the corporate buyback of shares (which tends to increase the stock prices as fewer shares are available for trading).
It’s instructive that 9 percent of those responding to the survey cited an oil price of $120 per barrel as the level at which they would consider raising production. And keep in mind that they are NOT talking about $120 per barrel for a few months, but as an average price over many years—since it can take many years to bring large projects into production and those projects can produce for many years after production begins…
…click on the above link to read the rest of the article…
