January Inflation

[JAG]

I can't even begin to guess what the mental conflict he has on drilling in the Gulf. I tend to think it is pretty flexible.

Florida is a cash cow for tourism, and the state's residents fiercely protect their white sand beaches from any potential threat of change.

I personally think if they had a similar restriction as California and drilled out of sight from the beach, it would exponentially escalate Floridian industries related to fish harvests.

 

[SAJ-99]

Prolonged Trade War May Wipe Out 50% Of China’s Oil Demand Growth — Forbes

A prolonged global trade war could have an outsized effect on China's oil demand, according to one research outfit. That would likely mean an oil price slump.

apple.news

@SAJ-99 drop in prices at the pump? Significant reduction in fracking production?

That article talks about 50% drop in demand growth. That could certainly happen. Or if US goes into recession and global demand will certainly drop. If prices go too low, Saudi's may rethink their favor to Trump to lift export limits. The reality of crude oil is that companies (and countries) need to make money and no one is pumping oil at a loss for long. US investors in US oil companies have zero patience for that. Flip side to Global Macro stuff is China has no problem buying Russian or Iranian oil at a discount. Tariffs are just going to strengthen that relationship. The interesting time will come in a few years when the tier 1 assets in Permian start to disappear. The price of oil has to go up and we need to continue on path to EVs.

US's self-imposed restrictions against energy independence.

Sorry JAG. That is myth. There are no restrictions of any type on energy independence. We are pumping a LOT of oil. Americans love cheap gas, so all politicians love cheap gas. I always joked that if you could wave a magic wand and get every barrel of proven reserves out of the ground for $20, Oil company CEO's would sign on in a New York minute, sell it, buy islands and hook up solar and electric, while eventually leaving the average American standing at the pump with nothing to buy. Capitalism.

Good luck in the WY draw.

 

[SAJ-99]

@SAJ-99

Are you in the oil industry?

You always seem to have a very deep knowledge of the oil stuff.

I will add that today you see the price falling 2% and the news is "US/Iran progress". The news explanation is almost comical. You have to believe that 1. Some deal will every get worked out (this one is funny because any new deal is going to look like the one Obama and the rest of the World signed on to and Trump pulled out of in first term) and 2) Iran oil is somehow not hitting market now (also comical because we know China is buying it.)
So yeah, go long oil if you believe headline news. I tend to think it is more "recession is coming" than "talks with Iran".

 

[Sytes]

Thank you @Lostinthewoods for calling out ALL involved in the b.s. antics while those pandering innocence at the expense of one with a differing position.

With that, to those extremes involved in your collective pom pom cheering / hyped, anti like-minded, closed to opposing opinions, keep your blue thumbs to yourselves - I'm not part of your clique nor have interest in your doomsday, closed minded key stroking. UNLESS you're interested placing your $ where your key stroking mouth yammers.

This applies towards ONLY the extremes that many hunt talk members identify reading though lack interest posting due to the menacing behavior of the vocal key stroker club kids.

A few quality opinions shared, even amidst the clique's assault on the opposing opinion shared, based on views I may disagree though hold reasoned thought.

I'm not a fan of this admin's sweeping action though in many regards it's working. New trade deals made that have, for a long while, been ignored at the expense of competitive reciprocal trade.

I'm not a fan of this admin's action towards Canada. That's a period - end of sentence. This could have and should have been managed as neighboring partners at the negotiating table.
My period, end of senetence, lags with Mexico as we've extended beyond reciprocal though again, as with Canada and strong allies, should have been at the negotiating table.

I'm not a fan of the rhetoric of the admin though it has shaken many to realize the emphasis of carrying a big stick... wish this admin had the speak softly portion Theodore Roosevelt claimed in his quote, though even he was quite boisterous so...

Meh,

People say they are losing mass $... yes - to those who fail in the mid/long term objective.

If you're death is imminent in the next year or two... maybe you're taking a hit - then again, buh-bye regardless.

If you're living beyond the next couple years and financially intelligent to work within a retirement portfolio, you're fine JUST AS YOU WERE AFTER COVID.

 If you live by the seat of your pants with your life's investments playing the market... you reap what you sow.

Best to all!

Edit: a friendly PM noted I noted the incorrect moderator. Hah! Nice catch. Thanks for the PM. corrected.

 

[JAG]

The interesting time will come in a few years when the tier 1 assets in Permian start to disappear. The price of oil has to go up and we need to continue on path to EVs.


Sorry JAG. That is myth. There are no restrictions of any type on energy independence. We are pumping a LOT of oil. Americans love cheap gas, so all politicians love cheap gas. I always joked that if you could wave a magic wand and get every barrel of proven reserves out of the ground for $20, Oil company CEO's would sign on in a New York minute, sell it, buy islands and hook up solar and electric, while eventually leaving the average American standing at the pump with nothing to buy. Capitalism.

Good luck in the WY draw.

View attachment 369281

That's a neat chart; it nicely illustrates the increase in US Field production and how it's increased. The US is still barely a net exporter of oil. What about the ANWR? It is perceived to be the largest reserve the US has.

It's not a myth, it just reveals how little I've been paying attention since 2005. Just now paying attention. Frankly, I've only been tracking renewables and EV RD production with an unsurprising and convenient departure from oil dependence. The fireside chats with my Dad mostly happened before he retired in 2008. One of his frequent points of tension was the industry's knowledge of the US's vast oil reserves, but restricted access because of moratoriums.

Since then, technological advances (fracking) and improved access (horizontal drilling) appear to be the reason for the increased non-offshore extraction. I apologize for boring you with my catch-up summary.

The US's independence, while it achieved net export status in 2020, reverted in 2022 due to dependence on Canada for 52% of its petroleum, 10% from Mexico & others.

This was a fun read/detour (for me) into how the US has manufacturing capability to refine heavy, gloopy oil, but less infrastructure for refining less viscous oil that happens to be easier to refine.

What would you say are the barriers to energy independence and export capacity? Costs to build infrastructure to refine our less-viscous oil? It seems like we still need Canada, Mexico, and Venezuela for the heavy oils?

I'm starting to see a perspective where energy independence may be an overly naive and detrimental idea. You may like this essay since many of your points concur with the author's positions:

US Oil Security and the Oil Import Tariff Question​

As I ask, would a shift in infrastructure upgrades cause another spike in gas prices and a reciprocal focus on EVs and renewables?

 

[JAG]

I just learned a lot tonight and took the time to even reread the earlier posts in this thread. I now understand more of the points/objections made than I did a month ago. The knowledge you all have shared has been helpful, thanks.

Even re-reading my post above this one, I realize that some of my questions are simplistic and perhaps too revealing of how much I have to learn.

Money does come back to the US. It comes in the form of foreign investment in US through financial assets. Hence we have an huge industry that focuses on how to play with money, and it employs a lot of people.

For example, this post here from SAJ-99. I play with money, but I don't make a living doing it, and I didn't get a degree that helps me understand how to.

 

[SAJ-99]

The US is still barely a net exporter of oil. What about the ANWR?

Arctic Refuge Lease Sale Yields No Interest | U.S. Department of the Interior

The Department of the Interior today announced that the Bureau of Land Management received no bids for the congressionally mandated oil and gas lease sale for the Coastal Plain of the Arctic National Wildlife Refuge (Arctic Refuge). The deadline to submit bids was Monday, January 6

www.doi.gov

It’s about the cost.

What would you say are the barriers to energy independence and export capacity? Costs to build infrastructure to refine our less-viscous oil? It seems like we still need Canada, Mexico, and Venezuela for the heavy oils?

Yes. Refining capacity is a problem and has been for years. Oil is imported from Mexico, refined and exported back. It is complicated market. Not all oil is the same. Refineries that refine heavy crude (sour) can’t be easily switched to light-sweet WTI. Mostly every independence is a political talking point.

 

[mevertsen]

Arctic Refuge Lease Sale Yields No Interest | U.S. Department of the Interior

The Department of the Interior today announced that the Bureau of Land Management received no bids for the congressionally mandated oil and gas lease sale for the Coastal Plain of the Arctic National Wildlife Refuge (Arctic Refuge). The deadline to submit bids was Monday, January 6

www.doi.gov

It’s about the cost.


Yes. Refining capacity is a problem and has been for years. Oil is imported from Mexico, refined and exported back. It is complicated market. Not all oil is the same. Refineries that refine heavy crude (sour) can’t be easily switched to light-sweet WTI. Mostly every independence is a political talking point.

Same issue is with gold.

Several gold mines around here. Only a couple main companies have bought the mines.

All kinds of different ore is trucked up to a couple hundred miles to go to a proper mill. Each type of ore requires a specific mill.

That is cheaper to truck it than to build a new mill on site at $2B.

I see lots of gold go by my house every day.

Sorry. Off topic, just a neat note on how complex all the minerals are.

 

[Cap’n Crunch]

Thank you @Lostinthewoods for calling out ALL involved in the b.s. antics while those pandering innocence at the expense of one with a differing position.

With that, to those extremes involved in your collective pom pom cheering / hyped, anti like-minded, closed to opposing opinions, keep your blue thumbs to yourselves - I'm not part of your clique nor have interest in your doomsday, closed minded key stroking. UNLESS you're interested placing your $ where your key stroking mouth yammers.

This applies towards ONLY the extremes that many hunt talk members identify reading though lack interest posting due to the menacing behavior of the vocal key stroker club kids.

A few quality opinions shared, even amidst the clique's assault on the opposing opinion shared, based on views I may disagree though hold reasoned thought.

I'm not a fan of this admin's sweeping action though in many regards it's working. New trade deals made that have, for a long while, been ignored at the expense of competitive reciprocal trade.

I'm not a fan of this admin's action towards Canada. That's a period - end of sentence. This could have and should have been managed as neighboring partners at the negotiating table.
My period, end of senetence, lags with Mexico as we've extended beyond reciprocal though again, as with Canada and strong allies, should have been at the negotiating table.

I'm not a fan of the rhetoric of the admin though it has shaken many to realize the emphasis of carrying a big stick... wish this admin had the speak softly portion Theodore Roosevelt claimed in his quote, though even he was quite boisterous so...

Meh,

People say they are losing mass $... yes - to those who fail in the mid/long term objective.

If you're death is imminent in the next year or two... maybe you're taking a hit - then again, buh-bye regardless.

If you're living beyond the next couple years and financially intelligent to work within a retirement portfolio, you're fine JUST AS YOU WERE AFTER COVID.

 If you live by the seat of your pants with your life's investments playing the market... you reap what you sow.

Best to all!

Edit: a friendly PM noted I noted the incorrect moderator. Hah! Nice catch. Thanks for the PM. corrected.

@Sytes would you explain to me a little more about your hard stance on Canada and your ideas about Mexico? Feel free to PM me if you prefer.

I like @JAG am trying to better understand all sides of each topic whether I agree or not.

 

[406dn]

Speaking to the oil refining, the refinery that I retired from was designed to handle heavy sour crude. This was the type of crude most available, when the refineries in the northern US were first brought on stream. There are advantages to running heavy sour crude. That type of crude is less expensive than lighter, sweeter crude. The discount was generally even wider, since Canadian and northern US crude, is essentially land locked, and can't reach the world market.

A refinery's crude tower fractionates the crude. The crude comes into the unit at the bottom and is boiled. The lighter components rise the highest into the tower before condensing back into liquid. This is where the bottleneck occurs, with lighter crude. That part of the tower becomes flooded with more product than it can handle. This causes a unit upset, and you have to cut the crude feed rate, to clear that portion of the tower.

Every refinery has an individual ability to handle its crude slate. There is some ability to adjust, but there is always a bottleneck, to be managed.

There have been almost no new refineries built in forever. The preference is to enlarge, existing refineries. When a bottleneck hinders a sufficiently profitable opportunity, the company engineers a solution for it.

Oil refineries are an incredibly complex operation, from both the operating side and the business side. The fact that everyone assumes there will be product, whenever they need it, is proof it is most often well executed by oil companies.

 

[noharleyyet]

 

[SAJ-99]

Some good news, although not much detail.

Bessent told people he sees de-escalation with China at JPMorgan private event | Forexlive

Bessent spoke in Washington at a JPMorgan client event that was closed to the media

www.forexlive.com

 

[JAG]

Same issue is with gold.

Several gold mines around here. Only a couple main companies have bought the mines.

All kinds of different ore is trucked up to a couple hundred miles to go to a proper mill. Each type of ore requires a specific mill.

That is cheaper to truck it than to build a new mill on site at $2B.

I see lots of gold go by my house every day.

Sorry. Off topic, just a neat note on how complex all the minerals are.

It's related. Inflation is a big button with a ton of wires attached to it.

 

[LopeHunter]

Some good news, although not much detail.

Bessent told people he sees de-escalation with China at JPMorgan private event | Forexlive

Bessent spoke in Washington at a JPMorgan client event that was closed to the media

www.forexlive.com

China needs to sell things. America is an important destination for Chinese production though is a declining percentage as look back over the past decade. This has been done intentionally by China where the leadership decides export policy down to a granular level which is much different than here in America where export policy is generally only focused on a few strategic technology items that can be used to fight America in a war.

China has been using infrastructure deals in Africa and the Americas that effectively will have the countries getting rail lines, sea ports, etc, defaulting on the agreements which then will allow China to take full control over strategic footholds far from Chinese territory.

China, thanks to this American administration's seesawing of messaging which muddles proclamations of what will be a country's percentage, what items, what countries, what timeline, etc, now looks like the shining light of Free Trade opportunities. There are dozens of countries around the world which are non-aligned so can embrace China unlike countries that are aligned with American military and economic policy.

I think every U.S. Representative can read the tea leaves to see challenging economic results as they go through primaries and then on to the November 2026 General Election. That leads me to think this administration blinks. China ascends. The U.S. Dollar fades in importance.

This scenario, if happens, is very bad for Americans this year and in two years or not for 20 years. The new normal is not like 2008 nor 2020 if the U.S. Dollar is eroded in importance. Look at Japan that is still down after a few decades.

Yes, oil falls when economic demand falls. Falling oil pricing reduces the advantage to shift to Green initiatives. The new normal will impact us more than 18 months of lacking economic normalcy that allows the stock market to rebound as has in the past couple of decades.

I can be wrong. I am starting to think the new normal will not be as much fun as the past normal.

 

[Sytes]

@Sytes would you explain to me a little more about your hard stance on Canada and your ideas about Mexico? Feel free to PM me if you prefer.

I like @JAG am trying to better understand all sides of each topic whether I agree or not.

I'm not a fan of this admin's action towards Canada. That's a period - end of sentence. This could have and should have been managed as neighboring partners at the negotiating table.
My period, end of senetence, lags with Mexico as we've extended beyond reciprocal though again, as with Canada and strong allies, should have been at the negotiating table.

This is opinion/experience only as it is in my wheelhouse of federal employment. Not based on graphs, charts, or MALA anti-admin theories:

IMO/E, We hold a valuable relation with our northern "family". We have the longest border of ANY two countries in the world. We get along and Canada has always stepped in with boots on the ground when we, the U.S., decided to stick our pecker in other country affairs in the name of National Security, including mineral securities (oil), etc.
We owe each other mutual respect, the dignity to manage our reciprocal trade differences at the negotiating table. In the end, it will calm as Canadians can not resist their snowbird love for our country and we, Americans, can hold out far longer than Canada to press for better reciprocal trade. Canada has a 340 million population within trucking /rail distance and U.S. has 40 million Canadians for the same retail/wholesale value.
We offer massive amounts of employment for products assembled in Canada (automobiles, etc) and we both leverage within bilateral trade with mainly energy and agriculture. It's a common trade imbalance of Canadian surplus versus U.S. deficit. To better understand the #'s U.S. deficit with Canada is $63 billion for 2024 ALONE!
Another side of trade imbalance: Softwood lumber with respect to Canadian forestry practice holds a direct impact on U.S. lumber prices. This admin is rightfully (again, IMO) attempting to open U.S. timber to counter Canadian "reciprocal" trade imbalance.

It sickened me during the 4 Nation Face Off when Canada boo'd and hurled insults during our U.S. Anthem and U.S. returned volley in Boston of sickening feeling as we stepped down to their level of disrespect. Our national anthems are not sung in praise of Trudeau, nor Trump. The anthems are respected for our countries.
Can one imagine the crap our U.S. Olympics would be if each flag and anthem is met with loud, roucous boo's and snearing screams of insults? Sad. Some here disagree and find this petty is reasonable - to each his/her own. Again, this is merely my opinion.

This admin has caused Canada to expand alternative export opportunities to reduce the volitility our giverning element has exposed. Though again, reality - even with more reciprocal agreements made, Canada holds far greater value with our country over expanding current exports to other countries. This admin knows this and so does Canada.
The boisterous country bravado has valuably (IMO) surged Canadian national pride! This is the positive side of the current action. Not often do we find every Canadian Province aboard the maple leaf flag! I currently reside in Canada on U.S. Gov orders and it's very cool to see the pride sprout from this disingenuis admin vocal yammering.
It's great as ALL my bordering neighbors have their maple leaf flags waving. Makes me miss my ability to wave my American flag as I do - 24/7 (with a light for night). My neighbors are all fantastic people! I watched the second 4 Nations NHL game at one neighbor's house, play monthly poker games at another, etc, etc.

Mexico, we hold a trade deficit of $722 million. Mexico's population as of 2023 was 130 million! *Amazing... You can see how challenging this is when compared to the deficit of $64 BILLION with Canada and their 40 million population. This shows a significant value and unequivicable challenge that is able to be modified - at least somewhat. USMCA was a good start. Time has been spent with USMCA to identify weak points and revamp the trade agreement.

Mexico, we hold a serious security factor that calls for this admin's valued actions on the southern border. Canada is now the vocally exposed (by this admin) as the weak link for Mexican, S.A., European, and Asian cartels to gain access to U.S. 340 million. And this IS ACCURATE! In my opinion/experience. Canada is far behind in funding their CBSA to adaquately and properly utilize tools and intelligence to reduce the nexus to America from their seaports. This admin is correct in the drug/human trade due to Canada's inability to defend itself from foreign trafficking. It not only affects U.S. though also Canada. U.S. Northern border, as mentioned before, is the longest border between two countries in the world! U.S. has been increasing the rehabilitation of northern border ports of entries, tools and training for the ports and the boundry between the ports. Canada depends on a seperate branch of RCMP for boundry enforcement... RCMP is spread far too thin to be effective. Canada needs to step up if they want to negotiate their massive surplus, IMO.

Many aspects to be worked between our two neighboring countries that, IMO, would have been better resolved at the negotiating table than loud mouth political bantering, as could be said of our *strong allies elsewhere. However, that is not how this admin operates and to this admin's defense, their actions have led to many new trade deals much more favorable to U.S. than before... I personally don't like his style.

How's that for a bunch of typed yammering? Haha! Watch as a few will nit pick a line or two and misrepresent the intent. I'm open to constructive comments that, I imagine will be related to surplus vs deficit and population aspects. I don't have the time to detail my specific thoughts of this though it is clearly apparent. I believe we will never reach a 1 to 1 though we are far from even 1 to 50 and that *can be negotiated.

 

[brymoore]

Canada exported $413B which included $130B in oil. US exports to Canada was $349B. US trade deficit of $63B.

The deficit was caused by the US addiction to oil. Remove the Canadian oil sales and the US has a trade surplus of $66B.

 

[Sytes]

Canada exported $413B which included $130B in oil. US exports to Canada was $349B. US trade deficit of $63B.

The deficit was caused by the US addiction to oil. Remove the Canadian oil sales and the US has a trade surplus of $66B.

Canada needs to continue the export otherwise, they would be heavily in the red, employment and $.

As for, "addiction" some perspective:

For Canada's 40 million people, they used 2.4 million barrels per day. 869 million barrels a year / 40 million = 22 per person.
U.S. uses 18.5 million barrels per day (-1.5 biofuel). 6.75 billion barrels a year / 340 million = 19.9 per person.

"Addiction" is a misnomer.

Also, take into account, U.S. exports approx 365 million barrels of oil to Canada, totalling approx 1 million barrels a day. That is more than a third (closer to 1/2) of the total oil used in Canada.

There is a serious deficit vs surplus between the two countries, when $130B -$24.5B is "swapped", for lack of better words.

"U.S. goods imports from Canada in 2024 totaled $412.7 billion, down 1.4 percent ($5.9 billion) from 2023. The U.S. goods trade deficit with Canada was $63.3 billion in 2024, a 1.4 percent decrease ($926.9 million) over 2023."
*Edited last paragraph: calculation error. Corrected by sharing the U.S. Trade statistics for 2024. Same as mentioned in my post above, respectively.

 

[SAJ-99]

WSJ said the kids took away Grandpa’s keys while crazy Uncle was away.

I’m here for the memes.

https://www.wsj.com/politics/policy/trump-tariff-pause-navarro-bessent-lutnick-b9e864fb

 

[Nick87]

WSJ said the kids took away Grandpa’s keys while crazy Uncle was away.

I’m here for the memes.

https://www.wsj.com/politics/policy/trump-tariff-pause-navarro-bessent-lutnick-b9e864fb

I thought you didn't like memes....

 

[SAJ-99]

I thought you didn't like memes....

You kidding? I love memes, if they are funny.