Hello gumnam, regarding Message 21643814 , remember that the price cap rationale is bandied about by the analysts all around, and they are not wrong on the face of the table of facts, but most of the analysts never saw the possibility of oil at 30, much less the reason for 60, and certainly not a whiff of a clue regarding 68.
My figuring, to stab at the truth, and it is a guess, is that the Chinese State Oil Companies do exactly as they are told, and if told to sell at a loss, then they would.
If, OTOH, they are told to choke off the supply, then they do that.
The bosses are all, to the last one, appointed by the Communist Party, and each will toe the line, to the last step.
The publicly traded subsidiaries of Chinese State Oil Companies are definitely money makers, because (a) there must be subsidy at the parent level, else the math does not work, and (b) they import a huge slug of heavy but cheaper oil, since much of the refining capacity is geared for it.
The fact of the matter is that China gasoline price is increasing, and according to the cab drivers, adjusted weekly, with one coming up next week, say a subsidized USD 1.80-ish/gallon plus/minus from the current USD 1.70-ish plus.
China import of oil is decreasing, and if my understanding is correct, and if China did not add more domestic production, then it all seems ugly obvious, that supply is being strangled.
There are already municipal level discussions on the next phase of energy choke, and it does not involve price caps, but a simple dictate that forbids private cars of even/odd number plate from operating on any given day.
Given that there are such discussions, and given oil can be bought should anyone wish to buy, I would say the discussed possible moves are meant to shut off demand, by choking off supply, for purposes that we can guess at.
Of course, perhaps the Chinese oil import is not going down as much as retail-level supply choke off, and the difference is going into storage. Unknowable Knowns.
I am paying about USD 6/gallon to fill up my SUV, and have done so since switching from sedan to SUV 14-15 months ago (when expecting daughter who is now nearly 11 months old). At this sort of price, one simply do not use the car as often as a matter of course. To do so, one has to be close to public transport, and since I have used mostly public transport for 20 years, no big deal; quite convenient really.
I dread to think what folks who needs to commute 1-2-3 hours pay day starting at 5:00am will think of public transport when the necessity arises, and my guess is that it will arise. Road rage will have a new definition.
Revolution, at least in the way of banning SUVs, is certainly not out of the question.
Recommendations, short real estate in the burbs, obviously;
Short GM and go long on Honda shares; and
For those able, if need to buy guns to put in glove compartment, then do not drive.
Chugs, J
P.S. Gasoline at USD 2.60ish in the USA is too cheap, compared to Starbucks Frappuccino ice coffee, and the USD 600,000 hovel in everyday neighborhoods where folks will be shooting gas station attendants.
At 6 bucks, we approach reality and only barely, since the stuff disappears once used.
All of the possible developments is of course extremely bullish for stocks, bonds, and real estate, since
... folks will stay home more, so will spend more on homes, and the goods will still arrive at ports stretching from Seattle to Houston, to be marked up, thus boosting productivity, and the recycled dollars from higher oil and dearer import will of course benefit treasuries, and so mortgages :0)
All jokes aside, I am actually quite concerned about the oil situation, for no particular good can come from it, unless of course one owns and continue to add to Canadian oil sands while borrowing USD.
The dollar is expensive, and the oil sands are too cheap. |
