Some more background on oil and gauging a summer gasoline crisis. Notice the extreme high levels of imported oil over the last nine weeks, nearly 13 mm Bbls/day, versus the 5 year average of 11 mm. We are now importing 75% of our oil consumption. Also notice tanker rates, especially in weeks 3-7, five weeks where tankers were aggressively contracted (at $2.50-$3.00 rates) to run this oil from the PG to the GOM. Notice weeks 8-14, where the rates fall off to $2.00, still high but not at "panic" levels. That might suggest that oil imports going forward will back off from what I think are unsustainable levels. Then notice that crude oil inventories have been improved a bit by this activity from very dangerous levels, to merely dangerous. Gasoline inventories too, have at least begun to stabilize at too low levels.
beacon1.rjf.com
The point of this exercise though is to illustrate that special extraordinary efforts now have to constantly be made just to keep this thing from falling apart. The US needs to outbid other oil competitors for both shipping and tankers. We need to convince and/or bully the producers to cheat, go far beyond their quotas. One break in the daisy chain (and there are plenty) and you get instant shortages, price spikes and gas lines.
Here would be the economic impact of a gasoline spike. A 70 cent spike would equal 1% of all US consumer consumption. A buck, about 1.5%. I don't think there is enough attention given to natural gas, and electricity though. Bullying OPEC doesn't work there, it's mostly a NA market. Because this is more regulated the passthrough would be slower, but utilities will get surcharges in a price spike (or if not, because of their weakened conditions, they go quickly bankrupt). The numbers are similar, 40% spike equals 1% of consumption, etc.
The larger largely ignored story is food. Consumption on food and beverage is $900 billion versus $300 billion for NG, electricity, and gasoline. So even a 10% increase in food prices (clearly happening) will divert 1.5% of consumption. |
