Monday, April 3, 2023

Just when oil/gas prices were back to sensibility, the Saudis screw it all up

Unlike 2022, US oil and gas prices have been relatively benign, and today gasoline is down nearly 70 cents a gallon compared to where it was a year ago. And apparently, things were going too well for the Saudis' liking.
Saudi Arabia and other major oil producers on Sunday announced surprise cuts totaling up to 1.15 million barrels per day from May until the end of the year, a move that could raise prices worldwide....

The production cuts alone could push U.S. gasoline prices up by roughly 26 cents per gallon, in addition to the usual increase that comes when refineries change the gasoline blend during the summer driving season, said Kevin Book, managing director of Clearview Energy Partners LLC. The Energy Department calculates the seasonal increase at an average of 32 cents per gallon, Book said.

So with an average U.S. price now at roughly $3.50 per gallon of regular, according to AAA, that could mean gasoline over $4 per gallon during the summer.
And the announcement came 3 years to the day of this bit of news.

Funny that, isn't it? And just like in 2020, oil futures jumped in reaction to the Saudi oil cut in 2023.

Oil benchmarks jumped 6% on Monday, the day after the OPEC+ group jolted markets with plans to cut more production, raising fears of tightening supplies while some warned of reduced demand if oil refiners flinch at paying higher prices for crude.

Brent crude settled higher by $5.04, or 6.3%, at $84.93 a barrel, after touching its highest since March 7 at $86.44. West Texas Intermediate crude settled up by $4.75, or 6.3%, at $80.42 a barrel after rising to a two-month high during the session.
This is frustrating, because it was a typical March when it came to gasoline availability in America, and while availability declined a bit throughout the month, that's a typical March pattern.

I will note there was an uptick in gasoline consumption in March 2023, back toward pre-COVID levels.

But at the same timewhen we had slightly lower availability and higher consumption, oil was trading at $75 a barrel in March 2023 compared to $100+ in March 2022, which is even more proof that last year's spike in oil and gas prices was speculative BS and profiteering. By contrast, March 2023's price was between 6-10% higher than what we had in March 2018 and March 2019, which would be a "normal" inflationary increase of around 2% a year. Nothing odd there.

The real-life supply-and-demand situation makes the Saudis' move puzzling from an economic standpoint, and infuriating from a "they're trying to screw us" standpoint. It seems like oil and gas prices were set to rise a bit in coming months based on tighter supply and slightly higher consumption, but apparently that's not enough for the Saudis.

The US is pumping out more oil itself these days, around 500,000 more barrels per day than we were this time last year, and back to 2019 levels. Let's see if pressure is put on oil companies to increase production after the Saudis' move, especially now that we know that companies in Saudi Arabia and America made a ton of money off of our suffering in 2022.

Very fishy stuff today, and we better be ready to react and hit back against the gougers bad-faith BSers if we see gas prices go back toward $4 a gallon in the coming weeks.

Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)