We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
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Samizdata quote of the day If no one will buy this oil then why is there a market price for it? And why are there transactions occurring at this market price?
We can go further. This oil is owned by someone. That means someone has bought it.
It’s entirely true that some of this oil – say maturing futures at Cushing – has a negative price. But that’s just an annoying market price, not the absence of a market nor a lack of a price at which someone will buy it.
– Tim Worstall
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If my oil tank is full, but the delivery truck is here with my next load and I can’t back out of that purchase, I might well take a loss to offload it to my neighbor with his empty tank.
Storage costs money. Ask any farmer.
In this market where the government has a murky finger dipping in the pot, weird things occur. Weird, I say.
I live in Washington state, and in my area the price of gasoline has barely declined at all. The price of oil is a third of what it was a few months ago, but gas prices have dropped by about 5%.
What strange brew of incentives, disincentives, and perverse incentives causes this? Pffft. No idea.
But I do know that, for contrast, when the price of oil shoots up, the price of gas in my area immediately follows in proportion. Suspicious, that.
In NZ the petrol companies are losing money at the current price because their turnover is so reduced (plus no in-store sales). Some are shutting down.
There’s nothing remotely perverse about it. Fixed overheads and reduced turnover will do that for any business.
There’s nothing remotely perverse about it. Fixed overheads and reduced turnover will do that for any business.
And the granddaddy cost of all, the economic rent being leeched from them.
The “peak oil” panic of a few years ago has proven as credible as most other scares.
Good essay by Tim, as usual.
I understand that China is apparently buying oil at the vastly reduced prices and storing it for later (can’t find the link, though), which would not surprise me. China always plays the long game such as, allegedly, exporting a virus to cripple western economies, and when/if normal service, and prices, resume, will be in a more advantageous position than many countries.
Ferox – the powerful do not WANT cheap fuel.
The left push Global Warming ideology – so they want the price of fuel to be as high as possible. In fact they want you to live in a mega city dependent on mass transit and controlled by “public-private partnerships” (Agenda 21 – FASCISM, brought to the U.K. and most other Western nations by all political parties). The European Union system of government where the people have no say – “science based policy making” as the Fascists (and they are Fascists – not orthodox Marxists) of the Economist magazine would put it.
And much of the right (step forward Ted Cruz – fine mna in many ways) are linked to the oil business – who (like the left) do not want low prices for consumers.
So it is lose-lose.
A Paul Marks style world – “everything is for the worst, in the worst of all possible worlds”.
Essentially if the world does not fill you with suicidal despair – you are already dead.
I suppose China can build oil storage facilities as fast as they can build hospitals… but I doubt they can store enough oil to make a difference when the world gets back to more normal function. However, I think they have a much larger tsunami looming… the West is going to stop doing business with China, as fast as it can manage. For at least a generation, I bet. That sort of crushing recession is going to eat China away from the inside… If they intentionally released this virus, it is an unthinkably massive blunder, which may end the regime.