National Economic Council Director Kevin Hassett appears on Bloomberg News to discuss the US March jobs report and oil market supply disruptions related to the military action in Iran against the impact of oil prices on the US economy.
Director Hassett notes the continued goal of the Trump MAGAnomic plan is to build momentum, keep driving domestic investment and the short-term impact from Iran should mitigate quickly. WATCH:
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Question about the price of oil to the US refineries, end users, etc. If only between 1 and 10% of our oil comes to us through the Hormuz Strait, why did our price go sky high? Is our price based on cost of production, if it is then the price should have hardly moved. If our price is based on supply and demand, our demand is constant and the supply is supposedly 90 from US suppliers. Any Oil and Gas experts got an answer?
Also, Thinker, maybe some of these oil & gas experts can answer why our gas at the pump shot up in 3 days by .40 or .50 cents per gal when the gas in the stations fuel tanks was bought at the lower price. Plus, gas in the pipeline from the distributers was bought at a lower price. I think we saw mucho price gouging going on here in Texas.
The price of the commodity, no matter where is resides at any given time, is what the MARKET will pay for it.
You might by gas at $3 a gal….but in the week it takes it to get to the distributor, the MARKET might be valuing that gas at $4 a gal.
In a free market, the possessor of any commodity has the right to sell it for what he can get for it.
He almost has to charge more, if he hopes to stay in business.
Yes!
The same for precious metals dealers.
Why does a mutual fund,
or stock,
or soybeans,
go up
or go down,
even though the
fund or stock or grain
represents the same
business/ entity
as yesterday ?
Ans.
it is the price that people, the market,
‘thinks’ it is worth.
And that can change, up or down, during the day, or next day.
….free market…
Imho
The value of a thing is determined when someone purchases it.
True.
But that value can change instantly if someone is willing to PAY MORE for it at any time subsequent to when it was first purchased.
Or…if suddenly that thing is no longer in as much demand, its value can DECREASE rapidly as well.
That’s exactly my point
Exactly. If you buy gold you will pay today’s market price no matter what the seller paid for it.
Excellent example…housing. In our area, just 3 years ago people were paying $50,000 over asking prices (often sight unseen) to buy a house.
Texas gal here agrees. A question we have asked ourselves as far as gas already purchased.
In our area, pre this operation, the prices have been up and down like a fiddler’s elbow. Many times changing from morning to afternoon. And by as much as 20-30 cents per gallon.
???????????????!!!
But the latest increase was so hefty that I had to remember I was still driving and take my shocked eyes away and return them to the road. My jaw, however, stayed dropped.
Every gas station in our area seems locked into the same prices.
Questions, questions…
Betsy, did you just say:
‘The prices have been up and down like a fiddler’s elbow.’
Why Ah believe Ah did, dear WORDMAN 😉
That’s my Southern Sister!
Yes, Aggie. Absolutely 💕
Was he on the roof?
“On the other hand”!
❤️✝️❤️🫵
💕 😎
“Every gas station in our area seems locked into the same prices.”
Yes that’s true, the days of gas wars are long gone.
For years the best has been a couple cents here or there.
People will drive 10 miles to save a penny a gallon on a 12 gallon fill up.
Filled up yesterday diesel $5.85 was $130.00, the way I look at it is if I lived in a blue outhouse state it would be that every time.
Listen real close and you won’t hear a peep for the state and local tax collectors, sales tax income is way beyond what was budgeted.
Carry on.
All is silence. So true, so true…
I don’t drive 10 miles to save a penny a gallon. But I certainly pay 20-30¢ a gallon less by stopping 8 miles away… when I’m actually near a lower priced station. I always have.
Actually it’s more than that if I go from the absolute high in my area to lower priced stations. Still haven’t paid over 3.99 a gallon even though I’m seeing stations at $4.49! Most are in the $4.19 range. High State gas taxes here in PA.
It’s $10/gallon in parts of CA.
So it shouldn’t be a big supply issues here in states, but………There are 3 refineries closed or closing and a 4th is just announced, here in Cali; that impacts lots of western states? Nevermind the base barrel cost! The recent refinery explosion in Houston, is it back on line? Good point that states don’t mind rise in sales tax revenue, while some pols wistfully declare we must give people relief!
Newsom’s energy board is to vote on raising taxes up to another dollar a gallon. That’s our fight… state government.
The short answer is replacement cost.
There’s a link in my comment below for a fuller explanation.
Correct, but the seller can get a better margin on both sides of the rise and fall.
I think a lot of people here feel that the cost is out of line with the true impact of the war. It also plays well to the Orange Man Bad TDS psycho Marxists deranged person…. Sorry I digress. 😔
Exactly.
On the other end……When world oil and products crash ( usually fast and deep), the high priced product is still in storage. Gas stations will be pumping previously ordered and stored expensive fuel. Public pressure makes them sell low, after buying high.
Gas stations have to charge you for the price they are going to pay for their next supply, if that is going to be higher. Otherwise they couldn’t buy your next refill.
In California, thanks to Gavin Newscum and our crazy legislature, gas went up $1/gallon between my 2 week fill up. I paid $5.50/gallon at Costco cheapest!
Cal voters are about as sophisticated as their patron saint Jerry Brown. They cannot break the trance they’re under short of a Democrat telling them to vote red. Expect no change until Sac is bankrupt. And then they’ll blame Trump.
The gas station owner pays cash (this includes credit card charges) for each gasoline delivery. This means he has to charge the current market price every day to pay for the next tanker.
Prices drift down more slowly because of human nature. That’s why we need competition on every corner.
I used to work in the bidness.
Yes, so did my ex. For many years he would go out at night and conduct “price surveys” to see if they should raise or lower their prices based upon the competition prices of other companies.
Gouging going on here in Pittsburgh, pa for sure.
Great question! Very practical. Gas is pricd according to current market price, not price on delivery. It’s anticipatory.
replacement cost
Oil is a global commodity.
Folks keep asking and the answer is still the same.
Yeah, people don’t understand that if China is suddenly willing to pay more for the oil, they’re getting the oil until we’re willing to pay more. The person willing to pay the most is going to get the product.
Can we segregate that which we have for domestic use from that which goes on the global market? Is there some sort of cosmic ru,e that prohibits this?
Never mind. I just saw Biff’s answer below
I had the same question. Then got educated here about our refineries built to process heavy crude, not the light stuff we produce domestically. So the stuff we import for our needs is negatively impacted by overseas activities 🙁
As you stated refineries are built to a spec as to what the feed stock is.
As such the end product is different.
There is Beverly Hillbilly thought in this country that all “oil” is going to end up as gasoline.
.
Oil is a commodity just all commodities they subject to the global market
The pump price is based on replacement cost, not the cost in storage. Here’s a decent explanation of the pricing factors:
https://oilprice.com/Energy/Energy-General/Why-Did-Gas-Prices-Jump-So-High-So-Fast.html
Thank you.
The other side is that when the price of replacement drops it is not on the same slope as the upside.
Out of our scope of control.
Yup. Anyone who has ever run a business, ESPECIALLY a retail one, understands the concept. It’s not the cost paid of current inventory, it’s the REPLACEMENT cost of future inventory that dictates present price. In oil as in most commodities, the ‘futures market’ has a large influence on current prices.
except when prices drop, there is a longer delay for retail prices to drop then the instant rise.
Well – one underlying concern.
Oil traders are worried about the oil market becoming “disconnected” or “fractured”.
I.e., a US market, a European market, an Asian market, etc., each paying a different price for what they can buy and get delivered.
The US produces more than enough to supply itself. But is currently tied to the Global market by some invisible strings (Adam Smith). And one slightly visible one – the cost of transport.
If President Trump were to say something like, “No more US Oil going overseas until US demand is met and only then at a Premium”, things would get interesting.
No more Marginal pricing (cost of global market clearing barrel of oil).
Or other scenarios resulting in the price of oil being a local market price instead of global.
The cost of US produced oil meets US demand at something like $70/Barrel.
Hmmmm.
Consider this from AI:
The BP Whiting Refinery is the largest refinery in the Midwest and bp’s largest facility in the world, located in Whiting, Indiana, with portions extending into Hammond and East Chicago.
Established in 1889 by Standard Oil, the 1,400-acre complex currently processes approximately 440,000 barrels of crude oil per day, producing gasoline, diesel, jet fuel, and asphalt for the region.
We have capabilities available…And 50 miles down the road, in IL, per AI:
The ExxonMobil Joliet Refinery is a coking refinery located at 25915 S Frontage Rd E, Channahon, IL 60410, operating under the Joliet operations division.
As one of the largest integrated fuels, lubricants, and chemical companies globally, ExxonMobil utilizes this facility to produce lower-emission fuels and innovative products critical to modern society.
You probably remember Fahey Flynn, Aggie; he sold a lot of Standard Oil products from that Whiting refinery.
You expect more from Standard…and you get it.
but what kind of crude, sweet, heavy, light, sour. I thought oil was oil until I married a refinery worker. Most of the US refineries are built for the crude that is most prevalent in the area they are in. For convenience and cost effective.
Also, we refine a lot of oil from Canada, which is heavy–tar sands stuff.
I saw some evidence of the fracturing of the global oil market other day. Read a few articles discussing it. Theorizing that this maybe why it looks like the Trump/US Navy does not seem to be in any hurry to actually open the Straight of Hormuz
City of London manipulating oil futures.
California imports much of its refined oil products, now that Newsom is basically forcing its refineries out. Also, scarcity–increased demand for less available product–drives prices up regardless. Oil sells on a world market, and prices fluctuate accordingly. Oil traders shop the world.
Refineries play a big role. Except for a fairly small refinery in Galveston, the last large refinery in the US was built in 1977. And most of the 130 or so refineries in operation were built to process heavy crude rather than the light sweet crude oil produced by most of our American oilfields. So we end up exporting a lot of our light crude to be refined elsewhere and import much of the heavy crude that our refineries process.
Note: I worked in the Permian Basin oilfield for a decade and I pay attention.
To end on a positive note, ground has been broken in Brownsville TX for a new refinery that will process the light crude.
From the net: “the new America First Refining (AFR) facility at the Port of Brownsville, Texas, is specifically designed to process 100% domestically produced light shale oil. The project, set to break ground in Q2 2026, aims to process 60 million barrels annually (approx. 160,000–168,000 bpd) of light, sweet crude”
I’m sure President Trump is aware of this facet of the issue and will work on more new refineries.
Doncha love the name of the new refinery?!!!
Here in California Democrats and Marxists are taking us backwards.
Phillips66 Refinery in Los Angeles (Wilmington) has shut down, as has Valero in Benicia (w waterfront views). Valero also has a direct pipeline to a local airforce base. These two process 20% of our oil. On top of this, upcoming new regulations could push Chevron to close their refineries, another 30% of our capacity. It’s insane. We also have a specially mandated summer blend which only has an infinitesimal affect on pollution, but hurts consumers.
One way Governor Newsom “helped” (Eye roll.) After a recent supply shortage, he and his brilliant (cough) advisors mandated that refineries keep on hand large volumes of product to cushion against such supply disruptions. Which is a nightmare and handcuffs production. This helped push the two recent closures.
Unsure how this will affect Chevron’s $550 million settlement with the City of Richmond, CA (to be paid over 10 years to fund community projects and avoid a proposed refinery tax). Chevron has had some pollution and accidents, which has impacted local residents.
I think President Trump should de lare a National Emergency for California and keep these two sites available for refining at least until the November election.
Spikes in CA fuel prices will affect the state, as well as air travel (jet fuel).
Excellent example.
Any part of the globalist green agenda that hurts every state goes double for California.
I refuse to “write off” California – it needs to be set free from the commies! They do not deserve such a big beautiful state.
Think about market prices as an auction. At an auction, if a bunch of new bidders show up and outbid everybody else, then the sale price will surge higher.
Our demand for oil hasn’t changed. Our supply hasn’t changed. But oil buyers around the world (mostly in Asia) can no longer get oil from the Persian Gulf they would normally buy. They are bidding up the price of the oil we normally buy. Oil producers will sell to whoever gives them the best price. Refiners will sell to whoever gives them the best price. Gasoline wholesalers will sell to whoever gives them the best price.
The retail gas station will raise or lower their posted prices based on how much gas they have left in their tanks and how much they expect their next truckload of gas might cost. If their posted price is set too high they get fewer customers. If their posted price is set too low they might run out before they get a new shipment.
The GLOBAL market makes a difference. Where would you sell something?…highest bidder?
“why did our price go sky high?”
Because they can.
There is more global demand for oil from the US as supply through the straits decreases.
For example, Australia is buying oil from the USA where it previously mainly brought oil refined in East Asia but sourced from the Middle East.
There isn’t that much of a supply of gasoline in underground tanks. Our Costco refills its tanks three times a day! Smaller stations maybe 1-2X weekly. It only takes a few hundred cars and trucks to use up 10,000 gallons.
Check your state gas tax, see if it’s been raised behind your back.
The United States needs to help build and finance a new oil pipeline bypassing Hormuz from Saudi Arabia to Syria’s Mediterranean port and a second oil pipeline to Yanbu on the RedcSea. This should have been done ten years ago. There’s no reason for the US economy to be held hostage by a few wacko mullahs in Iran. Any oil pipeline bypass would pay for itself in a year.
Its doable, another AI:
The primary oil pipeline operating in Iowa is the Dakota Access Pipeline (DAPL), a 1,172-mile crude oil pipeline that transports up to 750,000 barrels per day from North Dakota to Illinois, crossing through 18 Iowa counties including Sioux Center, Storm Lake, Ames, and Fort Madison.
Not sure about shipping with oil tankers on Lake Michigan or the other Great Lakes…but again, doable…
Again one more from AI for what its worth…:
No crude oil is currently transported by tankers on Lake Michigan, although petroleum products like gasoline and diesel are regularly shipped via barge and tanker on the lake.
While crude oil is not actively moved by tank ships, millions of gallons of refined gasoline produced in Illinois are shipped out of Green Bay across Lake Michigan annually.
Canadian oil that can’t be transported through all the pipelines Obama and Biden prevented from being built is instead shipped by rail-cars, mostly on the Warren Buffett owned BNSF railways. The rail tank cars are built by a company “Marmon Holdings” [UTLX] that Buffet bought a 60% share of.
Dec. 26 2007 from RAILWAY AGE Magazine: Warren Buffett is at it again. “Marmon Holdings” [UTLX] is becoming his property (by a 60% financial holdings stake) — presumably that includes all “UTLX” freight cars in N. America…..
________________________________________
Buffett buying Union Tank Car owner
Warren Buffett’s Berkshire Hathaway has reached an agreement to buy 60% of Marmon Holdings for $4.5 billion and plans to acquire the remaining 40% over the next few years at a price based on the conglomerate’s future earnings. Union Tank Car is a major Marmon property and will be a substantial addition to Buffett’s rail industry interests, which include equity positions in BNSF, Union Pacific, and Norfolk Southern.
According to press reports, Buffett completed the Marmon deal in just about two weeks, having been first approached in early December by a Goldman Sachs banker representing Marmon’s owners, the Pritzker family of Chicago, at a rally for Senator Hillary Rodham Clinton in San Francisco.
(Buffett was a big Obama, Hillary, JB Pritzker and Biden donor BTW. Buffett also owned a big stake in Goldman Sachs.)
Not far from my house in NY they built a huge pipe line and abandoned it years ago. Not once did anything run through it. I still dk why.
You wouldn’t happen to know which pipeline it is?
I think there’s already at least one such pipeline.
No…the Europeans need to do that.
Or better yet, the Arabs that want to sell it.
Or we could do it, and then charge the Euro-weenies a surcharge on oil that flows through it. 💰 💰 💰 💰
Never mind those cruise missiles…
With our planes and choppers now being shot out of the sky, I smell the Iranians have been holding back some defensive weaponry just for this purpose of breaking America’s will. My senses tell me Russia or China may have supplied such weapons to take down our planes and choppers.
Time to really bring down the hammer on Iran for if they capture an American warrior I will bet a public execution takes place to show further defiance while trying to rally faithful Iranian supporters of this theocracy.
May God have mercy on Iran if harm comes to our Warrior…because I am sure PDJT won’t….
There are thousands of acres of sand there, in/under which to hide weaponry, are there not?
Sand can become glass in the blink of an eye.
Well, only two planes hit and one of them limped back to base, as far as I’ve heard. That is actually rather remarkable.
I thought we needed 250k new jobs a month to keep the ship afloat?
Ai is replacing jobs at a faster pace everyday and being used to set up a CCP style control grid.
The ill timed Iran war is getting Jefferies closer to the SOTH with rising fuel costs and energy driven inflation.
Joe six pack is most displeased and likely to sit out the mid terms. Especially in PA with GOP’s lack luster candidate for governor.
If Joe six pack doesn’t vote then he can switch to wine (whine) after the demtards screw him over even more.
Joe Sixpack is getting screwed over by the Philly vote rigging machine regardless.
Thanks for bringing this up. Seems no one really wants to address the job crisis. And it IS a crisis regardless of what this administration spews out. The white collar market has been not only been AI’d but also increasingly offshored, reshored and Visa’d. The unemployment rate is about 35-40% in reality. And Joe sixpack is probably JoeIPA/white collar and he WILL sit out the midterms…….
Here is another take on the whole operation. From a boat captain
https://gcaptain.com/the-hormuz-hypothesis-what-if-the-u-s-navy-isnt-in-a-hurry-to-reopen-the-strait/
Thank you for this link and this brilliant opinion. Worth a read, and then a review.
It’s worth the 10 minute read
Most Excellent!!
Another similar theory
https://x.com/DrJStrategy/status/2040029898295632377
Recent development in the Iran conflict:
https://www.timesofisrael.com/liveblog_entry/second-american-plane-involved-in-iran-war-crashes-us-officials-say-pilot-safely-rescued/
https://www.zerohedge.com/geopolitical/us-fighter-jet-downed-iran-large-aerial-search-underway-crew
BBB kicking in??
Hassett is looking more and more Japanese.
Paid $6.50 for Standard Gasoline in California today.
$3.97 for regular in Salt Lake City area today.
$3.83 in Suffolk County NY tonight.
The companies are keeping the prices high. They are fighting Trump at every level .
Thank you, Sundance.
Say what you will. It costs me $50 a week more to drive my sorry butt to work each week. That adds $200+ a month to my bills. The electric rates are some of the highest in the country here in NH and going higher. My property taxes have doubled since 2006. My company did not break out my overtime for my yearly tax filing so no return on that. And on top of that my tax refund was $10 and the government will not cut a check anymore so stuff that as well.
This is not winning.
Once the gas bought at a lower price is sold, it has to be replaced. If the market price for the replacement is higher then the price at the pump has to go up
Too add a little perspective….he average nation-wide price of a galleon of gas on this day in 2022 was $4.
I don’t see a golden age.
“THANK YOU MR TARIFF!” President Trump
“A nation of consumers is an economic colony. A nation of producers is sovereign.” Susan Kokinda (PrometheanAction)
Can anyone add detail if many of these jobs went to H-1B visa holders that is foreign workers?