[HN Gopher] Evidence of price-fixing in the oil industry?
___________________________________________________________________
Evidence of price-fixing in the oil industry?
Author : toomuchtodo
Score : 216 points
Date : 2024-05-03 17:39 UTC (5 hours ago)
(HTM) web link (www.thebignewsletter.com)
(TXT) w3m dump (www.thebignewsletter.com)
| google234123 wrote:
| And our government has literally made it its mission to limit
| domestic oil production (canceling keystone, blocking permits,
| ceasing to lease federal land. I'm guessing all the net zero
| regressives were quite happy about the high prices too
|
| I remember at the time Biden was asking (failingly) Saudi & even
| China to pump more oil lol
| Pet_Ant wrote:
| If the prices mean that we move off of oil... we'll it's
| painful medicine.
|
| The planet's capacity to absorb CO2 is limited and too many
| people are too happy to be deficit spending on that account
| because it's not as visible. When that bill comes due, it won't
| be as easy to pay it off with green rectangles.
| highwayman47 wrote:
| Even if this were true, China, Russia and India aren't going
| to reduce their emissions. So they will thrive with the cheap
| energy and overtake the west.
| ComputerGuru wrote:
| This is old and incorrect. China is leading the way in
| terms of electrification and EV-adoption, ahead of even the
| darling child Norway.
| albertopv wrote:
| China is building more new coal power plants than rest of
| the world combined.
| 0xdde wrote:
| And more renewables.
| fnordpiglet wrote:
| That's a bit of a red herring. Their rate of growth in
| coal has fallen dramatically over the last 15 years and
| other sources are growing rapidly. As a share of the
| total coal is declining as is oil and renewables is
| increasing. Assuming this trend continues over the next
| 20 years coal will become a distinct minority share. But
| their overall demand for energy is so immense that
| they're still adding more coal power plants - and every
| other source of energy as well. The metric you quoted is
| pretty devoid of broader context and tells a story that's
| pretty skewed when the reality is fairly nuanced.
|
| https://ourworldindata.org/grapher/energy-consumption-by-
| sou...
| hollerith wrote:
| China does not produce enough oil to run its current
| fleet of cars and trucks. They get most of their oil from
| the Persian Gulf and they correctly worry that that
| supply line will be pinched (or cut off entirely) if the
| US gets angry at them (similar to how the US is angry
| with Russia now) or if some actor like Iran stops the
| flow of oil out of the Gulf. Most of the oil and oil
| products China gets from Russia leave Russia on ships
| from Russia's European ports -- another long supply line.
|
| So for sensible national-security reasons that do not
| apply to the US (namely, making sure it can continue to
| transport things like _food_ to all its citizens if its
| national-security competitor gets angry at it or if the
| Persian Gulf becomes unstable) China is interested in
| electrifying its vehicle fleet since China has plenty of
| coal with which to generate electricity.
|
| Because coal is the fossil fuel that produces the most
| carbon dioxide per unit of heat produced, it might be the
| an electric car in China will more greenhouse gas than a
| gas-powered car in the US.
| google234123 wrote:
| As long as you (and the Democratic Party) are honest about it
| during elections. I'd love for you to say this publically,
| see how the American people want to suffer and go back to a
| lower standard of living so that you can feel better about
| yourself.
| lambdaxyzw wrote:
| I'm ambivalent towards American politics, but that's an
| argument to be made that voting people (and media) don't
| think in timescales longer than 5 years, and it will be the
| humanity downfall if we don't focus on the Earth's long
| term problems. There are no easy solutions, and I don't
| pretend to have an answer, but "close your eyes and wait
| for our doom (or a miracle)" is not one.
| mjmsmith wrote:
| If I can't squander my children's future for my own selfish
| desires, what's the point of America?
| klyrs wrote:
| Aye? And are Republicans gonna be honest with farmers about
| the long-term consequences of not swallowing this bitter
| pill?
|
| Are your politicians prepared to talk about the real
| welfare queens in this country, the truck-driving rural
| population whose lifestyle is propped up by oil & gas
| subsidies?
| piva00 wrote:
| > so that you can feel better about yourself.
|
| I don't grasp this sentiment. It's clear it's not about
| feeling better about oneself but being preoccupied about a
| materially predicted catastrophe that can tear the fabric
| of many societies if left without action.
|
| Even if it means lowering some standards of living for a
| while, and spending money to move us out from the high
| consumption of fossil fuels, it's worth it long term both
| in economical and social aspects.
|
| You don't want a world where social strife due to mass
| starvation, mass migration, destroying societies that want
| to protect themselves from the potential millions that will
| seek refugee elsewhere where they can have food, is
| possible because it would be a little bit inconvenient to
| some of the richest folks on Earth. Those will also cause
| massive economical impacts, broken supply chains, less
| supply of some raw materials, more protectionism from
| nations wanting to hoard resources, wars between nations
| when water sources move borders or disappear altogether.
|
| Yeah, there might be some inconveniences that are required,
| but previous generations had to deal with much worse
| inconveniences: wars, famine due to crop failure, etc.
|
| It sounds really entitled to be offended by being asked to
| not drive your car so much, shop more locally produced food
| (and even stuff in general) if possible in your budget,
| change some ways of business to not require so many flights
| for simple meetings, so on and so forth.
|
| There are lots of low hanging fruits, there's also massive
| societal changes required, we should be brave enough to be
| inconvenienced a little to avoid much more suffering in the
| lives of our kids, grandkids and so on.
| thowawatp302 wrote:
| You sound like a real snowflake. Dealing with 3x the amount
| of 100F days where I live is a far lower standard of living
| than any boogie man you can come up with.
| dylan604 wrote:
| >If the prices mean that we move off of oil... we'll it's
| painful medicine.
|
| I'm know I'm an odd duck, but I think the price of gasoline
| in the US is way too cheap. Even at the highest price per
| gallon in the US, that's about the same price per liter in
| Europe. I'm not considering bigOil profits in saying that.
| I'm saying that until the price of gasoline hurts, nobody
| will care about the ramifications from using it (if even
| then). People are less concerned about the environmental
| effects as they are their personal financial effects, but
| I'll take it either way if it reduces the use.
| jajko wrote:
| That's political suicide. As much as I wish for what you
| write to become true, look at how stupidly unimportant (or
| unsolvable) items made people like trump from 0 to hero.
| This is majority of US voters, and same applies in many
| other countries. This would hurt literally everybody and
| cost given political side couple of elections.
|
| Look at how every single politician across all spectrum is
| playing politics and PC and is on full PR mode 24/7 when on
| camera. That's not the kind of people who make good long
| term decisions just because... they are good. Not when they
| massively hurt back.
| Marsymars wrote:
| > That's political suicide. As much as I wish for what
| you write to become true, look at how stupidly
| unimportant (or unsolvable) items made people like trump
| from 0 to hero.
|
| Or look at how the carbon tax is killing the ruling party
| in Canada. It reduces GHG emissions, is structured in a
| progressive way that's a financial benefit to most
| people, is strongly supported by most economists, and is
| wildly unpopular at large.
| bluefirebrand wrote:
| > structured in a progressive way that's a financial
| benefit to most people
|
| I think most people are unable to draw a line from the
| carbon tax to how it financially benefits them
|
| It has had a very visible surface level impact of making
| gas more expensive at gas stations, which is very clearly
| not a financial benefit for individuals who drive gas
| cars
|
| People need a concrete reason to believe that this puts
| money in their pocket. Not some just some vague assurance
| of "This financially benefits you"
| Marsymars wrote:
| > I think most people are unable to draw a line from the
| carbon tax to how it financially benefits them
|
| I probably agree, but if people can't draw that line from
| quarterly deposits into their bank accounts, it feels
| pretty hopeless.
|
| Maybe digital money is too ephemeral and the government
| should have insisted on mailing paper cheques to
| everyone.
| rightbyte wrote:
| The guy running the office before him was elevated on a
| pedestal of hope and dreams and didn't really deliver.
| Not that he as successor did either.
|
| There are deeply rooted problems with the elite and
| people will eventually realize that the frontrunner aint
| got nothing up against it.
| ArnoVW wrote:
| Every country has the government it deserves.
| - Joseh de Maistre
| aidenn0 wrote:
| The US federal gas tax has gone down since 1993 in any way
| you measure it except nominal dollars per gallon (since it
| has been fixed in nominal dollars per gallon since 1993).
| It's low enough now to neither be an effective excise tax
| (it's lower than sales tax in some places), nor fund the
| federal spend on highways.
|
| Nominal dollars per mile: gone down by about 10% on average
| since cars have gotten more efficient since 1993
|
| Real cost per gallon: gone down by more than half, since
| we've had ~116% inflation since 1993
|
| Real cost per mile: just multiply the two together and it's
| about 60% lower than it was in 1993.
|
| Percentage of spend on gasoline: Gas was $1.11 per gallon
| in 1993, and it's about triple that today.
| throwway120385 wrote:
| All you're really proposing is stranding poor people at
| their houses in the middle of nowhere.
| rokkitmensch wrote:
| This attitude of imposing pain that maps trivially to
| regressive taxation on lower- and middle-class voters is not
| a good look for the green left.
| hopfenspergerj wrote:
| You can obviously compensate by changing other taxes to be
| more progressive, this is such a silly argument.
| rokkitmensch wrote:
| A nuance is perhaps lost, I'm not saying don't do it,
| merely that simplistic messaging feeds into the binary
| crisis.
| mardifoufs wrote:
| Sure but that doesn't happen. Start by doing that, not by
| implementing the regressive part first.
| hedora wrote:
| Instead of sending the money to oppressive regimes, we should
| send it to atmospheric carbon capture facilities.
|
| It costs about $1/gallon (maybe $2/gallon, with recent
| inflation) to suck the CO2 emitted by gasoline out of the
| air, and put it back in the ground.
|
| That's a heck of a lot less expensive than dealing with the
| consequences of climate change, and certainly less than the
| amount gas prices fluctuate due to price gouging, etc.
| mjmsmith wrote:
| "The environmental constraints bit was in retrospect an obvious
| lie."
| dylan604 wrote:
| It was pretty obvious when said without needing retrospect
| MisterBastahrd wrote:
| It's almost as if you have absolutely no clue what you're
| talking about.
|
| Keystone was about pumping oil straight from Canada to the Gulf
| Coast for the export market, crossing key aquifers to get
| there. It literally never mattered with respect to US gas
| prices and never will regardless of what occurs in the future.
|
| The US literally produces more oil today than any country has
| in the history of the world. One of the main reasons its doing
| so is because oil prices are high enough to sustain production.
| Making oil cheaper REDUCES production. Wells become
| unprofitable to pump and maintain. When Trump negotiated a deal
| to crash the oil market, thousands of people in the industry
| lost their jobs.
| abracadaniel wrote:
| More than that, the Keystone pipeline would have increased
| oil prices in the US. Canada exports most of that shale oil
| to refineries in the US. The pipeline would have bypassed the
| US and forced us to compete with other buyers for the oil.
| The pipeline could only have had negative impacts on the US.
| https://www.cer-rec.gc.ca/en/data-analysis/energy-
| markets/ma...
| karagenit wrote:
| According to the EIA domestic crude production is at an all
| time high:
| https://www.eia.gov/todayinenergy/detail.php?id=61523
| daveguy wrote:
| We are producing more oil in the US than we ever have.
| knowaveragejoe wrote:
| Why are you so committed to being wrong?
| highwayman47 wrote:
| I look forward to nothing being done about this and no one being
| held accountable.
| hypeatei wrote:
| Yep, wouldn't expect anything else tbf. All the institutions
| and systems we've created are to maximize profits.
|
| No end goal in sight, just make number go up.
| Thiez wrote:
| In Vietnam they know how to deal with this kind of thing.
| Maybe the people responsible can get the Truong My Lan
| treatment?
| spxneo wrote:
| inb4 alephnerd but US legitimacy/prestige has taken
| significant hit in the past 10 years and the trend seems to
| be accelerating.
|
| Truong My Lan may have been a pig to be butchered. Much
| like SBF/CZ in the US.
| adamors wrote:
| Do they? Her story sounds exactly like what happens in
| authoritarian regimes with people who fall out of favor,
| nothing more. She controlled the largest bank in Vietnam
| for 10 years and then suddenly gets sentenced to death? In
| Russia, these people fall out of windows. This isn't
| justice.
| colpabar wrote:
| For me the best part was everyone telling us that nothing like
| this was happening, that something like this wasn't even
| possible, that corporate greed could NEVER have ANYTHING to do
| with the price of everything going up.
| knowaveragejoe wrote:
| In the worst case scenario your suspicions explain ~20% of
| price increases, so let's not get carried away with "I told
| you so"s.
| wolverine876 wrote:
| In my personal experience, lots of people were talking about
| it, including the White House; there were articles in the NY
| Times about it, etc.
| dang wrote:
| Ok, but please don't post unsubstantive comments to Hacker
| News.
|
| I understand the reason for repeating these sentiments--it's
| the same reason why they get upvoted to the top of
| threads*--but repetition of this kind is what we're trying to
| avoid here.
|
| https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
|
| https://news.ycombinator.com/newsguidelines.html
|
| * I've marked this one off topic now.
| gwbas1c wrote:
| > The FTC just found evidence that American oil companies
| colluded with the Saudi government to hike gas prices, costing
| the average family $3,000 last year. The question is, what can we
| do about it?
|
| Electric cars and heat pumps.
|
| This is why people paid a premium (until about a year ago) for
| electric cars. Fixed costs are better than variable costs.
| trifurcate wrote:
| What makes you think that the energy sector overall is immune
| to this while oil isn't?
| flakeoil wrote:
| More and smaller players in electricity production.
|
| Half the oil and gas production comes from an official cartel
| so it's kind of in the oil sector's DNA with price fixing.
| NewJazz wrote:
| More opportunity for substitutions when your fuel is
| electrons instead of a specific blend of fossil fuels
| processed in a specific way.
|
| That said for profit electric monopolies are indeed a
| scourge.
| SkyPuncher wrote:
| Because there are multiple ways to generate electricity-
| including at-home options for many people.
|
| There's also an interesting factor in timing and latency of
| the grid. Peak usage is typically mid afternoon. While least
| usage is overnight.
|
| There's essentially excess capacity during the time period
| that most people charger their car.
| bryanlarsen wrote:
| Not immune, but more resistant:
|
| - electricity can be generated many different ways
|
| - many generation sources aren't dependent on resupply.
| Spiking the price of lithium doesn't prevent existing
| batteries from working, it only makes new ones more
| expensive. Solar, wind, hydro and nuclear (to a lesser
| extent)
|
| - electricity supply is heavily regulated, for better or
| worse.
| Ductapemaster wrote:
| While all of this is true, there is a monopoly on
| distribution. Doesn't matter where it comes from if one
| entity owns the pipes.
| plufz wrote:
| What does matter though is if you can affect the
| distribution with your vote. I would guess it is harder
| to affect oil companies, that are often located in other
| countries than your own.
| throwway120385 wrote:
| It's not that it currently is immune, it's that there's a
| compelling story for the energy sector to become immune from
| it as we reduce our dependence on fossil fuels.
| manmal wrote:
| Where I live, heat pumps suffered insane price hikes because
| production couldn't keep up with demand during the Russian gas
| scarcity scare. I'm talking increases of EUR10+k.
|
| And electricity prices are especially sensitive to gas/oil
| prices due to how European energy market prices are set. We
| still haven't fully recovered from the insane gas price hike
| that caused all electricity to 2-4x in price (with huge
| downstream effects on overall inflation).
| Retric wrote:
| People using gas or oil ran into similar price hikes.
|
| PV or if you're further north solar thermal actually
| protected people from price spikes.
| cameldrv wrote:
| Doesn't work if you're in most of California unless you have
| solar. Price fixing oil is bad, but you can switch to
| electricity for some uses. If everything is electric and
| electricity is a monopoly, it's the worst possible situation.
| rowanG077 wrote:
| Why? Electricity is so easy to generate that a monopoly is
| impossible.
| FuckButtons wrote:
| Not in Northern California.
| aprilthird2021 wrote:
| I live in California. Most people's electricity bills have
| tripled in the last 2-3 years. There's no alternative
| electricity provider.
|
| So, if everyone switches from oil, guess where the price
| gouging and collusion will move to?
| rowanG077 wrote:
| So make or buy your own generator. Or better yet startup
| an energy supply company. That's the point of it never
| beeing monopoly. The market is ripe for entry.
| Shendare wrote:
| So... the electric company can't become a monopoly
| because you can spend the money and effort to create your
| own electric company? How can that not be said for
| anything anywhere that becomes an obvious monopoly?
| JumpCrisscross wrote:
| > _How can that not be said for anything anywhere that
| becomes an obvious monopoly?_
|
| I can't hook up my own ISP or manufacture my own
| prescription drugs quite as easily as I can put up solar
| panels or buy a generator.
| dumbo-octopus wrote:
| What exactly are you proposing goes in this generator?
| JumpCrisscross wrote:
| > _What exactly are you proposing goes in this
| generator?_
|
| Whatever fuel you have access to that's cheapest. For
| most people, that will be natural gas or propane.
| dumbo-octopus wrote:
| So we're back to buying fossil fuels from a third party
| JumpCrisscross wrote:
| > _we 're back to buying fossil fuels from a third party_
|
| If we ignore the non-fossil fuel solution mentioned, yes.
| The point is it's a weak natural monopoly due to multiple
| alternatives.
| aprilthird2021 wrote:
| I think there are legal prohibitions on just putting up
| solar panels and going off the grid in CA. Like I said,
| it's the same cartel behavior over a different resource.
| You cannot start an energy supply company in California,
| only PG&E can supply power to people in California
| mrguyorama wrote:
| So fix California's absurd energy policy. They
| "deregulated" by giving PG&E a monopoly, paid Enron an
| absurd ransom when Enron did what should have been
| considered fraud and made Californian's pay the state
| back, routinely harm individual solar owners, and refuse
| to give PG&E any reason to actually maintain their
| century old infrastructure that sits in a dry forest etc.
|
| People repeatedly point at California fucking up "X" and
| then say "look how bad X is" ignoring that the other 48
| states in the union (Texas also likes to find innovative
| ways to fuck things up) are doing various amounts of
| "alright" to "quite well actually" at "X".
|
| For example, Maine also "deregulated" it's electricity
| sector in the 90s, and is only recently facing problems
| from the state sanctioned monopoly doing bullshit, and
| they have an actual excuse that we haven't built out new
| generation capacity since deregulation, and climate
| change means we have had an entire year of windstorms
| destroying the grid, including multiple storms taking out
| distribution to 1/3rd of the state.
| cameldrv wrote:
| Either you generate it yourself or you pay. PG&E is not
| paying the third party electricity suppliers exorbitant
| rates, they're just charging enormous amounts for
| distribution. Without a political change, electricity will
| continue to be monopolized and extremely expensive.
| ultrarunner wrote:
| There are lots of government-enforced monopolies
| cortesoft wrote:
| That is why I have solar and batteries. Don't have to worry
| about energy costs.
| dpc050505 wrote:
| There's a state monopoly on hydroelectricity in Quebec and we
| pay the lowest rates in North America while Hydro-Quebec
| pumps a billion dollars into provincial government coffers
| every year.
| sn0wf1re wrote:
| Same with BCHydro. Not the cheapest, but still cheap. Much
| better than being at the whims of shareholders.
| adamomada wrote:
| I'm not sure of the other two provinces mentioned, but in
| Ontario we pay artificially low rates for hydro (aka
| electricity) because the rates are subsidized.
|
| I always thought it to be a ridiculous policy; show
| people the true cost of their usage and stop hiding taxes
| all over the place for everyone to make up the
| difference.
|
| You can brag about low rates via monopoly, but someone
| else might be paying for em
| sn0wf1re wrote:
| As best I can tell[1], BCHydro isn't subsidized, unless
| you count the land usage grants from the province (but
| the water flow stability is useful for irrigation, so it
| has other benefits)
|
| [1] https://www.bchydro.com/content/dam/BCHydro/customer-
| portal/...
| spxneo wrote:
| and where are the components for electric car batteries coming
| from again and what is the harm done to environment/countries
| being mined?
| occz wrote:
| It's miniscule when compared to the ongoing harms of oil
| extraction and implying otherwise is extremely dishonest.
| rconti wrote:
| I have an electric car, and I'm starting a hugely expensive
| remodel that will involve migrating to a heat pump and electric
| tankless water heater, but even with solar, it's a laugh to say
| that my PG&E rates are a fixed cost!
| zer00eyz wrote:
| >> PG&E
|
| Fuck PG&E.
|
| I live in the Bay Area, and candidly my choices for solar,
| inverters, batteries, heat pumps and any thing that will make
| a home eco friendly are abysmal.
|
| I have a fairly unique roof for the area. There has only been
| one solar installer who did not run when I explained what I
| needed. They all have a cookie cutter approach to minimize
| costs and maximize profits. There is no variance or
| selection. It's a onesie fits all solution to a dynamic
| problem.
|
| Electric water heating is interesting. You should look to
| install a tank and a tankless heater. It's called a booster
| configuration. Set the tank up to run during the day when you
| have free power and then only hit the tankless when it runs
| empty (or your variable costs are low).
|
| Good luck finding a plumber who knows how to set it up.
| autoexecbat wrote:
| PG&E makes electric-only a little scary. I'll keep 1 EV and 1
| ICE car rather than going 2 EVs due to them
| mschuster91 wrote:
| Depending on how much you drive a day, a propane powered
| generator pack for a few thousand bucks (chinesium ones start
| at ~1000 $ [1]) in your shed should be enough to charge
| during the night and keep your home powered as well, and
| unlike gas/diesel, propane doesn't go bad during storage.
|
| [1] https://www.amazon.com/-/de/dp/B01M0N8256/ref=sr_1_3
| adamomada wrote:
| Why not skip it and drive an LPG-powered vehicle instead?
| mschuster91 wrote:
| Because you'll only need the grid backup like, what, a
| week or two in the worst case every two or three years? A
| LPG-powered vehicle will incur all the typical ICE
| vehicle costs during these three years.
| graymatters wrote:
| What to do about it - hit these oil companies, including the
| Saudi ones, with a huge class action law suit. Additionally US
| government must fine heavily instances of collusion and
| oligopoly so that others thinking of following path will be
| deterred.
| dealbreaker wrote:
| Except, last year electric prices were so high in Europe. As in
| 10 times higher. If it wasnt for thr government stepping in,
| our family business would've been decimated.
| WarOnPrivacy wrote:
| >> The question is, what can we do about it?
|
| > Electric cars and heat pumps.
|
| So us renters who drive long distances every day - when can we
| expect to come home to a 1k mi range EV and discover our
| landlord installed an EV charging system and new heat pumps?
| Because that sounds like a pretty awesome day.
| eulers_secret wrote:
| This is me, I'm a renter and my complex will never install
| chargers. I've tried, it's a no-go.
|
| That said, 50MPG vehicles are common these days. My '07 Prius
| gets 48, measured, a newer Camry/Accord/Sonata hybrid will
| get ~50MPG as well. Add an openpilot driving system and it's
| almost like a private train car.
|
| I drive 80 miles round trip, 5x a week for work. That works
| out to ~$2000/yr for gasoline. That's really not that bad at
| all! Just don't drive a crossover or truck as your daily.
|
| I'll probably never buy electric, because I don't want to buy
| a house (just not for me) and I don't think apartments will
| install a charger-per-spot (personal requirement). That's OK,
| hybrid is pretty great.
|
| On the heat pump side, I only have to heat 700 sqft - it
| requires little energy and is so little cost-wise I don't
| even track it.
| mschuster91 wrote:
| > Electric cars and heat pumps.
|
| And guess what the fossil fuel lobby is pumping millions upon
| millions of dollars in propaganda against.
|
| It's been utterly nuts to watch in Germany - our local tabloid
| rags and their _relentless_ campaign against heat pumps (as
| well as a botched communication regarding an energy-efficiency
| law from the government) actually worked good enough to put
| local manufacturers into a serious crisis [1]. Electric cars
| are in a similar bind - barely any government subsidies
| combined with falling gas prices, a lackluster / too expensive
| offering by everyone but Tesla and Tesla focusing more on the
| Cybertruck (that can't ever be certified to European standards)
| than on boosting Model 3 quality combined means that the % of
| electric cars on new registrations went downhill from 16% to
| 12% [2].
|
| On top of the fossil fuel lobby spending comes heavy smear
| campaigning from Russia and its 5th column (aka, parts of the
| far left, as well as the most popular far-right party), who
| have identified anything "green" as a fracture point of
| society.
|
| [1] https://www.mopo.de/im-
| norden/niedersachsen/auftragsflaute-w...
|
| [2] https://www.adac.de/news/neuzulassungen-kba/
| jhallenworld wrote:
| Ban oil exports. Why are we selling our oil overseas?
|
| I would also be OK with tariffs on exports, but they are not
| legal (it's in the constitution: concession for southern
| states, protecting their cotton exports).
|
| Also: fix Venezuela.
| chankstein38 wrote:
| I feel like I recall watching something where an oil exec
| literally said they were doing this. He was basically saying this
| was a way to get some profits back after they lost a ton of money
| during the lockdowns.
| 1980phipsi wrote:
| Oil industry profits got vaporized by the decline in prices in
| the aftermath of the shale revolution. Prices fell sharply from
| 2014 to 2016. So after this, capital discipline became the
| watchword. That meant they wouldn't overinvest in new wells,
| keeping supply constrained. While oil futures had some really
| weird behavior during the lockdowns, the market demand for
| capital discipline proceeded it.
| alach11 wrote:
| It's pretty absurd that the US government talks out of both sides
| of its mouth on this issue. There's an effort to divest from oil,
| shut down permitting, and discourage investment. And when
| companies respond to this by reducing investment, there are
| claims about "windfall profits" and "price-fixing".
|
| There's no grand conspiracy here. Shale companies over-invested
| in growth, lost their shirts in 2015, and got punished by
| investors (or went bankrupt). Then prices recovered, they over
| invested in growth, and got demolished _again_ as oil prices
| crashed and even briefly went negative in 2020.
|
| Fresh off these two crashes, it's not surprising at all that
| companies are exercising capital discipline and not taking on
| debt to drill. Shareholders don't want them to do that!
| nemomarx wrote:
| If they're lowering investment, couldn't they lower prices?
| singhrac wrote:
| I traded crude oil professionally until early 2022 and I
| remember that was how we justified low domestic production in
| mid 2021 as well (i.e. "producers think these prices are
| temporary, so they aren't investing").
|
| In retrospect (and these are all guesses with hazy memory) we
| probably overestimated the cost of turning an oil well on and
| off.
|
| But exchanging text messages with OPEC to price-fix is damning.
| An active right wing party would decry this as foreign
| interference and communism (where's the free market?). Even
| ignoring the market impact, how can you let domestic producers
| collaborate with foreign governments to control such a serious
| macroeconomic input like this? It's like China paying Intel a
| bribe to produce worse chips.
| jmyeet wrote:
| Governments have two broad ways of fighting inflation.
|
| The first way is to raise interest rates. This is essentially a
| wealth transfer to banks and their owners while hurting
| individuals and businesses to stifle economic activity. This is
| what we always do. Why? Because capital owners demand it. The
| other way cannot be tolerated or entertained.
|
| The second way is taxation. Some countries (eg Spain) enacted a
| windfall profits tax. Unlike interest rate hikes, taxation only
| targets _profitable_ corporations. It allows a government to
| redistribute wealth to those who most need it, fund
| infrastructure and so on. And it disproportionately affects those
| who price gouging for massive profits, such as in the case of the
| oil and gas industry. Companies may reinvest profits into their
| business to avoid these excessive taxes. Great. Perfect. Love to
| see it.
|
| This latest price-fixing scandal is going to turn into a huge
| deal. This is just the beginning.
|
| But it's not th esole reason for price hikes in 2020-2022. A lot
| of that was because the then Trump administration browbeat OPEC
| into cutting production in early 2020 [1], which was a truly
| disastrous policy. You can see the effects on the 5 year view [2]
| very clearly.
|
| [1]: https://www.reuters.com/article/idUSKBN22C1V3/
|
| [2]: https://tradingeconomics.com/commodity/crude-oil
| marcosdumay wrote:
| If you insist on controlling the noise in monetary phenomena
| through fiscal policy you'll have a really bad time.
|
| But people are saying the Panama canal has a drought problem.
| Maybe you can help with a bucket, you'll probably have a larger
| impact.
| abeppu wrote:
| > If you insist on controlling the noise in monetary
| phenomena through fiscal policy you'll have a really bad
| time.
|
| Isn't that more a political problem than an economic insight
| though? We know fiscal policy impacts monetary phenomena (PPP
| loans, stimulus checks, the child tax credit, etc had
| inflationary effects), but it's too politically easy to spend
| more, and too politically difficult to raise taxes, and it's
| _definitely_ too hard to do either in a timely manner in
| response to changing economic conditions.
|
| But if we had given a politically independent body like the
| Fed control of tax / spend knobs instead of interest rates,
| and allowed them to evaluate whether to change those things
| on a scheduled basis as economic data arrive ... maybe that
| would also work, we'll just never get the opportunity to try
| it.
| marcosdumay wrote:
| Nope, it's a completely mathematical reality. If you ditch
| monetary intervention you'll lose control of the economy by
| the simple fact that the noise in monetary markets is
| orders of magnitude larger than the economy.
|
| You'll regain your power after you destroy enough of the
| economy that it runs with a smaller monetary market. Your
| government will certainly get bankrupt a few times in the
| process.
|
| The fiscal and monetary interventions are almost
| independent things. One can not really replace the other.
| thegrim33 wrote:
| The claim: "there's now evidence that price-fixingp in the oil
| industry alone may single-handedly be responsible for a little
| over a quarter of the total inflationary increase in 2021."
|
| Ignoring the typo, which makes me completely confident in their
| ability to accurately report on these events, the claim is: that
| price fixing / collusion happened.
|
| --
|
| Their evidence: "Yesterday, the Federal Trade Commission released
| evidence confirming that collusion played a serious role in
| hiking oil prices at that time."
|
| They claim that the FTC has evidence of collusion, and they link
| to a release from the FTC.
|
| --
|
| The FTC evidence: "The Federal Trade Commission took action to
| resolve antitrust concerns [..] the proposed consent order seeks
| to prevent Pioneer's Sheffield from engaging in collusive
| activity that would potentially raise crude oil prices"
|
| So .. they took action to resolve "concerns", to be preventative
| so that "collusive activity" that could "potentially" raise
| prices doesn't happen, in the future.
|
| "The FTC alleges in a complaint that Sheffield has, through
| public statements and private communications, attempted to
| collude" .. "Sheffield sought to align oil production"
|
| So .. he "attempted" to collude, he "sought" to collude, or he
| did collude?
|
| --
|
| So, to summarize, the evidence uses wording like "concerns,
| prevention, in the future, attempt", but nowhere states that
| anything actually DID happen, whereas the author of this article
| interprets that as evidence that it absolutely did happen?
| virtue3 wrote:
| in the actual FTC release: "Through public statements, text
| messages, in-person meetings, WhatsApp conversations and other
| communications while at Pioneer, Sheffield sought to align oil
| production across the Permian Basin in West Texas and New
| Mexico with OPEC+."
|
| "Sheffield, for example, exchanged hundreds of text messages
| with OPEC representatives and officials discussing crude oil
| market dynamics, pricing and output. In discussing his efforts
| to coordinate with Texas producers under a production cut
| mandated by the Railroad Commission of Texas, Sheffield said,
| "If Texas leads the way, maybe we can get OPEC to cut
| production. Maybe Saudi and Russia will follow. That was our
| plan," he said, adding: "I was using the tactics of OPEC+ to
| get a bigger OPEC+ done.""
|
| "NOTE: The Commission issues an administrative complaint when
| it has "reason to believe" that the law has been or is being
| violated, and it appears to the Commission that a proceeding is
| in the public interest. When the Commission issues a consent
| order on a final basis, it carries the force of law with
| respect to future actions."
|
| This is also legalize, so he hasn't been PROVEN to yet; but
| it's obvious they have a lot of things to go through here.
| somenameforme wrote:
| I was also just reading the FTC complaint [1] because this
| article reads as painfully biased.
|
| And perhaps somebody else can fill in the blanks here, but so
| far as I can tell, the FTC is not alleging any sort of
| wrongdoing, but instead filing a complaint against a proposed
| merger between Exxon and another company, which could enable
| larger scale constraints on competition. Their evidence are the
| messages and comments from the head of the to-be-merged
| company, who made efforts to follow along with OPEC price
| standards (or even take the lead) as a means of maximizing
| profit.
|
| Where 'strategic pricing' ends and price fixing begins is not
| at all clear to me, especially in a field like this where
| global prices are actively controlled by a price fixing cartel.
| But it seems to me that the main article is engaging in some
| extreme speculation, hyperbole, and sensationalism - while
| presenting it all as matter of fact.
|
| [1] -
| https://www.ftc.gov/system/files/ftc_gov/pdf/2410004exxonpio...
| Workaccount2 wrote:
| This is what happens when people think that blogs are "the real
| news".
| toomuchtodo wrote:
| Blog author: https://www.economicliberties.us/matt-stoller/
|
| > Matt Stoller is the Director of Research at the American
| Economic Liberties Project. He is the author of the Simon and
| Schuster book Goliath: The Hundred Year War Between Monopoly
| Power and Democracy, which Business Insider called "one of
| the year's best books on how to rethink capitalism and
| improve the economy." David Cicilline, Chairman of the House
| Antitrust Subcommittee, has called Stoller's work "an
| inspiration." Stoller is a former policy advisor to the
| Senate Budget Committee.
|
| > He also worked for a member of the Financial Services
| Committee in the U.S. House of Representatives during the
| financial crisis. While a staffer, he wrote a provision of
| law mandating a third party audit of the Federal Reserve's
| emergency lending activities. He also helped cut part of a
| $20 billion subsidy to large financial institutions. His 2012
| law review article on the foreclosure crisis, The Housing
| Crash and the End of American Citizenship, predicted the rise
| of autocratic political forces, and his 2016 Atlantic
| article, How the Democrats Killed their Populist Soul, helped
| inspire the new anti-monopoly movement. His writing has
| appeared in the Washington Post, the New York Times, Fast
| Company, Foreign Policy, the Guardian, Vice, The American
| Conservative, and the Baffler. Stoller writes the monopoly-
| focused newsletter Big with tens of thousands of subscribers,
| which you can subscribe to here.
| Workaccount2 wrote:
| I don't see how any of that lends him credibility. If
| anything it just paints him as more of an ideologue. A
| career dependent on a preset agenda. No thanks.
| lumost wrote:
| TBH - this sounds like a very weak counter-point. The pertinent
| information is that oil production declined in the US during
| the 2021 inflationary period. A point in time where under
| classic money theory - either investments should have been
| happening too quickly or too many dollars were chasing too few
| goods.
|
| Something happened in the oil industry which is unexplained by
| economics (at least to my knowledge), and trivially explained
| by collusion/price-fixing.
| HDThoreaun wrote:
| > Something happened in the oil industry which is unexplained
| by economics
|
| 1. Tons of producers went bust during the shale boom and
| covid price fallout.
|
| 2. Remaining producers see that the future will require less
| oil and remember the rest of the industry failing when they
| increased production.
|
| 3. They dont increase production.
|
| This is exactly what economics projects. Less competition =
| worse prices. It doesnt take collusion for everyone to come
| to the same cocnlussion.
| objektif wrote:
| PG and all the other smart people were making fun of average
| citizen on twitter when they blamed corporations for some of the
| inflation.
| somenameforme wrote:
| I wouldn't quite rely on this article as a game changer. The
| author's evidence for his shocking headline is exclusively him
| assuming his own conclusion, and then adding a healthy helping
| of fudgery on top of that. From the article
|
| ---
|
| How do you aggregate just the oil industry? Well, it's pretty
| clear that in 2021 and 2022, the industry did fantastically
| well, with the "the top 25 companies [making] more than $205
| billion in profits in 2021," and an "even more astounding"
| amount in 2022. Of course, not all profits are due to price-
| fixing, but $205 billion is just the top 25, not the whole
| industry. And profits got much much better the next year.
|
| So let's layer on a rough guess of a $200 billion increase in
| profits in 2021 that Scott Sheffield implies, which is 27% of
| the total corporate profit increase that year. That's a pretty
| astounding amount, more than a quarter of the total
| inflationary increase being a result purely of a price-fixing
| scheme.
|
| ---
|
| So he's assuming that 100% of inflation is caused by corporate
| profits (which is beyond absurd), and then stating that since
| the oil industry made up 27% of total corporate profits (using
| evidence that seems to be wildly hand-wavey at best, even
| though the exact numbers are readily available), that they
| therefore caused 27% of all inflation. And somehow, the giant
| price-fixing conspiracy (which is a gross misrepresentation of
| what the FTC is saying) was the reason they made these 27% of
| profits (which is absurd).
| NewJazz wrote:
| "smart people"
| abeppu wrote:
| Ok, so any time bad corporate behavior causing inflation comes
| up, I have to wonder -- how much oil stock would you need to own
| for this contribution to inflation to be good for you (outweigh
| your increased costs)?
|
| When price increases cause greater revenue to asset holders from
| consumers, there's some spectrum of spending to asset holding,
| and most people that own nothing are losing out, and Warren
| Buffett who owns a lot but is famously modest in his lifestyle is
| benefiting ... but how would you estimate where the breakeven
| point is? Is a lean FIRE person benefiting? Exxon stock has had a
| really strong 3 years, but we don't get to observe the counter-
| factual of how it would have behaved without this price-fixing.
| mistrial9 wrote:
| all that assumes perfect selfish behavior by each individual
| investor. Most stocks are not held by individuals, and most
| individual adults are not invested in stocks.
|
| The rational question raised here is not terrible, but several
| assumptions in it, together, make the mental model that has
| enabled rampant destruction of the one and only natural Earth
| in the past two decades with full knowledge of it.
| abeppu wrote:
| Asking who benefits does not require us to assume perfect
| selfish behavior from all investors, nor does it require us
| to assume that people who benefit from this behavior to want
| it to continue.
|
| I don't think it requires the mental model you're alleging at
| all. I'm fully in favor of taxing carbon at a rate which
| reflects its actual externalized costs, as well as other
| emissions. I've argued that DAs should charge oil companies
| with manslaughter when people die in heat waves. I don't
| drive a car, I don't eat animals, and I plant native
| wildflowers. Being opposed to the destruction of the planet
| does not mean I should not ask "who actually benefits from
| economic trends that everyone complains about?"
|
| Piketty argued that the share of growth that goes to capital
| vs labor will determine a great deal about how inequality
| changes over time, and insofar as artificial price increases
| are just increased revenues to asset holders, this behavior
| has importance not just today but in shaping the future.
|
| > Most stocks are not held by individuals
|
| Isn't that a distraction? Even when stocks are held by, e.g.
| an insurer, another company, ultimately ownership of most
| wealth tracks back to some collection of natural persons.
| Even in cases where 'ownership' doesn't track back to people,
| there are still beneficiaries, e.g. people who have pensions
| don't directly own the assets that the pension fund holds.
| bilsbie wrote:
| Wait until they find out about OPEC.
| toomuchtodo wrote:
| The US has no control over OPEC. It absolutely has control over
| monopolies and cartels within its borders. That's part of the
| story; something can be done about this behavior in this
| jurisdiction and situation.
| mcconaughey wrote:
| Ignoring the fact that this article doesn't clearly state the
| "evidence" that the FTC found in this "conspiracy", it
| misunderstands what occurred with US Shale producers from
| 2010-now.
|
| In the 2010s, US Shale Producers got hyped up on strong oil
| prices and the explosion of fracking. They massively
| overproduced, leading to the price cratering and a large majority
| of producers going out of business. Oil and gas was in severe
| distress from the late 2010s to the negative price drama in 2020.
|
| When prices rebounded in early 2020s, there was a lot of scar
| tissue in the industry about overproduction. Producers are now
| extremely conservative. They are also well aware that clean
| energy is on the horizon and want to draw out this good cycle as
| long as they can.
|
| Opposite to what the conspiracy theory states, OPEC and US Shale
| do not want prices to go too high in the short term, as this
| shock would accelerate the clean energy transition. They
| definitely want strong prices, but this $80-100 range is probably
| the sweet spot. Below $80, they might pull back, which is what we
| see from OPEC. But this certainly isn't some "conspiracy" to
| elevate oil to $200/barrel. These participants are sophisticated
| and are not that shortsighted.
|
| I think the typical Democrat-Party view that "oil bad" and "oil
| corrupt" lacks nuance. It also ignores the profligate government
| spending that is driving excessive consumption (travel, etc.)
| causing a lot of these market dislocations the past several
| years. Now, they want to point the finger at some grand
| conspiracy. This seems not far off from Q-Anon on the other side
| of the political aisle.
| a123b456c wrote:
| "If Texas leads the way, maybe we can get OPEC to cut
| production. Maybe Saudi and Russia will follow. That was our
| plan," he said, adding: "I was using the tactics of OPEC+ to
| get a bigger OPEC+ done.""
| wolverine876 wrote:
| > When prices rebounded in early 2020s, there was a lot of scar
| tissue in the industry about overproduction. Producers are now
| extremely conservative
|
| In corporate America generally, it seems to be a widespread
| strategy to limit supply and drive up prices. Sometimes it's
| done explicitly and illegally, such as in rental housing (look
| up RealPage). Is there evidence that it's particular to shale
| production?
|
| > I think the typical Democrat-Party view that "oil bad" and
| "oil corrupt" lacks nuance.
|
| You said it, then said it lacks nuance.
| pxeger1 wrote:
| > excess consumption (travel etc.)
|
| Could you explain what you mean by excess consumption?
| code_biologist wrote:
| There are obvious charitable interpretations of OP's meaning,
| but you ask for effort without any yourself. Could you
| explain what you're unclear about? Could you explain if you
| ask for clarity at all, or because you have an underlying
| unexpressed disagreement? Is it about the definitional
| existence of "excess consumption" or is it the precise
| details you quibble with?
| sangnoir wrote:
| A definition of Excessive consumption would be in order,
| because it suggests that there's a "right" level of
| consumption other than what the market settles on, gp did
| not quantify what counts as excessive, or why. This concept
| is new to me and warrants more than a single parenthetical
| example that raises more questions.
| toss1 wrote:
| >>I think the typical Democrat-Party view that "oil bad" and
| "oil corrupt" lacks nuance.
|
| Right. That is why, after 3 years of a Democratic Presidency
| and Senate, the US is producing more crude oil than any
| country, ever [0]. /s
|
| If what you said about Democrats had even a shred of validity,
| that would not happen.
|
| [0] https://www.eia.gov/todayinenergy/detail.php?id=61545
| feoren wrote:
| There's a common mental exercise I see where smart people will
| engage in armchair economics to explain what "must have"
| happened in some situation, or the way the word must work. It
| all sounds very convincing, but the problem is that there are
| dozens of other equally convincing macroeconomic explanations.
| Somehow the ones people tend to pick happen to excuse every
| rich person from any accountability and foster a "greed is
| good" outlook, even though the other equally good explanations
| (left unsaid) would imply the opposite.
|
| You shrug off the FTC's evidence here, and put the word
| "conspiracy" in scare quotes to discredit it. But the FTC
| claims "Sheffield sought to align oil production across the
| Permian Basin in West Texas and New Mexico with OPEC+." and
| "Sheffield, for example, exchanged hundreds of text messages
| with OPEC representatives and officials discussing crude oil
| market dynamics, pricing and output." It feels to me like
| you're disregarding any actual facts and evidence in this case
| for your favorite macroeconomic explanation instead.
| kristianp wrote:
| News article with a more concise telling of this story.:
|
| https://edition.cnn.com/2024/05/02/energy/oil-ceo-opec-scott...
| dogman144 wrote:
| I knew a trader in Texas in the 00's. Worked with to oil traders.
| Total hearsay but heard stories from this person of traders in TX
| calling friends they grew up with who worked in Cushing Ok (large
| pipeline exchange or w/e the technical term is) to adjust the
| flows a bit over lunch and then change it back.
|
| So, I believe it
| chasd00 wrote:
| It happens, Enron traders were turning off power plants in
| California that Enron owned to drive up electricity prices (and
| cause rolling blackouts). They only got caught after the
| implosion, i'm sure things like that happen all over the place
| in many industries.
| quickthrowman wrote:
| How did it cost the average family $3,000 extra for gas in one
| year? I drove 12,000 miles last year and spent less than $2,000
| on gas (480 gallons @ 25mpg, $4/gal), does the average family
| drive 100k miles a year or am I missing something.
|
| I suppose if you add in all the gas (and diesel/bunker fuel) that
| you pay for indirectly through transportation costs, you could
| come up with $3,000 per family.
|
| It is more or less impossible to collude with the Saudis to raise
| the price of natural gas in the United States (lack of
| transport), so they must be talking about gasoline.
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