What do we have 8.2 million more this week than last week?

[bilby]

A US gal. is only 80% of a gallon anyway.

I still feel cheated after buying a 'pint' of beer in LA in 1995, and only getting 16 fl.oz.

The pain is exacerbated by the horrifying disinformational propaganda taught to US children, who are presented with the outright falsehood of the mnemonic 'A pint's a pound, the whole world round'.

WAKE UP SHEEPLE!!!1!! A pint's a pound ONLY IN THE USA!! 'The whole world round', a pint is 20 fl. oz. - hence the correct mnemonic as I was taught in my school (that was, thankfully, in the free world outside of the pernicious influence of US weights and measures): "A pint of water weighs a pound and a quarter".

No wonder so many Americans need therapy. Getting served short measure in beer would traumatise anyone.

 

[barbos]

What about kilogram in US? 80% too?

 

[bilby]

What about kilogram in US? 80% too?

80% of US citizens have never heard of the kilogram.

 

[TV and credit cards]

We are overdue for a good old fashion Texas refinery explosion. I've got dibs on the third week of June.

What if storage tops out. Eek!

 

[Bronzeage]

A US gal. is only 80% of a gallon anyway.

I still feel cheated after buying a 'pint' of beer in LA in 1995, and only getting 16 fl.oz.

The pain is exacerbated by the horrifying disinformational propaganda taught to US children, who are presented with the outright falsehood of the mnemonic 'A pint's a pound, the whole world round'.

WAKE UP SHEEPLE!!!1!! A pint's a pound ONLY IN THE USA!! 'The whole world round', a pint is 20 fl. oz. - hence the correct mnemonic as I was taught in my school (that was, thankfully, in the free world outside of the pernicious influence of US weights and measures): "A pint of water weighs a pound and a quarter".

No wonder so many Americans need therapy. Getting served short measure in beer would traumatise anyone.

The short pint dilemma is almost as bad as the problem of whether to take one 300mg aspirin, or two 400mg aspirin. It's almost as great a puzzle as why one needs to know the weight of a pint of water.

In America, we prefer our beer to be served cold, really fucking cold. This is partly because we perfected the technology which allows us to do this. It's also because thermodynamics dictates that if a beer is served luke warm(Fahrenheit) the last sip is actually warm. There are some things a civilized person need not endure.

 

[Jimmy Higgins]

What about kilogram in US? 80% too?

Naw. That is equivalent to international standards thanks to the drug trade.

 

[dismal]

Back on the topic, I think this might be a good opportunity apply some of our advanced economics lessons:

Q. If the returns to storing a barrel of oil increase dramatically all other things being equal we would expect the quantity of barrels of oil stored to

a) go up
b) go down
c) stay the same
d) My economics is so effing advanced that I can assure you it's not possible to know the answer.

And a related question:

Q. If the returns to drilling an oil well go down due to a lower price of oil all other things being equal we would expect the quantity of rigs drilling oil wells to

a) go up
b) go down
c) stay the same
d) My economics is so effing advanced that I can assure you it's not possible to know the answer.

 

[Bronzeage]

Back on the topic, I think this might be a good opportunity apply some of our advanced economics lessons:

Q. If the returns to storing a barrel of oil increase dramatically all other things being equal we would expect the quantity of barrels of oil stored to

a) go up
b) go down
c) stay the same
d) My economics is so effing advanced that I can assure you it's not possible to know the answer.

And a related question:

Q. If the returns to drilling an oil well go down due to a lower price of oil all other things being equal we would expect the quantity of rigs drilling oil wells to

a) go up
b) go down
c) stay the same
d) My economics is so effing advanced that I can assure you it's not possible to know the answer.

Question 1 is a little obtuse. If the cost of storing oil goes up, it is because there is a shortage of storage space. This means it's not possible for storage to go up, no matter the cost of storage.

 

[dismal]

Back on the topic, I think this might be a good opportunity apply some of our advanced economics lessons:

Q. If the returns to storing a barrel of oil increase dramatically all other things being equal we would expect the quantity of barrels of oil stored to

a) go up
b) go down
c) stay the same
d) My economics is so effing advanced that I can assure you it's not possible to know the answer.

And a related question:

Q. If the returns to drilling an oil well go down due to a lower price of oil all other things being equal we would expect the quantity of rigs drilling oil wells to

a) go up
b) go down
c) stay the same
d) My economics is so effing advanced that I can assure you it's not possible to know the answer.

Question 1 is a little obtuse. If the cost of storing oil goes up, it is because there is a shortage of storage space. This means it's not possible for storage to go up, no matter the cost of storage.

The net cost is going down because the price of oil in the future is higher than today (aka contango).

So, as of this writing you can buy a barrel of oil today for $52.86 and sell it in, say, Feb 16 for $57.50. If this amount is high enough to cover storage cost and time value of money the incentive is created to import an additional barrel of oil and stick in storage*.

http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

*Assuming, of course, that we are not applying advanced economics wherein we can't say anything about how price will affect the demand for something.

 

[ksen]

If the price of storage goes up more storage will be built thus more oil would be stored.

 

[dismal]

If the price of storage goes up more storage will be built thus more oil would be stored.

Sure, according to simplistic economics 101. According to advanced economics we would have no idea whether a higher price of storage would induce new supply of storage capacity. In advanced economics we're not even sure we're willing to commit to what words like "induce" or "supply" even mean. We become so burdened by our abundant knowledge we are indistinguishable from those who know nothing at all.

 

[Bronzeage]

Question 1 is a little obtuse. If the cost of storing oil goes up, it is because there is a shortage of storage space. This means it's not possible for storage to go up, no matter the cost of storage.

The net cost is going down because the price of oil in the future is higher than today (aka contango).

So, as of this writing you can buy a barrel of oil today for $52.86 and sell it in, say, Feb 16 for $57.50. If this amount is high enough to cover storage cost and time value of money the incentive is created to import an additional barrel of oil and stick in storage*.

http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

*Assuming, of course, that we are not applying advanced economics wherein we can't say anything about how price will affect the demand for something.

"Advanced Economics" sounds something like "foresight economics"(also known as hedgefund math), which is always shaky when compared to "hindsight economics."

In any case, the question was about capacity, not price. It's possible high tank rents could induce someone to build more tanks, but this would require a belief in continued high production and low refinery capacity/low demand.

As foresight goes, that is not a really long distance.

 

[dismal]

The net cost is going down because the price of oil in the future is higher than today (aka contango).

So, as of this writing you can buy a barrel of oil today for $52.86 and sell it in, say, Feb 16 for $57.50. If this amount is high enough to cover storage cost and time value of money the incentive is created to import an additional barrel of oil and stick in storage*.

http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

*Assuming, of course, that we are not applying advanced economics wherein we can't say anything about how price will affect the demand for something.

"Advanced Economics" sounds something like "foresight economics"(also known as hedgefund math), which is always shaky when compared to "hindsight economics."

In any case, the question was about capacity, not price. It's possible high tank rents could induce someone to build more tanks, but this would require a belief in continued high production and low refinery capacity/low demand.

As foresight goes, that is not a really long distance.

Of course higher prices for renting out storage tanks would induce people to add storage tanks or other means of storage.*

We have been hearing stories of people parking oil tankers offshore etc. This is that. At some point if you pay someone enough they'll let you store oil in their swimming pool.

The part you seem to have missed is that the increased demand for storage has little to do with production, refineries, etc. except to the extent the outlook on them affects the forward curve for oil.

Right now you can buy a barrel of oil, stick it in storage, and sell it later for ~$5 bucks more. Essentially risklessly, except for credit. If you have storage.

This creates demand for storage that does not exist when the oil price curve is in its traditionally backwardated mode.*

*Assuming, of course, that we are not applying advanced economics wherein we can't say anything about how price will affect the demand for something.

 

[Axulus]

"Advanced Economics" sounds something like "foresight economics"(also known as hedgefund math), which is always shaky when compared to "hindsight economics."

In any case, the question was about capacity, not price. It's possible high tank rents could induce someone to build more tanks, but this would require a belief in continued high production and low refinery capacity/low demand.

As foresight goes, that is not a really long distance.

Of course higher prices for renting out storage tanks would induce people to add storage tanks or other means of storage.*

We have been hearing stories of people parking oil tankers offshore etc. This is that. At some point if you pay someone enough they'll let you store oil in their swimming pool.

The part you seem to have missed is that the increased demand for storage has little to do with production, refineries, etc. except to the extent the outlook on them affects the forward curve for oil.

Right now you can buy a barrel of oil, stick it in storage, and sell it later for ~$5 bucks more. Essentially risklessly, except for credit. If you have storage.

This creates demand for storage that does not exist when the oil price curve is in its traditionally backwardated mode.*

*Assuming, of course, that we are not applying advanced economics wherein we can't say anything about how price will affect the demand for something.

Ugh! Those greedy speculators, providing no value and driving up the spot price of oil and making profits by skimming off the top, all the while the oil is just horded by the capitalists in large tanks (providing no value to society while it just sits there). We need to pass a law that takes into account advanced economics and get rid of these leeches. We also need to hire Venezuela's commerce minister and crack down on these hoarders.

 

[dismal]

Ugh! Those greedy speculators, providing no value and driving up the spot price of oil and making profits by skimming off the top, all the while the oil is just horded by the capitalists in large tanks (providing no value to society while it just sits there). We need to pass a law that takes into account advanced economics and get rid of these leeches. We also need to hire Venezuela's commerce minister and crack down on these hoarders.

Well, it's not "speculation" if you know what the price is going to be.

And if it helps you can think of it as nobly deferring consumption today to increase the supply of oil in future months when the market projects it will be needed more.

 

[Axulus]

Ugh! Those greedy speculators, providing no value and driving up the spot price of oil and making profits by skimming off the top, all the while the oil is just horded by the capitalists in large tanks (providing no value to society while it just sits there). We need to pass a law that takes into account advanced economics and get rid of these leeches. We also need to hire Venezuela's commerce minister and crack down on these hoarders.

Well, it's not "speculation" if you know what the price is going to be.

And if it helps you can think of it as nobly deferring consumption today to increase the supply of oil in future months when the market projects it will be needed more.

I thought the Venezuela minister comment made the sarcasm of what I wrote pretty clear...

 

[Bronzeage]

"Advanced Economics" sounds something like "foresight economics"(also known as hedgefund math), which is always shaky when compared to "hindsight economics."

In any case, the question was about capacity, not price. It's possible high tank rents could induce someone to build more tanks, but this would require a belief in continued high production and low refinery capacity/low demand.

As foresight goes, that is not a really long distance.

Of course higher prices for renting out storage tanks would induce people to add storage tanks or other means of storage.*

We have been hearing stories of people parking oil tankers offshore etc. This is that. At some point if you pay someone enough they'll let you store oil in their swimming pool.

The part you seem to have missed is that the increased demand for storage has little to do with production, refineries, etc. except to the extent the outlook on them affects the forward curve for oil.

Right now you can buy a barrel of oil, stick it in storage, and sell it later for ~$5 bucks more. Essentially risklessly, except for credit. If you have storage.

This creates demand for storage that does not exist when the oil price curve is in its traditionally backwardated mode.*

*Assuming, of course, that we are not applying advanced economics wherein we can't say anything about how price will affect the demand for something.

Would you build an apartment complex in a company town, if you expected the company to shut down in one or two years?

The idea of selling your barrel for $5 more than you paid for it sounds great. What could possibly go wrong besides a downturn in the economy, a technology advance which makes oil less important, or the presence of so much crude oil in storage, no one feels the need to bid up the price.

Let's not forget the possibility of a major refinery fire, which might restrict output and drive up retail prices, but would reduce the demand for crude at the same time.

There's really no such thing as "riskless."

 

[dismal]

Well, it's not "speculation" if you know what the price is going to be.

And if it helps you can think of it as nobly deferring consumption today to increase the supply of oil in future months when the market projects it will be needed more.

I thought the Venezuela minister comment made the sarcasm of what I wrote pretty clear...

Yeah, I got it.

 

[dismal]

Of course higher prices for renting out storage tanks would induce people to add storage tanks or other means of storage.*

We have been hearing stories of people parking oil tankers offshore etc. This is that. At some point if you pay someone enough they'll let you store oil in their swimming pool.

The part you seem to have missed is that the increased demand for storage has little to do with production, refineries, etc. except to the extent the outlook on them affects the forward curve for oil.

Right now you can buy a barrel of oil, stick it in storage, and sell it later for ~$5 bucks more. Essentially risklessly, except for credit. If you have storage.

This creates demand for storage that does not exist when the oil price curve is in its traditionally backwardated mode.*

*Assuming, of course, that we are not applying advanced economics wherein we can't say anything about how price will affect the demand for something.

Would you build an apartment complex in a company town, if you expected the company to shut down in one or two years?

The idea of selling your barrel for $5 more than you paid for it sounds great. What could possibly go wrong besides a downturn in the economy, a technology advance which makes oil less important, or the presence of so much crude oil in storage, no one feels the need to bid up the price.

Let's not forget the possibility of a major refinery fire, which might restrict output and drive up retail prices, but would reduce the demand for crude at the same time.

There's really no such thing as "riskless."

In a futures market you lock in the price you're going to sell it for in the future today. It doesn't actually matter what the market price is at the time.

 

[Bronzeage]

Would you build an apartment complex in a company town, if you expected the company to shut down in one or two years?

The idea of selling your barrel for $5 more than you paid for it sounds great. What could possibly go wrong besides a downturn in the economy, a technology advance which makes oil less important, or the presence of so much crude oil in storage, no one feels the need to bid up the price.

Let's not forget the possibility of a major refinery fire, which might restrict output and drive up retail prices, but would reduce the demand for crude at the same time.

There's really no such thing as "riskless."

In a futures market you lock in the price you're going to sell it for in the future today. It doesn't actually matter what the market price is at the time.

Is this a contract to buy at that price, or an option to buy at that price?