Part of the reason that oil prices have spiked as much as one may expect is that Iran is still exporting oil to China, which is buying it (and doesn't need to buy it elsewhere).
Unrelated but it's kind of amazing both A) The versatility of oil in so many applications and B) That people were smart enough to figure all this stuff out. It's really kind of a miracle substance in ways that aren't obvious at first
I think a lot of the predictions, reactions, and takes on this war ignore a very critical reality-we've currently been at war for less than 30 days. Less time than it takes to get personalized license plates. Every single take is premature at this point.
There are some takes that aren't dependent on waiting to see what happens: 1) we've cost ourselves a lot of money and drawn down a lot of our most sophisticated munitions, 2) we've lost several aircraft, 3) we've lost several American lives, 4) we've killed several thousand people, many of them innocent civilians, 5) most importantly we didn't need to do this, so every cost listed above was an unnecessary waste..
Reading more about the huge airport slowdowns because of the TSA being unfunded, and it really does seem like no one wants to say the obvious.
Just start waving people through. It's fine actually. We can indeed go back to the days when anyone can wander up to the gates without intrusive checks and it'll be no big deal.
Mass shooters? They could shoot everyone waiting in line today if they wanted. The ostensible point of the TSA is they prevent people from taking over airplanes, not that they prevent mass shootings.
The reason shooters go to schools is because they’re mad at the school and/or trying to cause the worst damage they can, not because they’re soft targets.
I don't think they do anything very useful, no. And the argument has never been that they stop "crazy mass shooters"; those could show up at literally any crowded venue. The argument has been that they stop plane hijackings, and I think the juice isn't worth the squeeze on the level of security for result.
This is only tangentially related to this topic, but I just discovered, through my husband’s coworker, the series “Tehran” on Apple TV. It’s apparently an Israeli series, so I’d expect it to have some kind of propaganda message for Israel, but I like it so far after the first couple of episodes, and it doesn’t seem one-sided or heavy-handed yet. (I like spy shows.) It’s apparently not that new, it has a few seasons already. Who has seen it, and what did you think?
My husband and I watched it and liked it! I am not deeply invested or informed about the geopolitical situation, but it was a satisfying spy show, and it held up pretty well through the seasons IMO.
No, the reason oil isn’t more expensive is that the market like most commodity markets is literally designed to slow down price movements so producers and consumers have time to adapt and adjust for unexpected events.
Probably the most relevant mechanism here is that most oil is simply not sold at a daily price but rather under long term fixed price contracts (lengths vary but I’d guesstimate it about a year or so on average). So market changes take time to be reflected in pricing as the old contracts need to expire and then get resigned at newer higher prices.
Secondly there’s a reasonable amount of storage out there and countries/companies will draw on that for some time.
So higher prices do show up, but not as high as they “should” be, and last for much longer than they “should”.
LNG is a different and scarier story and that’s what’s really driving the demand reduction efforts in Asia, since it’s used for electricity and has almost no elasticity. That’s where you could see real immiseration of the strait stays closed for an extended time.
In California we already pay like 2-3x the national average for gas so I am confident Gavin Newsom will lower gas taxes to offset the cost and we will be fine an then he will win the election as a national hero.
Is the answer just "China"? From some brief perusing, it sounds like they're the major importer of Iranian oil, but they built up a strategic reserve large enough to last months.
Anecdotally, I was there in February before the war started in a small city (a million people, but adjusting for population, that's like Scranton in the US), and I'd estimate about 40% of the cars on the road were electric. They have cell phone companies (Huawei and Xiaomi) building electric cars that look wicked cool and are cheaply priced (probably heavily subsidized, but that's the point).
If they were less prepared, maybe oil prices would have spiked further faster?
If you follow Murban crude prices, the UAE benchmark, they were starting trading at $25 premium to Brent at the end of last week. Then it soared to $160 by the opening of markets Sunday night before crashing Monday morning. They're since down to $110 following Trump's TACO gestures. A lot of Murban would have been going to East Asia so it seems like East Asia is going to bid up prices for what they have access to. (The UAE can export a small amount thanks to a pipeline connecting to Oman) The pain from this will be probably hit the US via higher GPU costs from NVidia but also memory chips (Samsung is a massive manufacturer in Korea). Both are very dependent on LNG and GPUs need helium which is a by product of oil extraction, i.e. the Middle East was producing a lot.
As long as Trump keeps gesturing like he's TACOing ala 2 weeks ago, oil markets will be skittish about rising too much. But unless something actually happens to change the course of the war, reality will set in and prices will rise. Brent dropped under $100 after Trump's announcement but 24 hours later it's back over $100 again. The longer this goes on, the more the market will eventually freak out
I don’t follow the insurance thing at least over the long term. If it’s really 20 percent of the world’s oil at a certain point insurance companies will have to suck up and price a higher level of risk to have ships traverse the strait, right ?But that’s way down the road.
So the American taxpayers are on the hook to compensate shippers if their ships get attacked and thus they're not able to get their oil delivered to meet East Asia demand.
But we didn’t build keystone? I thought the world would end?
Never thought Trump would be the president who did the most to reduce fossil fuel usage.
Part of the reason that oil prices have spiked as much as one may expect is that Iran is still exporting oil to China, which is buying it (and doesn't need to buy it elsewhere).
Someone is trading oil futures based on inside information from the administration: https://paulkrugman.substack.com/p/treason-in-the-futures-markets?
Unrelated but it's kind of amazing both A) The versatility of oil in so many applications and B) That people were smart enough to figure all this stuff out. It's really kind of a miracle substance in ways that aren't obvious at first
It's a form of magic, specifically necromancy, animating the bones and flesh of dinosaurs to labor for us long after their deaths.
We also live on the only planet in the solar system that is likely to have any. You can't drill for oil in the asteroid belt.
I think a lot of the predictions, reactions, and takes on this war ignore a very critical reality-we've currently been at war for less than 30 days. Less time than it takes to get personalized license plates. Every single take is premature at this point.
There are some takes that aren't dependent on waiting to see what happens: 1) we've cost ourselves a lot of money and drawn down a lot of our most sophisticated munitions, 2) we've lost several aircraft, 3) we've lost several American lives, 4) we've killed several thousand people, many of them innocent civilians, 5) most importantly we didn't need to do this, so every cost listed above was an unnecessary waste..
Reading more about the huge airport slowdowns because of the TSA being unfunded, and it really does seem like no one wants to say the obvious.
Just start waving people through. It's fine actually. We can indeed go back to the days when anyone can wander up to the gates without intrusive checks and it'll be no big deal.
The crazy mass shooters would be there the next day. I think you're wildly underestimating how much the TSA does to keep the crazies out.
Mass shooters? They could shoot everyone waiting in line today if they wanted. The ostensible point of the TSA is they prevent people from taking over airplanes, not that they prevent mass shootings.
Yet they don't. Because it's perceived as a hard target unlike an elementary school.
The reason shooters go to schools is because they’re mad at the school and/or trying to cause the worst damage they can, not because they’re soft targets.
Yeah, most school shooters usually go or went to the school in question
I believe many are doing it to get the most attention possible with the lowest risk of being stopped before they cause their damage.
I don't think they do anything very useful, no. And the argument has never been that they stop "crazy mass shooters"; those could show up at literally any crowded venue. The argument has been that they stop plane hijackings, and I think the juice isn't worth the squeeze on the level of security for result.
See, e.g., the 1985 Rome and Vienna terrorist attacks by the Abu Nidal Organization, where the targets were check-in lines, i.e., the outside the security screening zone: https://en.wikipedia.org/wiki/1985_Rome_and_Vienna_airport_attacks
"And the argument has never been that they stop "crazy mass shooters"; those could show up at literally any crowded venue. "
That was the argument and as tempting and high profile a target as airports are they don't have mass shooting events.
They do tend to have actual police stationed there who could respond very quickly, unlike many mass shooting targets.
This is only tangentially related to this topic, but I just discovered, through my husband’s coworker, the series “Tehran” on Apple TV. It’s apparently an Israeli series, so I’d expect it to have some kind of propaganda message for Israel, but I like it so far after the first couple of episodes, and it doesn’t seem one-sided or heavy-handed yet. (I like spy shows.) It’s apparently not that new, it has a few seasons already. Who has seen it, and what did you think?
My husband and I watched it and liked it! I am not deeply invested or informed about the geopolitical situation, but it was a satisfying spy show, and it held up pretty well through the seasons IMO.
"Chemists" chemical engineers, thank you very much. Those scientists have no idea how to design a cracking column.
It’s basically chromatography, but embiggened
Distillation was 90% of my separations curriculum, so seeing this come up in SB was fun
The embiggening part is not straightforward and I have the textbooks to prove it.
I don’t doubt that, it would be a lot of silica were that not the case
The Iran war has made me exasperated with America and Israel more and Iran a lot less. Even though I despise Iran for why they’re doing to Ukraine.
No, the reason oil isn’t more expensive is that the market like most commodity markets is literally designed to slow down price movements so producers and consumers have time to adapt and adjust for unexpected events.
Probably the most relevant mechanism here is that most oil is simply not sold at a daily price but rather under long term fixed price contracts (lengths vary but I’d guesstimate it about a year or so on average). So market changes take time to be reflected in pricing as the old contracts need to expire and then get resigned at newer higher prices.
Secondly there’s a reasonable amount of storage out there and countries/companies will draw on that for some time.
So higher prices do show up, but not as high as they “should” be, and last for much longer than they “should”.
LNG is a different and scarier story and that’s what’s really driving the demand reduction efforts in Asia, since it’s used for electricity and has almost no elasticity. That’s where you could see real immiseration of the strait stays closed for an extended time.
In California we already pay like 2-3x the national average for gas so I am confident Gavin Newsom will lower gas taxes to offset the cost and we will be fine an then he will win the election as a national hero.
I think with the recent national rise in prices we’re only paying 50% more than the national average now.
I do wonder what fraction of the California budget is gas taxes, and how much that gets hit as people cut back on gas.
California generates $20B/year from gas taxes, diesel taxes and motor vehicle fees.
That's projected to drop by around $6B/year over the next decade due to the spread of EVs.
https://calmatters.org/environment/2023/12/gas-tax-revenue-drop-climate/#:~:text=According%20to%20a%20state%20analysis%2C%20California's%20gas,gasoline%20and%20diesel**%20*%20**Fewer%20gas%2Dpowered%20cars**
National: $3.98/gal
California: $5.88/gal
Higher, yes. 2-3x? Not quite.
https://gasprices.aaa.com/?state=US
Let me have my histrionics!
I saw $6.80 at a gas station in Pasadena over the weekend. Much bigly, many winning, etc.
Is the answer just "China"? From some brief perusing, it sounds like they're the major importer of Iranian oil, but they built up a strategic reserve large enough to last months.
Anecdotally, I was there in February before the war started in a small city (a million people, but adjusting for population, that's like Scranton in the US), and I'd estimate about 40% of the cars on the road were electric. They have cell phone companies (Huawei and Xiaomi) building electric cars that look wicked cool and are cheaply priced (probably heavily subsidized, but that's the point).
If they were less prepared, maybe oil prices would have spiked further faster?
If you follow Murban crude prices, the UAE benchmark, they were starting trading at $25 premium to Brent at the end of last week. Then it soared to $160 by the opening of markets Sunday night before crashing Monday morning. They're since down to $110 following Trump's TACO gestures. A lot of Murban would have been going to East Asia so it seems like East Asia is going to bid up prices for what they have access to. (The UAE can export a small amount thanks to a pipeline connecting to Oman) The pain from this will be probably hit the US via higher GPU costs from NVidia but also memory chips (Samsung is a massive manufacturer in Korea). Both are very dependent on LNG and GPUs need helium which is a by product of oil extraction, i.e. the Middle East was producing a lot.
As long as Trump keeps gesturing like he's TACOing ala 2 weeks ago, oil markets will be skittish about rising too much. But unless something actually happens to change the course of the war, reality will set in and prices will rise. Brent dropped under $100 after Trump's announcement but 24 hours later it's back over $100 again. The longer this goes on, the more the market will eventually freak out
I pity the traders trying to make decisions based on Trump's brainfarts.
Amused to find out that my german instructor is an ai doomer.
?? Did you reply in the wrong place (I hate it when I do that).
I don’t follow the insurance thing at least over the long term. If it’s really 20 percent of the world’s oil at a certain point insurance companies will have to suck up and price a higher level of risk to have ships traverse the strait, right ?But that’s way down the road.
Not if the extra insurance premium is more than the extra cost of refining Canadian tar sands or whatever.
The US government is providing War Risk insurance in the area.
https://www.reuters.com/world/us-reinsure-maritime-losses-gulf-up-about-20-billion-agency-says-2026-03-06/
So the American taxpayers are on the hook to compensate shippers if their ships get attacked and thus they're not able to get their oil delivered to meet East Asia demand.
Got it.
Yes.