The Countdown to a Major Oil Price Surge Has Begun

Posted by iamnothere 5 hours ago

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Comments

Comment by fraserphysics 2 hours ago

For a long time I've been reading that the closure of Hormuz is going to constrain consumption soon. I understand the economic theory that reducing supply of an inelastic commodity greatly increases the price. The article says that inventories have insulated us from high prices so far. I am surprised by how large and effective those inventories have been. And I am surprised that futures prices are not higher. Can anyone here suggest explanations?

Comment by handoflixue 1 hour ago

If, hypothetically, the war ended tomorrow, then we could resume Business As Usual and slowly start rebuilding reserves. The Powers That Be (governments, oil corporations, etc.) have a vested interest in this: while a price spike ostensibly makes money for the oil corporations, it also drives people to invest in green energy, buy electric cars, or make lifestyle changes that reduce long-term consumption. Meanwhile, the politicians benefit from the illusion that everything is under control.

There are still enough reserves to maintain this illusion AND do a fairly orderly "jack up prices, drive down demand" transition if and when it proves necessary.

TL;DR: The whole point of these reserves is to provide this sort of stability

Comment by 3eb7988a1663 2 hours ago

Meanwhile, the gas prices near me recently decreased.

This must be how Cassandra felt all the time.

Comment by iamnothere 4 hours ago

Like the runup to COVID, everyone is just shambling along pretending that nothing’s happening. Even if the strait is opened tomorrow, inventories will continue to fall for some time. This is going to be a serious crisis.

I am really not looking forward to whatever bullshit laws they try to force through during the crisis.

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Comment by nxm 4 hours ago

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Comment by iamnothere 3 hours ago

“Getting through” a crisis is almost guaranteed short of a planet killing asteroid. We also “got through” WWII, although it was an extremely unpleasant time.

Covid (and the response to it) caused the deepest global recession since the Great Depression. It was a big deal, very damaging to the global economy, and generally a miserable time for most.

Comment by vor_ 2 hours ago

Your recollection is incorrect, and besides that, Covid had a serious impact on the world that's still being felt today. We didn't simply "get through it just fine."

Comment by dragontamer 3 hours ago

No one is claiming the end of the world here. Just $150 to $200 per barrel of oil.

Comment by bell-cot 3 hours ago

> ... like Covid, where I recall almost everyone on HN believed it'd be the end of the world ...

Looking back, but don't see that. Maybe I'm just failing to hit Peak Doomer?

For example - https://news.ycombinator.com/front?day=2020-06-09