When will we start seeing the effects of higher diesel prices? Farm equipment uses a lot for harvesting, which means it will raise the price of production by quite a bit, and semis use diesel to transport goods around the country. There is also a big heating oil market out there as well, which is very similar to diesel if I understand correctly.
a lot of Data centers are connecting to the grid raising electricity prices but some have their own powerplants which are often Natural Gas. 20% of Natural gas comes via the straight of Hurmuz. Or it used to anyways.
Winter natural gas use + data center natural gas use + less supply -> higher prices
the one saving grace might be a milder winter temperature wise thanks to El Niño?
LNG trades at 10x in Japan/Korea than it does at the Henry Hub (and the Algonquin Citygate is trading even less than the Henry). So while global trading has some impact in domestic commodity prices, it's marginal for a number of reasons. One, LNG is different than natural gas, we only have so much capacity to create and export liquified natural gas and the U.S. is already the largest LNG exporter and the largest natural gas producing nation by a full magnitude over Russia. We also have natural gas production across the country with a mature transportation network domestically and that is before accounting for cheap Canadian gas, particularly in the Northeast.
Natural gas prices have fallen nearly 4% this year in the U.S., largely due to high inventories. Natural gas prices can quintuple and they still won't be at the level of 2005-2007 and that's without accounting for inflation.
All the prices have been creeping up, especially retail goods. If you haven't felt the squeeze already, you'll definitely be feeling it in the next year in essential goods unless youre in the money class
Oh I definitely feel it on the groceries front, but I drove a hybrid and live within 10 miles of my workplace, so gas isn’t hitting me nearly as hard as some of my coworkers driving 30mi+ each way in their giant vehicles.
No, it's not anymore. If you put heating oil in a modern diesel, it will cause serious engine problems. Modern diesels are engineered to only run on ultra low-sulphur diesel, running heating oil will cause problems with fuel pump, injectors and eventually cause failures in emissions systems if the engine will stay running long enough.
Oldee, pre-emissions diesels? Sure, you can run heating oil with additives to improve lubrication, but performance will be diminished from lower cetane
I'm looking forward to Trump, who was saying the new chairman was the best and brighestest of all time is now an idiot and radical left that wants to destroy America.
Yes and no. Traditionally, Central Banks try to look past oil shocks. And the impacts of oil hitting $100 won’t filter through to consumer prices for a little bit of time.
The bigger impact is the producer price index coming in at nearly 6%.
Even if you take the most optimistic view and expect that businesses can only pass through a fraction of the costs, you’re looking at consumer inflation that is going to be above the 2% target.
If I were the central bank I think I'd view these oil shocks as different than most. We are seeing tankers being sunk, infrastructure being destroyed, and I personally don't see a short term solution to this escalating. So I'd view at least some of the higher prices as long term baked in at this point.
Conversely, given improvements in energy efficiency and other notable advancements, oil shocks are no longer seen as bad as they were 5 decades ago.
That said, they of course are going to take this into consideration, but are much less concerned about short run noise, as monetary policy is very much more a long term play.
Doesn't efficiency increasing just make a supply shock more devastating? I.e. to reduce 10 gallons of fuel demand in a 13 mpg vehicle you cut 130 miles of travel, but in a 38 mpg vehicle you cut 380?
Imagine a toilet paper supply shock. Modern triple plus toilet paper is more efficient than single ply, so your cost per poop is less. But if you choke off supply is the problem that the cost per poop has gone up, or is the problem that I need to poop and I don't have toilet paper?
I actually think you're both right. But just because your cost per mile is less than it once was, doesn't mean the real issue isn't limited supply.
FWIW core is expected to continue to cool, down to ~.2% month on month. So if it comes in there I think hikes are still an expectation, as that data is baked in to current pricing. If it comes in hotter it’ll be hard to do anything but a hike.
Headline is gonna be higher tho on energy volatility.
Ding ding ding, those PPI numbers are all but solidifying a hike soon.
Futures moved from 60% probably of a hike next week to 70% upon release. We’ll see what CPI says on Friday, but unless it’s significantly lower than expected I’d be expecting a hike.
> Yes and no. Traditionally, Central Banks try to look past oil shocks.
I would argue that central banks have resisted committing to changes that acknowledge drastic changes in the global markets, but this situation has clearly extended beyond an "oil shock". Several countries have dumped their petroleum reserves to try to smooth out the "shock", and the problems are getting worse.
Consumer prices are already up on the speculation and the "whatever the market will bear" greed that companies were approved to pursue by this Administration.
Not raking hikes was the implosion option, let alone a rate cut. The Fed will hike rates, and I bet the yields will remain firm. The market is screaming that it won't tolerate anymore nonsense, and this US government is run by idiots who are determined to destroy the economy.
Text is going to make this seem sarcastic, but I mean it sincerely: it is, still?
An oil shock is a temporary thing, yet this has been going on for six months with no end in sight. Trump and Iran both continue to hold red-line demands that are impossible to reconcile, and neither has the ability to militarily force the issue; Iran can't knock out the USN blockade, and Trump doesn't have the support to launch an outright invasion of Iran.
When the only weapon available is economic pain, does it still qualify as a shock?
Now, the longer it goes, the less it can be "looked through", because the consequences of it filtering through the supply chain last longer and longer. But that's more of a subjective viewpoint (how long should we wait until we know it will impact us years into the future).
The treasury being at odds with the federal reserve is exactly the red flags you'd be looking for to divest away from said state where the central bank is at odds with the treasury.
The Fed doesn't control interest rates generally. The signals where they think rates should be by adjusting the rate they charge banks - this the one rate they control.
Government bonds are considered riskless. Lenders will require a higher return to lend to anyone else. The Fed can signal they want lower rates, but the bond market sets the baseline.
The Fed will most likely follow the rising rates in the bond market. If they signal lower rates and the market doesn't respond, then the Fed loses relevance.
Agreed - nearly risk free. Of course, if the US government ever defaults, then all USD denominated debt will be worthless. There is nothing backing the dollar except faith (and credit).
Still, loaning to anyone else entails more risk and will demand a higher return, so adding a little risk to Treasury Bonds doesn’t change the analysis.
We can be right back down into the $80 a barrel range with a mean tweet. It happens just that quickly. Yet, somehow, no one in an official capacity will use the term “volatility”.
Man, I’m so glad I’ve largely remained on the sidelines of participating in the US economy. I work, I place money into 401k plan, I pay my rent on time, every time. No other bills of note, and no debt. But a whole lot of money in investments, and a whole lot sitting in HYSA, ultra liquid, paying me a pittance that the Fed Reserve says it should pay.
The correct answer to supply shocks is to lower the interest rates - not hike them up.
You need more investment to replace lost production - not squeezing the demand further (market forces do it on their own), thus need for lower interest rates.
The interest rates should fall. And that'll save his midterm. Trump did lower pharmaceutical prices. Unless there's a discrepancy for at-large investors and market makers to go in the healthcare marketplace, which is not true because there are more pharmaceutical start ups through artificial intelligence (college research groups), not dropping interest rates is denying the market a correction. Every other country is giving healthcare away for free or cheap, yet no other country can be as responsible for healthcare than America. That is a large investment opportunity.
mist_kaefer | 18 hours ago
When will we start seeing the effects of higher diesel prices? Farm equipment uses a lot for harvesting, which means it will raise the price of production by quite a bit, and semis use diesel to transport goods around the country. There is also a big heating oil market out there as well, which is very similar to diesel if I understand correctly.
The_Frostweaver | 18 hours ago
a lot of Data centers are connecting to the grid raising electricity prices but some have their own powerplants which are often Natural Gas. 20% of Natural gas comes via the straight of Hurmuz. Or it used to anyways.
Winter natural gas use + data center natural gas use + less supply -> higher prices
the one saving grace might be a milder winter temperature wise thanks to El Niño?
Wrong_Assignment_446 | 17 hours ago
Yes, you're right, Qatar has the largest natural gas liquefaction plant in the world which was, of course, bombed by Iran.
originalrocket | 5 hours ago
*had
Troutalope1 | 17 hours ago
The U.S. doesn't import natural gas from the middle east, the LNG transported in the Strait is predominantly for Asia.
Stlr_Mn | 6 hours ago
It’s a connected market. If LNG goes up in Asia or Europe because of the strait closure, then it goes up on the U.S. as well.
Troutalope1 | 6 hours ago
LNG trades at 10x in Japan/Korea than it does at the Henry Hub (and the Algonquin Citygate is trading even less than the Henry). So while global trading has some impact in domestic commodity prices, it's marginal for a number of reasons. One, LNG is different than natural gas, we only have so much capacity to create and export liquified natural gas and the U.S. is already the largest LNG exporter and the largest natural gas producing nation by a full magnitude over Russia. We also have natural gas production across the country with a mature transportation network domestically and that is before accounting for cheap Canadian gas, particularly in the Northeast.
Natural gas prices have fallen nearly 4% this year in the U.S., largely due to high inventories. Natural gas prices can quintuple and they still won't be at the level of 2005-2007 and that's without accounting for inflation.
Icy_Scar_1249 | 17 hours ago
All the prices have been creeping up, especially retail goods. If you haven't felt the squeeze already, you'll definitely be feeling it in the next year in essential goods unless youre in the money class
mist_kaefer | 10 hours ago
Oh I definitely feel it on the groceries front, but I drove a hybrid and live within 10 miles of my workplace, so gas isn’t hitting me nearly as hard as some of my coworkers driving 30mi+ each way in their giant vehicles.
Randomfactoid42 | 18 hours ago
Heating oil is identical to diesel it’s just dyed a different color for tax purposes.
Troutalope1 | 17 hours ago
No, it's not anymore. If you put heating oil in a modern diesel, it will cause serious engine problems. Modern diesels are engineered to only run on ultra low-sulphur diesel, running heating oil will cause problems with fuel pump, injectors and eventually cause failures in emissions systems if the engine will stay running long enough.
Oldee, pre-emissions diesels? Sure, you can run heating oil with additives to improve lubrication, but performance will be diminished from lower cetane
Randomfactoid42 | 16 hours ago
Most heating oils meet the ULSD standard now.
And you can’t run red diesel in anything on-road unless you want to pay the fines.
tribbans95 | 17 hours ago
You haven’t been seeing them? I have
Evilbred | 17 hours ago
I'm looking forward to Trump, who was saying the new chairman was the best and brighestest of all time is now an idiot and radical left that wants to destroy America.
evantom34 | 16 hours ago
So true. Trump crony now a socialist terrorist or some bologna
Modokon | 15 hours ago
I'm hoping he strokes out on the day and winds up making incoherent noises whilst shitting himself...oh wait...
Evilbred | 15 hours ago
We call those Tuesdays
EconomistWithaD | 19 hours ago
Yes and no. Traditionally, Central Banks try to look past oil shocks. And the impacts of oil hitting $100 won’t filter through to consumer prices for a little bit of time.
The bigger impact is the producer price index coming in at nearly 6%.
Even if you take the most optimistic view and expect that businesses can only pass through a fraction of the costs, you’re looking at consumer inflation that is going to be above the 2% target.
Not_Legal_Advice_Pod | 18 hours ago
If I were the central bank I think I'd view these oil shocks as different than most. We are seeing tankers being sunk, infrastructure being destroyed, and I personally don't see a short term solution to this escalating. So I'd view at least some of the higher prices as long term baked in at this point.
EconomistWithaD | 18 hours ago
Conversely, given improvements in energy efficiency and other notable advancements, oil shocks are no longer seen as bad as they were 5 decades ago.
That said, they of course are going to take this into consideration, but are much less concerned about short run noise, as monetary policy is very much more a long term play.
ActivatingEMP | 18 hours ago
Doesn't efficiency increasing just make a supply shock more devastating? I.e. to reduce 10 gallons of fuel demand in a 13 mpg vehicle you cut 130 miles of travel, but in a 38 mpg vehicle you cut 380?
EconomistWithaD | 18 hours ago
I think you have the example backwards. If you cut a gallon of gas now, there is much less reduction in driving distance.
Beyond that, increased efficiency means production processes are less reliant on oil, and so any impacts are more diluted.
ActivatingEMP | 18 hours ago
What. How would it cut less driving distance now, when we get more distance per unit fuel?
EconomistWithaD | 18 hours ago
It’s cost per mile.
ActivatingEMP | 18 hours ago
But if the gallon doesn't physically exist anymore, the cost per mile will just climb until the gallon is priced out?
EconomistWithaD | 18 hours ago
Well, I have yet to see evidence of broad scale gas shortages that cause rationing.
ActivatingEMP | 18 hours ago
But if the production is not matching consumption eventually you have to pay that piper?
iAwesome3 | 12 hours ago
https://www.iea.org/data-and-statistics/data-tools/2026-energy-crisis-policy-response-tracker?tab=Energy+conservation
It’s getting priced out on a global scale. Most countries have at least a guideline put in place but it varies a lot from country to country
Not_Legal_Advice_Pod | 14 hours ago
Imagine a toilet paper supply shock. Modern triple plus toilet paper is more efficient than single ply, so your cost per poop is less. But if you choke off supply is the problem that the cost per poop has gone up, or is the problem that I need to poop and I don't have toilet paper?
I actually think you're both right. But just because your cost per mile is less than it once was, doesn't mean the real issue isn't limited supply.
EconomistWithaD | 14 hours ago
Again, where are the gas lines?
Not_Legal_Advice_Pod | 13 hours ago
At the strategic reserve pulling oil out of our emergency supplies to keep the retail pumps fed.
Maxpowr9 | 19 hours ago
CPI is tomorrow and I imagine it will be just as bad; causing a 25bp rate hike. Will be fun to see Trump go off the rails.
2ManyCatsNever2Many | 18 hours ago
he'll blame it on biden
RIP_Soulja_Slim | 18 hours ago
FWIW core is expected to continue to cool, down to ~.2% month on month. So if it comes in there I think hikes are still an expectation, as that data is baked in to current pricing. If it comes in hotter it’ll be hard to do anything but a hike.
Headline is gonna be higher tho on energy volatility.
RIP_Soulja_Slim | 18 hours ago
Ding ding ding, those PPI numbers are all but solidifying a hike soon.
Futures moved from 60% probably of a hike next week to 70% upon release. We’ll see what CPI says on Friday, but unless it’s significantly lower than expected I’d be expecting a hike.
tortilla4masclol | 13 hours ago
Plastics manufacturing here. Fun times, layoffs looming.
vertigo3pc | 17 hours ago
> Yes and no. Traditionally, Central Banks try to look past oil shocks.
I would argue that central banks have resisted committing to changes that acknowledge drastic changes in the global markets, but this situation has clearly extended beyond an "oil shock". Several countries have dumped their petroleum reserves to try to smooth out the "shock", and the problems are getting worse.
Consumer prices are already up on the speculation and the "whatever the market will bear" greed that companies were approved to pursue by this Administration.
Not raking hikes was the implosion option, let alone a rate cut. The Fed will hike rates, and I bet the yields will remain firm. The market is screaming that it won't tolerate anymore nonsense, and this US government is run by idiots who are determined to destroy the economy.
EconomistWithaD | 17 hours ago
I mean, other things are happening, but this is still a canonical "oil shock".
AnAlternator | 14 hours ago
Text is going to make this seem sarcastic, but I mean it sincerely: it is, still?
An oil shock is a temporary thing, yet this has been going on for six months with no end in sight. Trump and Iran both continue to hold red-line demands that are impossible to reconcile, and neither has the ability to militarily force the issue; Iran can't knock out the USN blockade, and Trump doesn't have the support to launch an outright invasion of Iran.
When the only weapon available is economic pain, does it still qualify as a shock?
EconomistWithaD | 13 hours ago
Yes, because (at some point), it will end.
Now, the longer it goes, the less it can be "looked through", because the consequences of it filtering through the supply chain last longer and longer. But that's more of a subjective viewpoint (how long should we wait until we know it will impact us years into the future).
Astr0b0ie | 9 hours ago
Yeah and so was the oil embargo in 1973 which was the catalyst for the stagflation that plagued the rest of the 70s.
EconomistWithaD | 9 hours ago
Yes. Good things we are less oil dependent and more energy efficienct.
SeaworthinessDry269 | 17 hours ago
Yes but a prolonged higher oil price trickle in the economy and get passed to consumers. Once oil falls back, consumer prices rarely do.
EconomistWithaD | 17 hours ago
Of course they do. "Looking past" shocks doesn't mean they have no impact.
It means that global shocks are much harder to policy using domestic rates, which is why we have a focus on core.
Picks6x | 16 hours ago
The treasury being at odds with the federal reserve is exactly the red flags you'd be looking for to divest away from said state where the central bank is at odds with the treasury.
king_of_the_nothing | 18 hours ago
The Fed doesn't control interest rates generally. The signals where they think rates should be by adjusting the rate they charge banks - this the one rate they control.
Government bonds are considered riskless. Lenders will require a higher return to lend to anyone else. The Fed can signal they want lower rates, but the bond market sets the baseline.
The Fed will most likely follow the rising rates in the bond market. If they signal lower rates and the market doesn't respond, then the Fed loses relevance.
Gamer_Grease | 17 hours ago
Govt bonds are not considered riskless. They’re just the closest to a risk-free option.
king_of_the_nothing | 16 hours ago
Agreed - nearly risk free. Of course, if the US government ever defaults, then all USD denominated debt will be worthless. There is nothing backing the dollar except faith (and credit).
Still, loaning to anyone else entails more risk and will demand a higher return, so adding a little risk to Treasury Bonds doesn’t change the analysis.
082426grateful | 18 hours ago
We can be right back down into the $80 a barrel range with a mean tweet. It happens just that quickly. Yet, somehow, no one in an official capacity will use the term “volatility”.
Man, I’m so glad I’ve largely remained on the sidelines of participating in the US economy. I work, I place money into 401k plan, I pay my rent on time, every time. No other bills of note, and no debt. But a whole lot of money in investments, and a whole lot sitting in HYSA, ultra liquid, paying me a pittance that the Fed Reserve says it should pay.
walkingthecowww | 15 hours ago
How does that qualify as sitting on the sidelines of the economy
Ateist | 6 hours ago
The correct answer to supply shocks is to lower the interest rates - not hike them up.
You need more investment to replace lost production - not squeezing the demand further (market forces do it on their own), thus need for lower interest rates.
Azula_In_The_AMX | 18 hours ago
The interest rates should fall. And that'll save his midterm. Trump did lower pharmaceutical prices. Unless there's a discrepancy for at-large investors and market makers to go in the healthcare marketplace, which is not true because there are more pharmaceutical start ups through artificial intelligence (college research groups), not dropping interest rates is denying the market a correction. Every other country is giving healthcare away for free or cheap, yet no other country can be as responsible for healthcare than America. That is a large investment opportunity.
RashmaDu | 17 hours ago
Yes, thankfully pharma prices are the only good being sold on the US market. Oh? I'm being told they're not?