For those who think the Ukraine conflict has anything to do with the high gas prices

Discussion in 'Political Opinions & Beliefs' started by kazenatsu, Mar 4, 2022.

  1. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Why would gas prices suddenly shoot up so much when only a total of 3% of US oil comes from Russia?
    And not only that but China is continuing to buy from Russia. So presumably China will just increase its purchases from Russia and decrease them from the rest of the world accordingly. (China is the world's largest oil buyer and buys more 50% more oil than all the oil Russia exports)

    Is the news media simply trying to use the Ukraine conflict as a distraction from the real reasons gas prices are going up? Certain policies that if Americans realized what they were causing might not make the White House look so good.
     
    Last edited: Mar 4, 2022
  2. Joe knows

    Joe knows Well-Known Member

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    It’s not only about the US so our singular percentage doesn’t matter in a global marketplace. As for china buying more Russian oil, I totally believe that. But may I ask where you got the info at that says they will decrease their purchases elsewhere? If they do actually adjust oil purchases barrel for barrel I would say you may be correct to some extent. But I haven’t been able to find that anywhere
     
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  3. LiveUninhibited

    LiveUninhibited Well-Known Member

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    The oil market is global, so any kind of disruption anywhere leads to higher prices everywhere. This could be a disruption in supply or increase in demand, e.g. diverted to a war effort, or it could be a disruption in trade.
     
    Last edited: Mar 4, 2022
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  4. 61falcon

    61falcon Well-Known Member

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    We get at least 8% from Russia not 3%.
     
  5. 61falcon

    61falcon Well-Known Member

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    We have over 100 million working age 16-64 year old Americans not in the workforce, so it certainly is not an over abundance driving to and from work.
     
  6. Joe knows

    Joe knows Well-Known Member

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    Just because you quit working doesn’t mean you quit driving.
     
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  7. CKW

    CKW Well-Known Member

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    Prices are based on speculation not current events. Not know what the future holds in a chaotic period will raise prices. If Biden decided to increase drilling and production in US and allowed construction on the pipe line---prices would drop before any oil new existed.
     
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  8. Josh77

    Josh77 Well-Known Member Past Donor

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    I for one do not mind oil prices being high. That creates incentives for other forms of energy to be implemented. The transition may be painful, but it is a price that will be paid sooner or later. I would rather it be paid sooner to avoid all of the ecological damage that oil infrastructure and extraction causes. I live in Maine, so it is going to be financially painful for me, especially in the winters, but it's a price I'm willing to pay for a change for the better. There are many things that are far more important than wealth and economic growth.
     
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  9. kazenatsu

    kazenatsu Well-Known Member Past Donor

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  10. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    I'm sure there is some monetary instrument that a consumer could buy - if they really wanted to - to guarantee the cost of car fuel for several years at a fixed predetermined price. Of course, they would have to pay the financial company for the service and assuming the risk.

    (It might not even be directly paying for the fuel, but rather would pay the owner a certain amount of money based on how much fuel prices rose above a certain amount)

    Anyway, if prices did not occasionally spike, there would be no incentives to producers to develop new sources. It is a market signal, and provides an incentive. If you impose price controls, you get shortages. People will continue burning too much fuel even though they shouldn't, or producers will not expand the supply to produce more because it is not worth it to them.
     
    Last edited: Mar 4, 2022
  11. TCassa89

    TCassa89 Well-Known Member

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    Bingo

    The idea that our gas prices depend solely on the oil that we use demonstrates a complete lack of understanding of the global market.

    If country A depends on Russia for 5% of their oil, country B relies on 15%, and countries C and D respectively depend on Russia for 35% of their oil each, what happens next is all of those countries simultaneously have to look elsewhere for their oil. This combined shift in the market has an impact on the overall cost of oil worldwide. Oil becomes more expensive no matter what country it is coming from

    It's the reason why gas prices are going up all around the world, it is not just the US that is experiencing higher gas prices
     
    Last edited: Mar 4, 2022
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  12. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Except I already did address this in my opening post. So long as Russia is still selling their oil to any normal buyer on the world market, even if it is not the same countries as it did before, it should not really affect overall oil prices.

    So your explanation does not really appear adequate.
     
    Last edited: Mar 4, 2022
  13. crank

    crank Well-Known Member

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    Why would oil prices impact your heating in Maine? Surely you burn wood? It's not like there are no trees in your State.
     
    Last edited: Mar 4, 2022
  14. crank

    crank Well-Known Member

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    Try telling that to the working poor.
     
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  15. crank

    crank Well-Known Member

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    It's global. All part of an insanely fragile, interconnected, and complex infrastructure - which only worked as well as it did in the late 20th and early 21st centuries because nothing much went wrong during those decades. All it takes is one thing to disrupt it (like a pandemic). Throw two things into the mix and you're finished.
     
    Last edited: Mar 4, 2022
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  16. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    5 percent of homes in the US still use heaters that burn oil. It used to be even more common.
    Some areas might not have easy access to natural gas pipes. Wood pellet fuel costs twice as much as oil.
     
    Last edited: Mar 4, 2022
  17. HereWeGoAgain

    HereWeGoAgain Banned

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    Because oil prices are determined by speculators. And this threatens to become a major disruption in the global supply.

    Prices aren't determined by the numbers. They are determined by bets.
     
    Last edited: Mar 4, 2022
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  18. TCassa89

    TCassa89 Well-Known Member

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    The error in that logic is it assumes that it is a mere matter of Russian oil becoming more expensive, but that is not the case. When multiple countries stop buying Russian oil, and begin making the shift to buy their oil from elsewhere all at the same time, this has an impact on the global cost of oil from around the world. Importing oil from Canada, Saudi Arabia, and Latin America all go up in cost as well.

    This isn't really something that is theoretical, the global cost of oil has already gone up
     
  19. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    I think you are totally misunderstanding me. Russian oil would actually become a little cheaper.

    My contention is that Russian oil exports are not really going to decrease. China will just pull up the extra slack.

    Why would they decrease? China is still open to buying Russian oil, and China is a huge market.

    If Russia can only sell its oil to China, for example, then they will reduce the price just a little bit, China will buy more Russian oil and less oil from other exporting countries. It is just playing musical chairs.
     
    Last edited: Mar 4, 2022
  20. crank

    crank Well-Known Member

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    What does gas have to do with wood, though? And what in heck are 'wood pellets'? We burn salvaged timber (deadfall, and demolition waste cleared of pest treatments and asbestos - free via our local landfill). We pay exactly zero dollars to heat the house - using a stove which also cooks and heats water via a water jacket:

    upload_2022-3-5_15-0-37.jpeg
     
    Last edited: Mar 4, 2022
  21. TCassa89

    TCassa89 Well-Known Member

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    Even if that were accurate (which it is not) most of the world is not going to be buying Russian oil, and are making the shift to buy oil from other countries instead of Russia. The demand for oil from countries outside of Russia still goes up, regardless of whether or not China increases their oil imports from Russia. That sudden shift in demand means we experience a sudden increase in cost worldwide

    It has already happened... this isn't a prediction
     
    Last edited: Mar 4, 2022
  22. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    That is irrelevant. Only a few countries need to be buying Russian oil. The market in China alone is 50% bigger than everything Russia exports. Countries that are still going to import, like China, will make the shift because Russia will lower their prices slightly below the competition. (The price difference will still be nominal though)
    Everyone will still end up exporting and importing the same amount of oil as they did before. It's just everyone will be buying it from different places than they did before.

    I don't understand how you are even being logical here.

    Yes it has happened. My point is it has nothing to do with the sanctions against Russia.

    I'm urging people to see the connection is not logical, and to take a look at other explanations. Explanations they don't want to see.
     
    Last edited: Mar 4, 2022
  23. TCassa89

    TCassa89 Well-Known Member

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    Once again the communication process has failed, perhaps it's my fault for not explaining it well enough, so let me try and explain it one more time

    The cost of oil going up globally has nothing to do with the cost of Russian oil. Quite the opposite in fact, it has to do with the cost of all non-Russian oil going up. What we have seen is a bunch of countries cut their Russian purchases all at the same time. Since there are so many countries making the shift from buying Russian oil to buying non-Russian oil. What ends up happening is the demand for all oil that is not from Russia suddenly goes up. When demand for non-Russian oil suddenly goes up, so too does the cost of that non-Russian oil.

    This isn't a prediction, it has already happened. The scenario you are describing about China buying up all the Russian oil has not happened, but even if it did happen (which it has not), that wouldn't change the fact that so many countries are collectively pushing the demand for all non-Russian oil up, thus increasing the cost of all non-Russian oil. So once again, even if what you were saying were true (which it is not), demand for non-Russian oil would still be up for everyone else. Under your hypothetical scenario (and it is a hypothetical since it has not happened), China would be experiencing cheaper gas prices, but for everyone else who is not buying Russian oil, they will be still experiencing higher gas prices.
     
    Last edited: Mar 4, 2022
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  24. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    In this theoretical example, as the cost of oil goes up, China would look more to Russian sources to get its oil, since it is cheaper there. As China increases the share of Russian oil it imports, it will decrease its share of non-Russian oil it imports, freeing up that oil for other buyers on the world market.

    In this model, the cost of non-Russian oil should go up, of course, but it should not go up too much. Because as it begins to diverge in price from Russian oil, it creates more incentive for China to replace the oil from other places it normally buys with Russian oil, freeing up oil on the world market, and tending to keep the overall supply the same. (It's basic mathematics)

    The fact that we do of course see the price of oil increasing should indicate to us that there is some outside additional factor at play. Inflation of the US dollar could be one of those factors, or speculation, but that is really not what the thread here was meant to discuss.
     
  25. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    This would only be a factor if the countries that were still willing to import Russian oil had a smaller market size than the total amount of Russian oil exports, which is not the case.

    I did read that many refinery companies in China are refusing to buy Russian oil for fear of US sanctions being put on that company, but as the cost of oil continues to increase, at least some medium-sized company in China that own a major refinery will be willing to deal with Russian oil and sacrifice its other business dealings with other countries.

    This article does claim that 70% of Russian crude exports do not have a buyer right now.
    Oil price rises again as buyers shun Russian crude - BBC News

    That could soon change as the supply shock lessens.
     
    Last edited: Mar 5, 2022

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