The Law of Demand. I keep thinking of that these days. Price goes up, demand goes down; the measure of how much is elasticity. The simplest example is that South Asia cannot pay $200/bbl.
I see an even bigger refutation of the Law of Demand in AI. The market assumption is that AI consumption will continue to rise even as the price of token soars. Also, demand for GPUs, memory chips, electricity, etc., will continue to rise even as the prices for those inputs rise by 10X. That's almost impossible. Demand will fall, substitutes will be found, supply will increase-- the price will not persist.
I agree with this as we have seen much mitigation of the supply shock. Some of it is not sustainable and we will see what happens if it continues.
The other thing is that the vulnerability to a second shock is high during this period. A political upheaval in a major producer, a terrorist attack on major pipelines, a natural disaster in a major refining port, etc. etc. could push things into what is normally a pathological case.
Something that got largely lost during this oil supply anxiety is that TESLA came out with an electric truck. Not that this new item is cheap - about US$300 000. Its battery is a staggering 2 megawatts and it can go for about 500 miles on a single charge.
An obvious thing to do is invest in items like this to make the world economy practice even more of the resilience that Robin celebrates. Oh, and I've no shares in TESLA by the way.
According to news reports there were a small number of tankers passing through the SoH throughout the blockage. SoH is only 30 miles wide at its narrowest point so it doesn't seem possible that even with transponders off they could sneak by the US military blockade. Tankers are big, carrying up to 2mbls. Was there enough of this to keep some oil flowing and dampen the runup in prices? Was the "leakage" deliberate (who, why) or are blockades more difficult to enforce than we might imagine? I agree that the Russian shadow fleet should be blockaded coming out of the Baltic but if blockades are harder to tighten that we thought, it may not be worth the risk.
The Law of Demand. I keep thinking of that these days. Price goes up, demand goes down; the measure of how much is elasticity. The simplest example is that South Asia cannot pay $200/bbl.
I see an even bigger refutation of the Law of Demand in AI. The market assumption is that AI consumption will continue to rise even as the price of token soars. Also, demand for GPUs, memory chips, electricity, etc., will continue to rise even as the prices for those inputs rise by 10X. That's almost impossible. Demand will fall, substitutes will be found, supply will increase-- the price will not persist.
I agree with this as we have seen much mitigation of the supply shock. Some of it is not sustainable and we will see what happens if it continues.
The other thing is that the vulnerability to a second shock is high during this period. A political upheaval in a major producer, a terrorist attack on major pipelines, a natural disaster in a major refining port, etc. etc. could push things into what is normally a pathological case.
It'll get there eventually, heavy SPR draws compresses it, short-term measure that won't change long-term factors.
Something that got largely lost during this oil supply anxiety is that TESLA came out with an electric truck. Not that this new item is cheap - about US$300 000. Its battery is a staggering 2 megawatts and it can go for about 500 miles on a single charge.
An obvious thing to do is invest in items like this to make the world economy practice even more of the resilience that Robin celebrates. Oh, and I've no shares in TESLA by the way.
According to news reports there were a small number of tankers passing through the SoH throughout the blockage. SoH is only 30 miles wide at its narrowest point so it doesn't seem possible that even with transponders off they could sneak by the US military blockade. Tankers are big, carrying up to 2mbls. Was there enough of this to keep some oil flowing and dampen the runup in prices? Was the "leakage" deliberate (who, why) or are blockades more difficult to enforce than we might imagine? I agree that the Russian shadow fleet should be blockaded coming out of the Baltic but if blockades are harder to tighten that we thought, it may not be worth the risk.
How much of a role was played in the big drawdown of reserves?