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Do You Remember The Oil Crisis And “Stagflation” Of The 1970s? In Many Ways, 2019 Is Starting To Look A Lot Like 1973…
Do You Remember The Oil Crisis And “Stagflation” Of The 1970s? In Many Ways, 2019 Is Starting To Look A Lot Like 1973…
The price of gasoline is rapidly rising, economic activity is slowing down, the Middle East appears to be on the brink of war, and Democrats are trying to find a way to remove a Republican president from office. In many ways, 2019 is starting to look a lot like 1973. For many Americans, the 1970s represent a rather depressing chapter in U.S. history that they would just like to forget, but the truth is that if we do not learn from history it is much more likely that we will repeat our mistakes. And without a doubt, right now a lot of things are starting to move in a very ominous direction.
“Stagflation” was a term that was made popular in the 1970s, and it occurs when there is a high rate of inflation but economic growth is declining or stagnant.
The U.S. hasn’t had a serious bout with stagflation in quite a while, but it appears that we may be moving in that direction.
Let’s talk about the slowdown in the economy first. On Monday, we learned that sales of existing homes in the U.S. were way down in March…
Home sales are struggling to rebound after slumping in the second half of last year, when a jump in mortgage rates to nearly 5% discouraged many would-be buyers. Spring buying is so far running behind last year’s healthy gains: Sales were 5.4% below where they were a year earlier.
On a year over year basis, existing home sales have now fallen for 13 months in a row.
That is terrible, and there is no way to “spin” that fact to make it look good.
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Satellite Imagery Reveals China’s Strategic Petroleum Reserve Is Vastly Greater Than Disclosed
Satellite Imagery Reveals China’s Strategic Petroleum Reserve Is Vastly Greater Than Disclosed
At the end of August, we did a follow up article on what we believe is a far bigger marginal driver to the price of oil than OPEC production (which may or may not be reduced by up to 750kbpd in November), namely the Strategic Petroleum Reserve of China, a major importer of oil in recent years, along with India, taking advantage of low prices and largely supporting global oil demand growth at a time of rampant oversupply, and which we profiled most recently in “A Chinese “Mystery” Has Become The Biggest Wildcard For The Price Of Oil.”
The simplest reason why Chiina’s SPR capacity (and storage) is of key importance, is that it determines the ongoing demand China has for oil – of which much ends up in storage – and also allows analysts to calculate how much more oil China would need, in order to fill up its SPR. While China has traditionally kept any data about its SPR inventory as opaque as possible, in a rare release this month, Beijing reported adding about 43 million barrels of crude to its strategic reserves between mid-2015 and early this year. Reserves totaled 31.97 million tons in early 2016, equivalent to about 234 million barrels, the National Bureau of Statistics said in a statement that was the first government update on reserves since December.
A guard stands before the oil SPR tanks at Zhoushan
As Bloomberg confirmed, emergency stockpiles of the second-biggest oil user have been a source of speculation among analysts and traders, who rely on customs figures and infrequent construction updates to estimate how much of the country’s imports go into strategic inventories, and for how long they will continue to fill.
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2015: Asymmetric Oil Warfare
2015: Asymmetric Oil Warfare
Let’s consider some examples of potential asymmetric-warfare tactics as they relate to the price of oil.
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