As Asian Oil Passes $134, PBOC Braces For Inflation Shock Following Premature RRR Cut
Update: Brent just passed $125
Asia-Pacific Tapis Crude Oil tends to be the benchmark grade for oil and gasoline pricing throughout AsiaPac. As WTI cracks $109, the Tapis crude spot price has just seen the largest 3-week rise since last February and is back to July 2008 highs - over $134. In dollars. This seems like perfectly bad timing for China's RRR cut last week, just as real inflation starts to flare in the real economy, and perhaps helps explains Gold's surge as China unapologetically unleashes inflationary pressures.
Tapis Crude has broken out (over $134) and back to JUL08 levels...
...and the rise is the quickest in a year...
Charts: Bloomberg
h/t Geoffrey
(5 votes)
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BOOM Daddy-O
We are so screwed!
Nahhh, it's transitory...
Don't worry, this is only the run up to attacking Iran. Like if the oil price is already crazy high - hey it can't get much worse now if we bomb Iran!
Just about making one of Iran's trump cards worthless...
iFucked groan.
But wasn't there a 47% decline in gasoline usage? If the usage decreases, the price of gasoline also should decrease. Something don't add up. Someone explains.
tb, yes prices will decline as soon as the real economy ceases from mass default. The Feds/ECB money printing is showing up in a greater proportion in China. Too much money is chasing the oil. Until mass default, wheeeeeee!
true brain
Due to the decrease in usage, REFINERIES are closing down, or decreasing their output by large amounts.(already happening here)
Less to sell, price goes up, less worldwide usage, PRICE must go up to make the same profit margins on what WAS the past usage.
Then add speculators, and monetary priniting induced inflation,currencies BUY less,because they are worth less.
Just a few of the possiblities IMHO.
While it is true that roughly 5% of US refinery capacity has been idled due to lower demand, the real cause of the massive rise in gas prices is more due to excessive speculation by non energy companies, mostly based on Wall Street in my opinion.
As you may recall back in April of 2011, the President along with the Attorney General created the "Oil and Gas Price Fraud Working Group" to investigate the manipulation of gas and oil prices by speculators that was hurting the nations economy. From what I understand there was one meeting and then nothing else was ever done as the influence of Wall Street in government seems to be far more influential than ethical and moral motivations to protect US consumers and the economy.
Right now, at a time when gas consumption is at near term record lows, gas prices are flying and if the President were to get serious about doing some serious investigation into the massive manipulation on the long side of the gas and oil markets it would stop this outrageous and completely non-demand/supply manipulation from hurting the US economy and its consumers. Do I expect meaningful investigation anytime soon? No. But if Obama wants a real shot at a 2nd term, he really needs to Do Something Meaningful.
How Wall Street Is Raising the Price of Gas
"...ABC News’ Mark Greenblatt Reports:
Every time you fill up your car with gas, your dollar ends up in the hands of a wide range of interests from around the world. Some of your money goes to oil companies, some of what you pay goes to refineries, and more still gets divided up by the gas stations you stop at.
What may surprise you, however, is what one of Wall Street’s top regulators has to say about who else you’re paying: speculators on Wall Street.
Bart Chilton, a commissioner at the Commodity Futures Trading Commission, the federal agency that regulates commodity futures and option trading in the United States, said it’s time to look at home — in addition to overseas — when searching for the reasons why gas prices are on the rise.
“I’m fired up,” Chilton said. “I’m concerned and we have to look after consumers.”
According to Chilton, much of the problem is actually “made in the USA,” created by Wall Street traders who gamble on oil prices.
“There aren’t markets without speculation,” Chilton told ABC News. “It’s the excessive speculation we are concerned about.”
Chilton, who has served as commissioner since 2007, said far too few players control far too much of the market, allowing them to push the price of gas higher and higher. Chilton and the CFTC are attempting to implement caps on the total positions speculators can take when trading in the oil futures markets.
Chilton obtained an energy research report from Goldman Sachs spelling out how much the Wall Street firm estimated speculators had pushed up the real price of oil sold to make gas, due to large bets in the markets.
Using the numbers from in the Goldman Sachs report, combined with current information from the CFTC, Chilton calculated how much speculation is driving up the price at the pump for the average consumer.
He shared calculations with ABC News for the first time.
By Chilton’s calculation, if you drive a car like a Honda Civic, you’re paying $7.30 more than you should every time you fill up — to Wall Street speculators. If your car is a Ford Explorer you’re paying an extra $10.41.
For a Ford F150, he says owners pay an additional $14.56 per fill up -or more than $750 a year.
For their part, industry groups representing Wall Street say there is no evidence their trading activities actually push up the price of oil.
Chilton isn’t doesn’t buy that argument. He and the CFTC are currently attempting to implement new rules that would put limits on speculation. In response, Wall Street is suing the CFTC attempting to get an injunction, which would allow everything to remain status quo.
“They don’t want these limits,” he said. “They want unbridled ability to speculate in these markets and that’s not good for consumers. It’s not good for markets. It’s not good for the economy.”..."
Duffminster
inflation is always and everywhere a monetary phenomenon
so say some topAustrianGuysnDollz
ergo, supply & demand is relegated to the diddley-squat bin by the fascist mofoz and their Ctrl + P + "promises"
and for the semantically challenged, parabolic means parabolic!
yeah! walk, ride a bike, trike or electric scooter. shop with a backpack. re-learn to ride public transportation, perhaps
like anything else, individually, you have a chance to "escape" some of this rip-off, if you wish
for many people, an 'extra' $2000+ in fuelMoney isn't gonna matter at all, especially if they "itemize" or "lease thru a corpoRobot"
for the larger picture, there will be a "shock" and an "adjustment" as the dollar is devalued...
rickshaws & pedi-cabs, BiCheZ!
Things have changed since you ran a rickshaw Slewie. Now you need to successfully complete a ten week Cert IV course in "Nationally Accredited Rickshaw Operations" Modules #7,864 through #8,314, at a local community college, plus pass annual recurrency and competency testing plus a psych evaluation, and to ensure you are meeting neon-vest compliance standards fully. Also, cup-holders have been banned as scalding was deemed an avoidable hazard.
Hint: you'll get extra kudos from examiners if you manage to avoid cow-dung splats during the practical sections.
i am a rickshaw pirate
but, i have a flat! L0L!!!
so, i will hafta get a fuking PUMP and reflate the tire
it's inflatiing nicely! everything is fiiiiiine!
Large tax base in gasoline just like cigarettes the less people smoke the higher the price
But the most important thing is we are making the world safe for Israel. /sarc
Reminds me of the Honeymooners, TV show. "To the Moon, Alice, to the Moon !".
I got just one question: Did real Gold surge or paper Gold surge ?
i.e, Is this surge due to paper markets speculation or physical buying ?
Paper price is the physical price at the margin, but there is no market price for physical gold in size (tons).
Thanks for the reply but it is not very clear.
To elaborate on my question, what I want to know is: what is driving the surge physical buying or paper speculation which can turn around very quickly?
For me, if it is physical buying then it is legitimate but if it is paper specs assholes then fuck this shit.
Paper market sets the price, for now.
True.
The way I see it is that paper speculators are responsible for the short term movements (I fucking hate it when they do these price spikes) but the physical buyers are responsible for the downside support.
The floor under the market is the physical buyer.
That’s what I think.
Paper traders control ups and downs; they need a rising price to stretch physical supply and coax physical out of hiding. The end of paper suppression will come when gold stops bidding for dollars, and paper price falls near zero.
Yep, one day bullion dealers will say fuck comex or lbma prices. This is my price take it or leave it.
And soon after that they will say fuck your paper money, I’m not giving you shit.
I've already done this with the one oz I'm looking to sell. I priced it ~30% above spot, and I'm probably going to raise it.
+ $55,000 to the lot of you above!
Looks like FOFOA's views are perccolating out to the financial community...
A possible explanation: Japan has most of its nuclear power plants shut down; somewhere they have to generate electricity to keep the industry going. Could it be that they use diesel generators (intended for backup) or other oil-burnig power plants instead?
If so, it would explain why the demand and price are up beside speculation.
Gunther - re. Japan. Yes, but, try to imagine that all the oil the US and Europe don't want, is taken up by China and India.
In the old days, if US consumption fell 50%, the world price would collapse. Those days are over. Demand in Asia is growing as fast or faster than demand falls in the West. Around 84mb per day is pumped out of the ground. It looks like the pumping rate per day will never go higher ... and only fall from here over time.
Makes Europe and the US turning away all that Persian oil look pretty stupid right about now doesn't it?
I bet that G20 will issue some soft statement over the weekend about the recent jump in energy prices.
We are in early stages of hyperinflation. It will be amazing to watch when 100 trillion USD equivalent in low yielding bonds, 0% yielding cash, annuities, life insurance around the world will try to squeeze into a $9 trillion gold market.
It will be amazing, for sure. What's the appropriate term of art for my gold is getting a chubby?
goldon?
yellowood?
goldmember?
"getting physical"?
getting a "spot-on"?
a "hard asset"?
"my phizz has an 'uptick' "?
pitching a yellow tent?
LOL. excellent.
Dupe
iWoody?
Velocity.
I'm not seeing it pick up. People were saying the same thing early last year. Remember, hyperinflation is a political event and not a monetary phenomenon. What you need is a panicky political class that no longer can manage perception so I'm notsure we're there yet.
Oh I am fairly certain we are there now. No budget, debt ceilings arbitraily raised, politicians not curbing spending at all...Yeah, it is very close. All we need is thye "panic". Oh wait, watch Europe burn.
Europe burning... That may be the key indicator of our short term fate just after.
THAT will likely be the last chance to buy gold at these bargain prices.
+ 1
Europe burning... That may be the key indicator of our short term fate just after.
THAT will likely be the last chance to buy gold at these bargain prices.
+ 1
Yes...
I think we are close. The propaganda is so bad and so unbelievable.
Agreed. We are not at the panicky state yet - at least not in terms of critical-mass numbers.
Stack. Wait. Win.
Hyperinflation is a currency event. Three apples may cost a billion dollars, but they still only cost two eggs.
Simplistic. We can say this much: When public perception changes and they realize en masse that their currency is being debased on a weekly basis, THEN velocity kicks in and the authorities are powerless BUT before any of that happens the political class sets fire to the debts in a DELIBERATE fashion.
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/9/28_Hugh_...
Hendry sums it up.
Hyperinflation is loss of confidence in the currency; printing is the reaction to this, not the cause. Printing can never catch up.
One more time. Your first part:
'Hyperinflation is loss of confidence in the currency;'
Correct. Now, what brings this loss of confidence about? Generally speaking, it is a change in perception of monthly/weekly/daily purchasing power by the public. Then cash cannot be gotten rid of fast enough and hypervelocity results.
"Printing" is an attempt to plug the holes in the Shadow banking system, however, seeing as how the 'printed' 'money' doesn't stay idle, it can 'leak' over into the real economy as might be happening now. Nothing suggests this is permanent however.
Again, no. During a hyperinflation cash is always short. There is not an abundance of cash. Printing is an attempt to meet demand for cash.
Your preconceptions are all wrong.
'During a hyperinflation cash is always short.'
Um, you're terribly confused, at least considering the historic examples of hyperinflation. That sentence hasn't anything to do with it.
Aside from having relatives who lived through an episode of hyperinflation and sitting down with them to discuss the intricate nature of the process I have read my Parsson and read about similarities and differences between Hungary, Yugoslavia and Zimbabwe.The models vary but there are some constants:
http://en.wikipedia.org/wiki/Hyperinflation#Models_of_hyperinflation
Please state your point. In hyperinflation, cash is always short; the market tries to clear at the rising cash price while the hard currency price (gold) actually falls. This is shown throughout history.
Although cash is losing value very quickly and people are trying to get rid of it ASAP, the cash is short, because despite massive increase in the money supply, the REAL VALUE of this money supply - what it can purchase in goods and services - is actually going down, hence even more printing and even more flight from cash.
The more they print = the bigger the money supply but with rising prices real purchasing power of that money supply is going down, hence cash shortages
Correct. Hyperinflation occurs when the real world stops bidding on currency. I would rather keep my three apples than have your million dollars. So to entice me, you need to offer me two million dollars. Cash is chasing the real world.
I think you are trying to say that people are poor despite having a great deal of currency.
ITG - I think you are right, with on caveat. Those with money/cash will dump their cash as quick as they can into hard assets to get rid of it before it loses value, but to the average JSP, it looks like there is no cash anywhere. People will not have the money to pay the high prices and so will clamor and moan for the government to print them up some. That is according to descriptions I have read of the public's perception during the Weimar hyperinflation.
Cheers.
Uh really Gene? How about this little precursor:
"Four-dollars-a-gallon gasoline would not derail the economy, St. Louis Federal Reserve Bank President James Bullard said Friday."
Oil looks to close at $110 = lots of political panicking over weekend ;)
vast-dom
Four-dollars-a-gallon gasoline would not derail the economy, St. Louis Federal Reserve Bank President James Bullard said Friday."
Wonder if he thinks $5.00+ will, then $6.00?.
Tell it to Floridians paying $5.00 NOW.
Would not DERAIL the economy?, WHAT economy??
Friggin idiot.
Some in FL are doing $6.00 as reported yesterday...
We had it in 2008, gasoline is a canary but it needs to leak into other necessities. See Hendry above.
I'm with you there GM but FWIW I'm beginning to sense a disturbance in the Force.
They are starting to lose it. Is my take.
I've been targeting the second half of 2012 as the time when the shit-storm finally blows into town. Come September, we'll have this conversation again, and I'll remind you that I thought they were losing it back in February.
Obama is gonna have some serious s'plain'n to do.
yep, as long as CPI is doing their price adjustments at "Dollar Tree Stores" were in good shape - they're [you know,... them guys in the black suits] having an 'exuberance moment of the 3rd-kind', in what to name-call the deflationary [-dx] lexicon for "BullWinkle World"!
Inquiring minds wonder how anyone has fate in the currency with Obammy and Nancy running the show. Proposterous!
Warren may turn out to be the idiot who watches on the sidelines helplessly.
I think this is fairly likely. I like your posts.
That's one possibility, another possibility is that lots of that money gets erased, poof, ala MFG.
As long as the BS story keeps going and the endless bailouts keep coming, prices will rise. Many investors will quickly find themselves insolvent one day. They will all default. Instant deflation bitchez!
$500 more out of the ATM on the way home...
These high, inflation adjusted, oil prices are a major drag on world GDP. If prices rise a 10% more and stay there for a while a recession is almost definitely coming.
Recession coming? What country do you live in? We have been in a recession for 4 years.
Four years ? We have been in reccession since 2000. I would argue that we haven't left recession since 1971. We just levered up and pulled economic activity forward at today's expense.
What would GenX say?
Every Monday, the German media assures me that we are currently having an "Aufschwung" - record numbers, record profits, never been better for us in the whole history of this country - everything superb and only getting better - almost no unemployment anymore.
And then - something happens on Friday - I am not sure what. But the world is ending again. The crisis is back - it will only get worse, we might lose everything, we are threatened - Europe will break apart - wars might break out - revolutions are on the way. And that everybody hates us now.
Sometimes they even manage to get this on the same day. On the morning - everything is good - after the DAX closes - world is ending. It's fascinating and sick. Journalists are such tools and clowns today. Not all of course. But too many. I am thinking that it was better in the past. Might be an illusion. At least according to surveys - journalist were never before so unpopular here. Only bankers are more unpopular.
Very interesting post. Always like to hear what the impressions of life are like in this important country. I'm sure it was better in the recent past; circa 1980, for instance. "Perceptions" are certainly "managed"; here there and everywhere.
If prices rise 10% more and stay there for a while...you're going to need to be better at handling a firearm than you are at keyboarding.
+ 9mm
a recession/depression is coming no matter what the price of oil does. The cause of the recession/depression won't be oil prices, the cause of the depression is the servicing of debt. The need to create more debt in order to service existing debt will lead to higher oil prices.
For forty years the western world borrowed from tomorrow to pay for today. Today is that tomorrow. Look out below.
DavidJ,
If prices rise a 10% more and stay there for a while arecession is almost definitely coming.
Say this is a misprint, pls...................IS almost definitely coming?.
Where do you reside?
USA. We are not in a recession yet. It surely feels like it for millions of my fellow Americans.
So, you work at Goldman Sachs or the White House, Lord Fauntleroy?
A recession is when your brother-in-law loses his job. A Depression is when you lose your job. (old joke; not so funny).
And just wait till the economic terrorists in Israel strike Iran.
lolmao500
And just wait till the economic terrorists in Israel strike Iran.
That is now officially OFF the table, no Israel strike on Iran.(for now)
Unlikely that the war mongers stop. Just look at the headlines. "Friends of Syria" meeting today to plan the invasion and resulting war with Iran.
Thats true but we are going to invade Syria insted which is just like invading Iran.
Land lock. Silk road, Strait of Hormuz, Syrian port to the Med... Secure all trade routes east and west (check)
Does one really believe Russia/China don't approve? On schedule, by design.
Ray Charles.
And like clockwork... wmd's in Syria.
http://thecable.foreignpolicy.com/posts/2012/02/24/exclusive_state_department_quietly_warning_region_on_syrian_wmds
Yeah but the Dow is at 13,000 so life is good right?
Tap on this....
Tapis is actually some of the sweetest lightest stuff around...
While the price of molotov cocktails just went parabolic, they are still a great bang for the buck:-)
The SquED calls this "growth."
If someone doesn't soon bring zero point energy into existance I'm going to go back to believing in the venturi carburator.
811 W Olympic Blvd & Figueroa St- Chevron
$5.29 a gallon
http://www.losangelesgasprices.com/
Gas price heat map -
http://www.losangelesgasprices.com/Price_By_County.aspx?state=CA&c=usa
I wonder if Nancy Pelosi can explain that to her constituents
"evil speculators"
But that "big hole in the gulf" proved there is no such thing as peak oil. How is $5.29 a gallon possible with an infinite supply of the stuff???