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Is The Oil Crash A Result Of Excess Supply Or Plunging Demand: The Unpleasant Answer In One Chart

Tyler Durden's picture




 

One of the most vocal discussions in the past year has been whether the collapse, subsequent rebound, and recent relapse in the price of oil is due to surging supply as Saudi Arabia pumps out month after month of record production to bankrupt as many shale companies before its reserves are depleted, or tumbling demand as a result of a global economic slowdown. Naturally, the bulls have been pounding the table on the former, because if it is the later it suggests the global economy is in far worse shape than anyone but those long the 10Year have imagined.

Courtesy of the following chart by BofA, we have the answer: while for the most part of 2015, the move in the price of oil was a combination of both supply and demand, the most recent plunge has been entirely a function of what now appears to be a global economic recession, one which will get far worse if the Fed indeed hikes rates as it has repeatedly threatened as it begins to undo 7 years of ultra easy monetary policy.

Here is BofA:

Retreating global equities, bond yields and DM breakevens confirm that EM has company. Much as in late 2014, global markets are going through a significant global growth scare. To illustrate this, we update our oil price decomposition exercise, breaking down changes in crude prices into supply and demand drivers (The disinflation red-herring).

 

Chart 6 shows that, in early July, the drop in oil prices seems to have reflected primarily abundant supply (related, for example, to the Iran deal). Over the past month, however, falling oil prices have all but reflected weak demand.

BofA's conclusion:

The global outlook has indeed worsened. Our economists have recently trimmed GDP forecasts in Japan, Brazil, Mexico, Colombia and South Africa, while noting greater downside risks in Turkey due to political uncertainty. Asian exports continue to underwhelm, and capital outflows are adding to regional woes. Looking ahead, we still expect the largest DM economies to keep expanding at above-trend pace but global headwinds have intensified.

And yet, BofA's crack economist Ethan Harris still expects a September Fed rate hike. Perhaps the price of oil should turn negative (yes, just like NIRP, negative commodity prices are very possible) for the Fed to realize just how cornered it truly is.

 

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Fri, 08/21/2015 - 10:27 | 6451355 Budnacho
Budnacho's picture

Yep, Zero demand at $3.75 a Gallon for gas....

Fri, 08/21/2015 - 10:31 | 6451377 Vlad the Inhaler
Vlad the Inhaler's picture

$4.50 in Cali.

Fri, 08/21/2015 - 10:34 | 6451391 Uncertain T
Uncertain T's picture

$2.15 South Carolina

Fri, 08/21/2015 - 10:54 | 6451465 Big Corked Boots
Big Corked Boots's picture

$2.15 in NJ as well. I think the only place worse to live than NJ is CA.

Fri, 08/21/2015 - 11:04 | 6451500 knukles
knukles's picture

CA's talkin' about adding another 12 cents for the roads  (It's all for the roadies, dontcha know)

Fri, 08/21/2015 - 11:09 | 6451515 remain calm
remain calm's picture

Both. What do I win?

Fri, 08/21/2015 - 11:24 | 6451619 Oh regional Indian
Oh regional Indian's picture

There has been a marked de-growth in miles driven.... ;-)

Fri, 08/21/2015 - 11:32 | 6451663 Overfed
Overfed's picture

It's running about $3 here in FEMA region X.

Fri, 08/21/2015 - 11:38 | 6451678 hedgeless_horseman
hedgeless_horseman's picture

 

 

Chart 6 shows that, in early July, the drop in oil prices seems to have reflected primarily abundant supply (related, for example, to the Iran deal).

Or related, for example, to the US Production of Crude Oil nearing all-time highs.

 

 

I told you so, time and again, going back to 2010... http://www.zerohedge.com/contributed/2013-11-05/hockey-sticks-day

Fri, 08/21/2015 - 11:43 | 6451727 Antifaschistische
Antifaschistische's picture

I, for one, feel much better that we have returned to depleting our natural resources at a record pace.  This will help to ensure that our children and our children's children have a bright future.   

Fri, 08/21/2015 - 11:49 | 6451745 hedgeless_horseman
hedgeless_horseman's picture

 

 

Based on what I see, our children's children will be plugged into the matrix, living fully-virtual lives, and will not drive anywhere.  Many sixteen year olds today don't give a shit about getting their driver's license.

Fri, 08/21/2015 - 11:51 | 6451776 Apply Force
Apply Force's picture

Meh - our children's children will farm or die.

Fri, 08/21/2015 - 12:22 | 6451933 Government need...
Government needs you to pay taxes's picture

What with all the Cesium from Fuckushima plus the cyanide from China, Californians will all be glowing lustily. . .

Fri, 08/21/2015 - 12:56 | 6452067 Jumbotron
Jumbotron's picture

"Meh - our children's children will farm or die."

Howard Kunstler talked about this in his book "The Long Emergency" back in 2005.  And continues to do so on his web site.

http://kunstler.com/

The "JIT" (Just In Time) model based on cheap global energy and cheap wage slave labor arbitrage is breaking down.  This is a multi-decade issue.  There will be recoveries....but each drop will see the world get, poorer, slower, and more local as the decades pass.

However, the elites of the world will try the very last trick in their bag of horrors......CASHLESS.  With a cashless, purely digital credit system, they can manipulate all they want, even to the point of doing "buy-ins" if the need arises...you know...to "save the children". 

That's when the last attempt at total control will happen.  But when there are still too many people, and not enough cheap, easily extracted and easily obtained resources for those people......shit will hit the fan none the less.  Cashless or not.

Then......war.  Global war....and the big reset to farming or dying.


Fri, 08/21/2015 - 17:43 | 6453544 malek
malek's picture

The JIT model has exactly nothing to do with cheap energy. More like accountants telling us "we don't need to put capital into holding a stock of materials."

Fri, 08/21/2015 - 20:08 | 6454078 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

A direct result of governments taxing inventory, really stupid!

Fri, 08/21/2015 - 20:17 | 6454106 Jumbotron
Jumbotron's picture

" The JIT model has exactly nothing to do with cheap energy. More like accountants telling us "we don't need to put capital into holding a stock of materials." "

 

Bull...Fucking...Shit.

Ever heard of Fed-Ex ?  Ever heard of UPS ?  Ever heard of 24/7 trucking ?  Ever heard of 24/7 rail service ?  Ever heard of Cloud Computing ?  Ever heard of Amazon ?  Ever heard of 24/7 overseas shipping ?

Ever heard of paved Interstate Highways ?  What about the Internet ?  What about all the steel mills, and the coke factories and the plastic factories and the asphalt makers......etc....etc....and fucking etc.

ALL of these, including so much more, rely SOLEY on cheap energy.

 

Go back to your magical X-Box and the comfort of your mother's basement.  And her magical microwave which just made you some magical popcorn.


Sat, 08/22/2015 - 06:54 | 6454943 NoPension
NoPension's picture

There is more work contained in the gallon of gas used to get most numbnuts to a job that produces almost nothing of value.

Push that car to work, and then home. And,then, tell me how hard you worked at your yob.

Sat, 08/22/2015 - 11:48 | 6455471 Matt
Matt's picture

There's work, and there is useful work. The objective is to get the worker safely, comfortably and quickly to work. The useful thing being moved weighs maybe 200 pounds. The metal box that moves the worker is over 2000 pounds. Man, I'm going to miss gasoline once it is no longer available. 

Fri, 08/21/2015 - 23:44 | 6454611 oooBooo
oooBooo's picture

Just too late systems were devised as a cost shifting mechanism. They do not rely on cheap energy. The energy to get the stuff from A to B doesn't change because it's set up to be delivered just before the line needs it or a year before. It might change because of fuel cost fluctuations but not because of when it was chosen to take delivery. What it does is shift warehousing and other inventory costs on to the suppliers. Someone got a huge bonus for reducing inventory costs but all he did was push them on to the part cost ledger as vendors just wrapped up their inventory costs into the part price. Now some clever vendors could produce a net reduction for their customers through scheduling production runs just right and such but just in time is essentially a ledger exercise of pushing costs around from one category to another.

 

Fri, 08/21/2015 - 12:29 | 6451962 Beatscape
Beatscape's picture

Anecdotal supporting evidence, my sixteen yearold has no interest in getting her driver's license. Has me and the wife scratching our heads a bit.  She spends so much time on her smartphone and gets rides from others when needed and uses Uber.  We say fine -- one less car to buy and one less person on our auto insurance. 

Fri, 08/21/2015 - 12:41 | 6452013 Apply Force
Apply Force's picture

Not like when we were 16... I bought my own 1st (and 2nd, and 3rd) cars in cash that I earned working (mowing lawns/yard work) from 12 on.  I worked on my own cars, which was not so hard, and usually Dad or another in the neighborhood could help out. I paid for my own ins. and my own gas.

Not so easy to buy a used car now - way more expensive per what a child can earn prior to being driving age.  And good luck working on your own car now - way more complex, and parts are way, way more expensive.  And insurance costs are higher as well.  No need to drive to a job for a 16 year old if the wage they earn can not even pay for car maintenance - if they could even find a job to begin with!

The Age of Less is upon us - adjust accordingly!

Fri, 08/21/2015 - 12:58 | 6452073 Jumbotron
Jumbotron's picture

BUT BUT BUT......we don't have ANY INFLATION !!!

Mr. Yellen and Mrs. Bernanke told me so.

Sat, 08/22/2015 - 06:55 | 6454944 NoPension
NoPension's picture

Where do kids pop their cherries nowadays?

Sat, 08/22/2015 - 17:43 | 6456463 Umh
Umh's picture

In their room, both parents work.

Fri, 08/21/2015 - 12:34 | 6451981 ceilidh_trail
ceilidh_trail's picture

Must be a regional thing? Mine and all her buds all were at the dmv the day they turned 16.That's all we heard for a good while.

Fri, 08/21/2015 - 15:57 | 6452903 Shaznardickleze...
Shaznardickleze the Doon's picture

No jobs, no money, no where to go, internet social life. Whats your point?
Would you pay $3 a gallon if you were paid $7 an hour? 

Fri, 08/21/2015 - 11:52 | 6451781 MalteseFalcon
MalteseFalcon's picture

Friend of mine in New England powers his house and car with solar panels on his roof.  6 year payback.

New England, bitches.

Fri, 08/21/2015 - 12:34 | 6451984 Midas
Midas's picture

With or without subsidies?

Fri, 08/21/2015 - 14:46 | 6452529 MalteseFalcon
MalteseFalcon's picture

There are some subsidies, just like every other energy source.  The payback would be no longer than 8 years otherwise.

You completely missed the main point: solar panels = energy independence (including transportation) = no energy companies.

Available now.

Fri, 08/21/2015 - 19:52 | 6454019 Midas
Midas's picture

How does your friend make it through the brutal New England winter with solar panels?  It must take a whole lotta batteries.  And don't tell me he is selling his power back into the grid because the main point, that I most definitely did not miss, is about energy independence.  If he is connected to the grid he is no more independant than the rest of us.  I am not trying to be argumentative.  I WANT to believe in solar panels.  I have tried to devise a system for my own homestead, but can't make the numbers work out as you claim.  I live in a sunny location, but not during the winter months.  If you could flesh out a few more details on his system it would be great.  I have been searching for economical batteries but haven't found anything.

Fri, 08/21/2015 - 18:51 | 6453821 CvlDobd
CvlDobd's picture

Every fucking thing is subsidised but all anyone wants to bitch about is solar subsidies.

Fri, 08/21/2015 - 19:41 | 6453983 Midas
Midas's picture

Asking a question is not the same thing as bitching.

Fri, 08/21/2015 - 19:03 | 6453861 August
August's picture

There really is no Region like Region X.

Call me a sentimental fool....

Fri, 08/21/2015 - 11:48 | 6451763 Cloud9.5
Cloud9.5's picture

Source?

Fri, 08/21/2015 - 11:11 | 6451525 remain calm
remain calm's picture

your chart is wrong

Fri, 08/21/2015 - 11:29 | 6451644 Sages wife
Sages wife's picture

I really need to pick up some crayons. Those chart thingies look like they might be fun to make.

Sat, 08/22/2015 - 00:38 | 6454671 EarthHuman
EarthHuman's picture

Imagine what price oil if we stopped subsidizing by billions of dollars the companies that are warming the planet.

Solar power is the way.

AGW is real idiots. Somebody troll me please.

Fri, 08/21/2015 - 11:13 | 6451539 cougar_w
cougar_w's picture

People are trapped in car-based lifestyles. It's drive, or die. THose who still have jobs to get to will buy fuel at any price, including $6/per or more.

Fri, 08/21/2015 - 12:14 | 6451897 flysofree
flysofree's picture

Where have you been the past 7-years?  The whole culture is changing.

Fri, 08/21/2015 - 12:28 | 6451960 cougar_w
cougar_w's picture

Changing? You have got to be shitting me.

Fri, 08/21/2015 - 20:19 | 6454119 Jumbotron
Jumbotron's picture

<chuckle>....got that right cougar_w.

The only change comes when there is no other choice but to change....or die.  And even then.........

Fri, 08/21/2015 - 12:57 | 6452070 sun tzu
sun tzu's picture

What gets me is that people think demand won't change if gas prices double or triple. People will carpool, take mass transit, and stop going out. That will lead to massive job losses as the economy craters and people don't have money to spend.  They will buy smaller cars and electric cars. It's called demand destruction.

Fri, 08/21/2015 - 13:30 | 6452231 laomei
laomei's picture

america doesnt have mass transit, doenst have jobs either, so i guess it all cancels out.

Fri, 08/21/2015 - 11:35 | 6451688 astoriajoe
astoriajoe's picture

I wonder how much they'll add for water.

Fri, 08/21/2015 - 11:54 | 6451798 pound the vix
pound the vix's picture

Where does the other $2 of taxes (inexcess of NJ and SC) go?

Fri, 08/21/2015 - 11:28 | 6451638 BandGap
BandGap's picture

$4.12 here in beautiful Chicago as the city further contemplates raising property taxes and mulls having people pay for garbage collection.

Fri, 08/21/2015 - 12:05 | 6451806 cowdiddly
cowdiddly's picture

Its about .20 cents a pound for transportation fuel in Oklahoma. 50 bag of oats/10.79= about .20 cents.

My little dragster is a great granson of Pepe San Badger and can cover 1/8 mile in about 13.5 seconds and tops out about 42- 44 miles an hour. Might be faster if I was a better driver and was younger. (Going 45MPH on a horse is some scary shit when young much less an old man with brittle bones in a field fun of Armadillo holes)

http://www.king-ranch.com/operations/ranching/quarter-horses/

runs on about 3lb a day or .60 cents

 

Fri, 08/21/2015 - 19:16 | 6453903 BurningFuld
BurningFuld's picture

Dude I'm in at .093 cents a pound. And it was really frickin' dry here this summer.

Sat, 08/22/2015 - 17:07 | 6456383 mkkby
mkkby's picture

Bullshit.  Your horse eats considerably more than 3 pounds a day.  Most likely you are paying for a lot of hay, a caretaker, shelter, range land and vet bills.

Even at 60 cents a day, you aren't getting much useful work in return.  At 45 miles per hour, you can go about 1 mile before the horse is winded.  Or it can walk for several hours at 3-4 mph carrying a small load.  Compare that to what a car/truck can do on the same amount of gas -- that's the reason your horse is really just a play time hobby.

Fri, 08/21/2015 - 12:26 | 6451949 Ms No
Ms No's picture

I'd say it is more like the answer in one quote, Kissinger the corpse is squealing again.

"Breaking Russia has become an objective [for US officials] the long-range purpose should be to integrate it," the 92-year-old told The National Interest in a lengthy interview for the policy magazine's anniversary that touched on most of the world's most pertinent international issues. "If we treat Russia seriously as a great power, we need at an early stage to determine whether their concerns can be reconciled with our necessities."

Fri, 08/21/2015 - 12:37 | 6451997 ceilidh_trail
ceilidh_trail's picture

Pay twice? Don't they already pay for it thru taxes?

Sat, 08/22/2015 - 08:00 | 6455002 Jumbotron
Jumbotron's picture

#highlytrained&unionizedsanitationtechnicianslivesmatter

Fri, 08/21/2015 - 14:40 | 6452509 DavidAKZ
DavidAKZ's picture

$US 3.15 in Australia - a US protectorate don't you know.

Fri, 08/21/2015 - 20:00 | 6454051 Advoc8tr
Advoc8tr's picture

Gotta love the way the pump price doesn't move here (No competition) ... same at $40B as it was at $80B  Currency dropped 25% - oil dropped 50% ... pump price remained static.

Fri, 08/21/2015 - 16:34 | 6453122 Hans-Zandvliet
Hans-Zandvliet's picture

Hang on, you Americans are pampered with tax-free gasoline.

This is the Price in the Netherlands: 1.66 Euros per litre. Sounds not so bad, doesn't it?

So let's convert it into your units: $7.00/USgal.

I'm NOT joking!

Fri, 08/21/2015 - 10:56 | 6451470 KnuckleDragger-X
KnuckleDragger-X's picture

There are variables to local gas prices, some of them make sense and some are pure WTF.....

Fri, 08/21/2015 - 11:24 | 6451557 Rockatanski
Rockatanski's picture

$2.35 in tucson but waht i find strange is that diesel is down to the same as regular unleaded. it use to be  at super unleaded prices...but i'll take it.

Fri, 08/21/2015 - 22:50 | 6454514 jerry_theking_lawler
jerry_theking_lawler's picture

Yep, there are less diesel user.....you know, CATS, DEEREs, and JIT truckers. This bitch is going down. Hope you have your preps made.

Fri, 08/21/2015 - 11:24 | 6451620 RiverDrifter
RiverDrifter's picture

$1.96 in Columbia SC....at Wal Mart's Murphy Oil stations, of course.

Fri, 08/21/2015 - 13:09 | 6452119 deKevelioc
deKevelioc's picture

$2.03 in all of Malaysia.

Fri, 08/21/2015 - 19:50 | 6454011 mt paul
mt paul's picture

3.47 $ per gal

north of the alaskan range..

Fri, 08/21/2015 - 13:32 | 6452242 de3de8
de3de8's picture

Its all taxes and scum govt taking every opportunity to raise taxes when prices on anything falls even if temporary. Never consider or think that price of goods will go back up then making total cost of good that much more unaffordable. Death by a thousand cuts.

Fri, 08/21/2015 - 10:36 | 6451395 nope-1004
nope-1004's picture

Fed will raise rates?  lmao.  As BOP noted a few days ago, the last rate hike was in 2006.

NINE YEARS OF BULLSHITTING THE PUBLIC about raising rates.  Enough.

Fri, 08/21/2015 - 11:13 | 6451537 DaveyJones
DaveyJones's picture

good thing they don't limit their bullshit to rate hikes

Fri, 08/21/2015 - 11:17 | 6451570 cougar_w
cougar_w's picture

Jaw-boning is all they have and they don't care what anyone thinks about it. There is no "growth" story anymore, not anywhere. When the jaw-boning no longer works to distract people from recognizing that the growth story is gone then the entire shit-show is just basically over for them.

Fri, 08/21/2015 - 11:32 | 6451667 Sages wife
Sages wife's picture

You got that right nope-1004; "...the LAST rate hike was in 2006."

Fri, 08/21/2015 - 10:43 | 6451422 Apply Force
Apply Force's picture

The chart is Brent oil and world demand - not so sure US local gas prices and demand are reflected so well there.

"Demand" at any rate really means "affordability" and oil production lags affordability changes by quite a bit - - hence what appears to be excess production to many people.  Reality just takes a while to catch up to long-term endeavors like drilling for oil.

It is simply a whipsaw in prices that is generally on it's way down... Down for the count within the decade, imo. 

Fri, 08/21/2015 - 11:21 | 6451585 cougar_w
cougar_w's picture

Demand does not mean affordability.

Ask yourself, at what price do you get out of your truck and walk or ride a bike? The answer for most people in the US is that there is no price. Because they are trapped in car-based lifestyles and have no choice. Drive or die. When they cannot afford the fuel to get out of the suburbs three times a day so they can work and shop and get the kids to school, they die.

Fri, 08/21/2015 - 11:41 | 6451716 cougar_w
cougar_w's picture

So what got me a down-vote here? The "there is no price" situation, or the "trapped in the suburbs" situation? Not that I care in particular, but people should probably reflect on what's bugging them and just maybe do something about that.

Not that you actually can do anything, of course. That being now your particular nightmare. But you could reflect on it anyway. Accept it as a spiritual journey. Or something.

Fri, 08/21/2015 - 11:48 | 6451761 Apply Force
Apply Force's picture

No red from me

Fri, 08/21/2015 - 11:59 | 6451824 Cloud9.5
Cloud9.5's picture

The demand for gasoline is to a large extent inelastic.  Cougar is right that we are trapped in the car culture.  I picked up my mother in law’s maid this morning.  She was walking the three miles from her house to my mother-in-laws.  She could not afford the repairs on her car.  We have no mass transit so she either walks or quits.   Most people would quit and go on welfare.  For all I know she may already be on welfare.

Fri, 08/21/2015 - 12:18 | 6451914 Apply Force
Apply Force's picture

If you can not PAY for gasoline it does not matter that you DEMAND it.  That begins large-scale from the top down (countries), and small-scale individually from the bottom up (the maid).

Your mother in law's maid is like Greece - can not get by on her own as she has before without help (a ride from you, someone to pay for her car repairs, .gov/welfare, etc).  So in Greece they will farm, or walk, or maybe move to a "better" place... or die.  We are all headed in the same direction though, and before too long you will be in the maid's predicament.  The squeeze is on, and in our lifetimes.

Sat, 08/22/2015 - 17:13 | 6456396 mkkby
mkkby's picture

You are simply being silly, pampering your god dammed maid like she's some irreplacable princess.  Let the bitch go on craigslist and get a used bike for very little or even free. 

If she's really to fat and lazy to walk 3 miles, she must be a terrible maid.  Let her quit and get another of the millions of mexicans who want the job.

I know.  Why don't you mop the floor while she sits and eats bon bons in front of the TV.  That's about how stupid you are driving your maid around.

Fri, 08/21/2015 - 11:47 | 6451757 Apply Force
Apply Force's picture

By affordability I mean in the larger sense - How much oil can Greece afford to import?  Or Turkey?  Our monetary systems (and so the economy created in that light) will lead the resources down in both price and availability.

And there will be death for those unwilling to walk and farm in Greece - and Greece is simply a peek at the future in general.

Fri, 08/21/2015 - 11:11 | 6451527 Cadfael
Cadfael's picture

$3.42 in my part of Calif., been dropping for a month.

Fri, 08/21/2015 - 11:26 | 6451613 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

$4.50 in Cali.

I paid $3.69 for top-premium this morning in SF Bay Area.  I did not shop around.  Where are you in Cali?

Fri, 08/21/2015 - 20:01 | 6454056 claytonmoore50
claytonmoore50's picture

Yep, taxes are the difference in price

Fri, 08/21/2015 - 10:31 | 6451379 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

Silver just got slammed by teh ppt...uuuugggg -.20 cents just like that

Fri, 08/21/2015 - 11:23 | 6451609 cougar_w
cougar_w's picture

Silver -- and just about everything else -- is going to be slammed by the end of large scale industrialization and consumer demand.

Fri, 08/21/2015 - 11:38 | 6451700 Chump
Chump's picture

Be sure to write and say thanks after you place your order.

Fri, 08/21/2015 - 10:32 | 6451382 Majestic12
Majestic12's picture

"Zero demand at $3.75 a Gallon"

You must live in the mid-west or south...I'd take $3.75 in a heartbeat!  San Jose gas is $4.99.

Yet, average incomes are the same as Arizona...

Fri, 08/21/2015 - 10:56 | 6451473 Budnacho
Budnacho's picture

Chicago....

Fri, 08/21/2015 - 10:57 | 6451475 Jus7tme
Jus7tme's picture

Sanjosegasprices lists more than 15 gas stations that sell regular unleaded for $2.77 to $2.99. The HIGHEST price seen for RU was $4.76 at some station near the airport, I guess geared toward rental care refillers from out of town, basically that do not know any better or do not care what the price is.

Fri, 08/21/2015 - 11:29 | 6451639 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

San Jose gas is $4.99.

WTF!  I paid $3.69 for top-premium in central Marin County this morning.  Seems like too big of a difference for opposite ends of the Bay Area.

Fri, 08/21/2015 - 11:49 | 6451767 dontgoforit
dontgoforit's picture

NE Geogria around $2.29.

Fri, 08/21/2015 - 12:01 | 6451834 Rage Against Yo...
Rage Against Your Face's picture

In England it is £5.31 ($8.32) a Gallon for Petrol at $45 a barrel. When oil prices were $104 a barrel they were £5.91 ($9.27). 

Fri, 08/21/2015 - 14:10 | 6452410 dontgoforit
dontgoforit's picture

My son and his wife just came back from a year in Germany.  He said prices were about what you're describing.  Pretty high considering the ME is so much closer there.  I remember paying around $2/lt about 20 years ago in UK and on the continent.

Fri, 08/21/2015 - 20:04 | 6454067 claytonmoore50
claytonmoore50's picture

I paid $2.62 for premium yesterday. I'm in N. Arizona
Californians are getting corned

Fri, 08/21/2015 - 10:37 | 6451407 Silver Bug
Silver Bug's picture

People are being prudent and doing what is right, they are curtailing their spending and preparing to buckle down. They know deep down that another crash is coming. It is only a matter of time, the writing is on the wall.

 

http://ericsprott.blogspot.ca/

Fri, 08/21/2015 - 10:44 | 6451426 Caveman93
Caveman93's picture

$2.45 Raleigh, NC

Fri, 08/21/2015 - 11:15 | 6451549 1000yrdstare
1000yrdstare's picture

2.09 in Greenville SC....Upstate for the win BITCHES!

Fri, 08/21/2015 - 10:57 | 6451474 Ruffmuff
Ruffmuff's picture

IT's about the dead petro dollar and making those pay for killing it. Well, no not those who killed it but those who got off the peg.

And so it begins.

Plus the cost should be about $1.85 a gallon.  Anyone that makes their vig from shit that comes below the earth have to share with satan.  IT's policy.

Fri, 08/21/2015 - 14:35 | 6452490 firewolfsblog
firewolfsblog's picture

$2.80 in central MN

Fri, 08/21/2015 - 18:58 | 6453838 crazytechnician
crazytechnician's picture

How are you physical gold holders going to deal with the crash in physical gold prices when you all start to sell your phyzz  to buy food and stuff ? Will you be begging the markets to artificially manipulate the price up so you can buy more toilet paper and prepper cans with your phyzz ouncezzz ?

 

Bitcoin , BTChezz .....

Fri, 08/21/2015 - 10:28 | 6451361 order66
order66's picture

Unambiguously.

Fri, 08/21/2015 - 10:28 | 6451366 Caveman93
Caveman93's picture

No job, no gas, no problem!

Fri, 08/21/2015 - 10:34 | 6451389 Majestic12
Majestic12's picture

You sure don't look like a "Caveman'...  Is your name "Lola"?

Fri, 08/21/2015 - 10:45 | 6451431 Kilgore Trout
Kilgore Trout's picture

You've never seen "One MIllion Years B.C." with Racquel Welch? Turns out cavewomen wore fur bikinis!

Sat, 08/22/2015 - 02:12 | 6454765 dreadnaught
dreadnaught's picture

and had perfect eyeliner/shadow and lipstick!

Fri, 08/21/2015 - 10:50 | 6451449 thetruthhurts
thetruthhurts's picture

Yea Majestic12.....You can find her on AshleyMadison.com  sign up now!

Fri, 08/21/2015 - 10:32 | 6451380 B2u
B2u's picture

WHAT???  What about all the demand from the  recovery that Obozo claims is occurring?

Fri, 08/21/2015 - 11:10 | 6451521 Icewater Enema
Icewater Enema's picture

That demand has been satisfied by all the windmills and solar panels that have been installed over the last several years. Winning!

Fri, 08/21/2015 - 10:33 | 6451383 Raoul_Luke
Raoul_Luke's picture

Five star rated for the negative commodity price crack - that's gold Jerry, gold!

Fri, 08/21/2015 - 10:33 | 6451384 Whootie_who
Whootie_who's picture

0.25% rate hike will destroy this house of cards? Bring on the creative destruction

Fri, 08/21/2015 - 10:36 | 6451385 SillySalesmanQu...
SillySalesmanQuestion's picture

You mean funderrrrmentals might mean something again....not

$2.35 here in NW Florida

Fri, 08/21/2015 - 10:36 | 6451393 Son of Loki
Son of Loki's picture

it's paradoxical!

 

In such a robust recovery to have no demand.

 

 

Fri, 08/21/2015 - 10:35 | 6451400 ebworthen
ebworthen's picture

More fuel efficient cars are about $10K cheaper to buy, besides getting better mileage.

Has anyone else noticed a lot more people, and older folks, driving 1.6 liter rice burners?

Fri, 08/21/2015 - 11:57 | 6451809 Lyman54
Lyman54's picture

Since I retired I drive my motorbikes as much as possable instead of the pickup.  8000 miles since spring.  Insurance for both bikes is $250 a year, never mind the difference in fuel burn.  One of my nutbar neighbours paid $80,000 for a new pickup.  When I laughed at him he told me with a straight face it was an "investment".

Fri, 08/21/2015 - 12:25 | 6451941 bmr22
bmr22's picture

2.0 liter 1986 camrey for my run around town car 32mpg and no f'in car payment LMFAO

Sat, 08/22/2015 - 01:43 | 6454737 Adahy
Adahy's picture

$2000 cash for my '89 Cherokee over 6 years ago.
She's well over 300k miles now and hasn't even hit her stride yet.
So easy to work on, even a basement-dweller can do it....if they'd get off of the couch that is.
As far as gas, well, it is a 4.0, so mileage isn't super great, but I barely drive over 100 miles a week (consolidating trips is key), so it's really not an issue.

One day, when she finally drives her last mile, I will replace her with another used Cherokee; another late 80's-early 90's model.

Car payment, Pfft!
Paying a mechanic, Pfft!

Fri, 08/21/2015 - 10:36 | 6451402 Seasmoke
Seasmoke's picture

The recent volatility is Silver is signaling something big is happening imo. It's not even been following Gold ..... Very strange.

Fri, 08/21/2015 - 10:48 | 6451440 RadioactiveRant
RadioactiveRant's picture

Will Gold production seize up with the fall in copper production? Lots of chatter that the fall in copper may be structural rather than cyclical as much of the use over the last decade is industrial fit out that won't be repeated on the same scale now China has largely urbanised.

Fri, 08/21/2015 - 10:36 | 6451403 taketheredpill
taketheredpill's picture

 

How can demand be both +ve and -ve in early August??

Fri, 08/21/2015 - 10:37 | 6451404 pndr4495
pndr4495's picture

Have the algos responded to this headline yet? In a little book titled " Winner Take All " William Gallacher said something like this: " the most powerful thing a trader can know is what other traders' positions are in that market. " Seems to me that the banks - in spite of Chinese Wall restrictions - know quite a few traders' positions and will pound oil until those positions change.

Fri, 08/21/2015 - 10:40 | 6451413 q99x2
q99x2's picture

I did my patriotic duty and spent 11 weeks on the east coast this summer. That should have helped use up some oil.

Fri, 08/21/2015 - 10:41 | 6451417 HandyCrapper
HandyCrapper's picture

High State gas taxes

Fri, 08/21/2015 - 11:27 | 6451632 cougar_w
cougar_w's picture

Yeah, like all the states increased taxes all at once, by a lot.

Nope.

Fri, 08/21/2015 - 10:46 | 6451430 Dr_Snooz
Dr_Snooz's picture

"Yep, Zero demand at $3.75 a Gallon for gas...."

Yeah, the price of oil has halved, but the price of gas is unchanged. How does that work? If we yell loud enough at our Congresscriminals, they'll launch some price-gouging investigation, determine that there is none, sweep it all under the rug and get back to servicing their corporate constituencies.

The problem is that you can only steal so much from the people before it's all gone and the whole system crashes...

Oh wait. That's already happening.

Fri, 08/21/2015 - 10:50 | 6451448 BustainMovealota
BustainMovealota's picture

It works when the people put their ass in the air and let their elected "representatives" have their way with that ass.  ie,  not good for you.

Fri, 08/21/2015 - 10:51 | 6451454 Benjamin123
Benjamin123's picture

Buy oil, make gasoline, take advantage of the price difference.

ISIS is heavily invested in small scale mobile refineries.

Fri, 08/21/2015 - 11:32 | 6451661 cougar_w
cougar_w's picture

People will buy gas  -- at any price -- before they buy groceries. Because they have to get to work as an urgent matter, because they cannot afford to lose their job, because half the people they know are already out of work. They have to keep that job no matter what -- and work two jobs 20 milesa part maybe three -- so that later in the week they can then think about buying groceries.

I'm kind of surprized the ZH crowd doesn't get this part.

The price of gas will go down when a lot of people are homeless or dead.

Fri, 08/21/2015 - 12:05 | 6451850 homiegot
homiegot's picture

We don't work 2 jobs 20 miles apart.

Fri, 08/21/2015 - 12:58 | 6452074 TheAntiProgressive
TheAntiProgressive's picture

Maybe the people are starting to wake up to the fact that it is all a mirage this job thing and all.  They create the money out of thin air when they want and have all us fools running like a hamster on a wheel to get some of this stuff in essecence wasting our lives in toil to support the reality of debt, monthly nut cracking that lays claims then to your "wages".  So really when you net it down you work for free.  And who wants to do that when you can sit at home and pretend you are "free".

Sat, 08/22/2015 - 17:25 | 6456421 mkkby
mkkby's picture

Hey idiots, miles driven is at AN ALL TIME HIGH.  It took me about 30 seconds to look it up.  From the start of 2008 recession, demand fell about 3-4 % and has climbed back.

So, yes, there is plenty of demand at these prices.  More than ever before.

http://www.advisorperspectives.com/dshort/updates/DOT-Miles-Traveled.php

Fri, 08/21/2015 - 10:46 | 6451432 falak pema
falak pema's picture

Calling Gail Tverberg, whose finite world is looking ominously true.

When you hit a sink hole you can dump all you want it won't fill up.

But to get the bump to stump up like Jack's stalk so that you can hump the she-camel on wobbly legs is a prowess beyond all fiat blowhards.

God, does it have a heavy ass now lying on the grass  out of gas !

I hope those other she camels Yellen, Lady Lagarde and Mutti --currently on a raping spree in Greece-- and the Squid machine, Draghi-- all get the message.

Three little financial piggies in their house of cards with deflation wolf at the gates.

Huff, puff and...suck...geez, watch it all disappear!

Vere is my Euro gone?

Dieselbloom vy does in not bloom? Juncker vy is your laundry machine not churning?

Hollande haff you no shame to say you vill pay your debt when you are sinking with the boat people into the Club Med lake ?

Who to believe ?

DEEZ NUTS vill you come and run EU for us???

Fri, 08/21/2015 - 11:00 | 6451488 samsara
samsara's picture

"Calling Gail Tverberg, whose finite world is looking ominously true."

Yes,  GailTheActuary of course was correct.  Smart lady,  read her comments/articles for years on TheOilDrum.

Falak,  Try this one from AutomaticEarth.  Nicole(aka StoneLeigh)  nails the future I believe very correctly.

Nicole (and Ilargi) used to run TheOilDrum Canada before AutomaticEarth.

http://www.theautomaticearth.com/2015/08/nicole-foss-the-boundaries-and-future-of-solution-space/

 

Nicole Foss: The Boundaries and Future of Solution Space

Fri, 08/21/2015 - 11:16 | 6451559 falak pema
falak pema's picture

thanks I enjoyed it.

Local area networks and value chains, not cancerous globalization. Minimal mercantile exchanges to starve the Oligarchy beast, to sustain human chains; except where labour lacks like in Germany.

Peak Oil and peak RM were already in the cards in 1979 with world population exploding. We should have learned from second oil shock.

Help Africa grow don't rape it! Respect Che Guevara's legacy by doing same in Land of Latinos. All those guys who died for what : Che, Gandhi, Mandela, even Giap!

But Pax Americana was on another page : Reaganomics!

I said this back in 2007 -2010, to the wind!

I wrote it all down but haven't published it.

Lol, it blows back now.

Fri, 08/21/2015 - 11:35 | 6451679 cougar_w
cougar_w's picture

Yeah I read that twice. Brilliant work, very sobering. TAE has been right-on for years.

Gail and Nicole are square on the mark. Gail's writing completely changed my thinking on a lot of these issues.

Thank the techno Gods for the Interwebs.

Sat, 08/22/2015 - 17:45 | 6456464 mkkby
mkkby's picture

The problem with Gail is that she thinks SOMETHING HAS TO BE DONE ABOUT IT.  That is, some government or higher power must step in and force people to act more rationally for the future.  That makes her and her ilk globalists and statistics -- and we all know how badly that would turn out (or has already turned out).  I'm sure she would just love carbon taxes and all the nonsense the UN dreams up.

Nothing needs to be actively done to fix these problems.  As resources get more scarce, price action alone will slow down demand.  The fed can't print natural resources.  Slowly over time the world will adjust, probably leveling off population growth at some point.

I notice gail now talks about decades of change.  In 2010 she confidently predicted imminent crashes/resets.

Fri, 08/21/2015 - 10:50 | 6451451 PrimalScream
PrimalScream's picture

Other readers are right - the price of gas at the pump in Los Angeles has been close to $5/gal.  Gasoline is always more expensive in CA because of the added taxes.  But someone is raking in huge profits at the current time.

Sat, 08/22/2015 - 17:46 | 6456469 mkkby
mkkby's picture

Total fail.  It's 3.05 - 3.19

http://www.losangelesgasprices.com/

Fri, 08/21/2015 - 10:59 | 6451484 Little Boomer
Little Boomer's picture

$2.45 in Western Mass.

Fri, 08/21/2015 - 11:06 | 6451507 rejected
rejected's picture

Yes.

Fri, 08/21/2015 - 11:10 | 6451512 Jus7tme
Jus7tme's picture

There are over 15 stations in LA that sell gass for $3.19 to $3.25, per lagasprices.com. There are also LOTS of stations at less than $4/gal. If you are paying $5/gal you can only blame yourself.

Fri, 08/21/2015 - 11:11 | 6451518 Silverhog
Silverhog's picture

Anybody looking at the Dow on Marketwatch see a brief drop of 565? The S&P showed a 19 handle as well? A minute later iDow was back up to 235? WTF was that?? I know I saw it.

Fri, 08/21/2015 - 11:10 | 6451523 Downrange
Downrange's picture

Cushing OK storage is about plugged, then what?  Total friggin shutdown

Fri, 08/21/2015 - 11:19 | 6451576 fowlerja
fowlerja's picture

Amazing that there is so much financial press coverage over whether the Fed will or will not raise interest rates..so much gloom and doom...so these Fed guys and gals sit up in their ivory tower and survey the global landscape and make this "heavy decision"...we give them too much credit for having this wonderful foresight and vision...

Fri, 08/21/2015 - 11:19 | 6451580 moneybots
moneybots's picture

"the most recent plunge has been entirely a function of what now appears to be a global economic recession, one which will get far worse if the Fed indeed hikes rates as it has repeatedly threatened as it begins to undo 7 years of ultra easy monetary policy."

 

The boom causes the bust.  Years of QE is the problem, not potential rate hikes.  Can't burst a bubble, until you build one.  A bubble is 100% guaranteed to burst.

Fri, 08/21/2015 - 11:20 | 6451592 jjsilver
jjsilver's picture

And of course the source for this data is impeccable. LOL

Fri, 08/21/2015 - 11:21 | 6451595 DaveyJones
DaveyJones's picture

Gail the Actuary (The Oil Drum) and many others have been predicting this phenomenon for some time now. The (modern) world (and their economic models) are entriely built on the fiction of never ending growth. Since energy drives everything and since the economic world has exponentially bet way out into the future, the economic structure will fall (completely apart) before the energy structure does. Even though it will take more and more money (read energy) to get the same energy out of the ground, the people will not be able to afford the price the companies need to charge and, as Ruppert said, everything wil just shut down.  

Fri, 08/21/2015 - 11:40 | 6451708 MSimon
MSimon's picture

There is a way out:

http://protonboron.com/portal/

 

Fri, 08/21/2015 - 11:23 | 6451605 Son of Captain Nemo
Son of Captain Nemo's picture

Courtesy of the following chart by BofA, we have the answer: while for the most part of 2015, the move in the price of oil was a combination of both supply and demand, the most recent plunge has been entirely a function of what now appears to be a CONTRIVED  global economic recession...

Fixed it!

Fri, 08/21/2015 - 11:29 | 6451643 ToSoft4Truth
ToSoft4Truth's picture

Toyota sent me a flyer offering 0% interest on anything.

Meanwhile, the Big Two are flooding dealer lots with monster trucks.

Two opposing strategies for sure. 

Fri, 08/21/2015 - 11:44 | 6451738 cougar_w
cougar_w's picture

This is why corporations are ultimately too stupid to live. In a few generations people will talk about "globalism" and mega-corporations as if they were mythical creatures.

Fri, 08/21/2015 - 12:33 | 6451979 bmr22
bmr22's picture

I laugh my ass off everytime I see one of the local rednecks tooling around in thier 8 foot tall $50,000 monster trucks with a rebal flag flying in the back. All the while they are working a shitty factory job for $12.50 an hr and renting the funiture.

Fri, 08/21/2015 - 11:31 | 6451660 Fox-Scully
Fox-Scully's picture

$3.07 Reno Costco

Fri, 08/21/2015 - 12:04 | 6451845 Fiscal Reality
Fiscal Reality's picture

$2.19 regular Tampa Wawa

Fri, 08/21/2015 - 11:32 | 6451669 spoonful
spoonful's picture

I hope anyone long on oil or dependent on its high price takes it where it hurts - they have long benefited from high energy prices at the expense of everyone else.   

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