A surprising surge in demand thanks to hotter than expected temperatures, droughts, and economic growth has created a shortage in natural gas. Joe Wallace reports for The Wall Street Journal: A scramble for natural gas is creating pockets of scarcity in the global market, boosting prices for the fuel and for the electricity generated by burning it. Rampant demand in China is sucking in chilled cargoes of gas from the U.S., after a year in which American energy companies throttled back production. A drought in Brazil has added to the competition by curtailing power output from hydroelectric … [Read more...]
As Oil Prices Rise, Where Are Shale Drillers?
In the recent past, shale oil drillers have acted to create a cap on oil prices by drilling heavily any time the price of crude seemed to get too high. Despite climbing oil prices, shale drillers seem to be absent. Collin Eaton and Christopher Matthews explain why at The Wall Street Journal, writing: Shale companies pumped with abandon anytime oil prices rose sharply last decade. But as crude tops $70 a barrel, they are barely doing enough to sustain U.S. production. Frackers have been forced to rein in spending and live within their means after many investors lost faith in the companies … [Read more...]
Electric Vehicles? American Gasoline Demand Hits Record High
Despite all the attention being given to electric vehicles, American gasoline demand has just hit an all-time high. Bloomberg's Mike Jeffers reports: Gasoline supplied in the U.S. hit a record high going back to 1990 during the week leading to the July 4th holiday weekend. A proxy for demand, gasoline supplied rose to 10 million barrels a day the week ended July 2, according to the Energy Information Administration. Market watchers were eagerly awaiting this week’s figures to see whether demand for the fuel has fully recovered from the pandemic. The inflection point underscores how … [Read more...]
COAL COMEBACK: What Happens When the Sun Doesn’t Shine?
Despite major investments in renewable energy around the world, coal is making a comeback. Coal is best suited to the energy challenges of today's post-COVID-19 economic rebound. Coal energy can come online quickly, and doesn't need the sun to shine, or the wind to blow, in order to produce. The resurgence of coal use may not last long, but its occurrence shows the inflexibility of renewable power sources. Sarah McFarlane and Katherine Blunt write for the WSJ: Coal use is surging in some of the world’s largest economies as electricity demand rebounds from the pandemic, illustrating the … [Read more...]
Heating Your Home Could Be a Lot More Expensive This Winter
Since prices and production collapsed because of COVID-19, drilling for fossil fuels has not rebounded as fast as demand, driving up their prices. This winter, reports The Wall Street Journal, prices for heating fuels could jump significantly. Ryan Dezember writes: Propane has rarely been so expensive this time of year, and prices may have to move higher yet to ensure ample supply for winter, when millions of rural Americans rely on the fuel to heat their homes. At hubs in Mont Belvieu, Texas, and Conway, Kan., propane futures traded Wednesday at $1.09 and 95 cents a gallon, respectively. … [Read more...]
Economic Researchers on Commodity Cycle: This Too Shall Pass
Don't call it a "supercycle." That's the message from economic researchers Jumana Saleheen and Lavan Mahadeva from the commodities consultancy, CRU. They suggest this is no Kondratieff Cycle, but rather a shorter business cycle set off by the pandemic. They write: Commodity prices have surged to very high levels this year. Iron ore and copper prices hit all-time highs before falling back after Beijing moved to curb prices. Aluminium prices are elevated and oil prices are fluctuating at about $75 a barrel. So are we at the start of a new commodities supercycle? Our view is that we are … [Read more...]
Chip Shortage: Why You Can’t Even Buy a Car Today
As the tension between China and Taiwan builds, there’s hope WWIII can be avoided thanks to a little-known manufacturer that supplies the world’s computer chips. Little known might not be the appropriate description for the 11th most valuable company in the world. But how many of your friends know about Taiwan Semiconductor Manufacturing Co. (TSMC)—manufacturer of the world’s most sophisticated chips? My guess is not many until the WSJ did a feature this weekend: The company makes almost all of the world’s most sophisticated chips, and many of the simpler ones, too. They’re in billions of … [Read more...]
Inside Real Estate Market: This Bubble’s Popped Baby
Your Survival Guy’s been watching lumber prices. I reported here and here that much of the increase was due to a bottleneck at sawmills. (There’s plenty of trees, just no excess capacity at the mills creating finished lumber.) Lumber futures reached a high of $1,711.20 per thousand board feet in May. On Tuesday, July futures were down to $1,009.90, off 41% from the record high. Ryan Dezember reports in the WSJ: The rapid decline suggests a bubble that has burst and the question is how low lumber prices will fall. Even after tumbling, lumber futures remain nearly three times what is typical … [Read more...]
Can China Curb Commodity Costs?
China is planning to sell stockpiled metals to fight inflation in their prices. Will it be enough? Chuin-Wei Yap reports for The Wall Street Journal: China said it would begin to sell major industrial metals from state stockpiles, an effort to squelch factory-gate price increases that have hit a 13-year high and are stoking fears of global inflation. As the world’s biggest buyer of a range of industrial commodities, China is using its market heft to try to quell the sharp rise in global metal prices over the past 12 months, including a 67% surge in copper, a bellwether for macroeconomic … [Read more...]
Post-Pandemic: Oil Demand Expected to Rise Quickly
With parts of the world reopening, oil demand is heating up, and as the pandemic subsides, the IEA expects rising demand will accelerate. The FT reports: Oil demand is expected to exceed pre-coronavirus levels by the end of 2022, the International Energy Agency said on Friday, with the body calling on world producers to “open the taps”. Consumption declined by a record 8.6m barrels a day last year as coronavirus raged around the world. It is expected to rebound by 5.4m b/d this year as vaccines are rolled out and countries open up again. In 2022, the IEA expects a further 3.1m b/d … [Read more...]
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