Allow Me To Butt In, With a Rebuttal of Sorts

Here is the premise...

Some politician said it is the patriotic duty of gasoline suppliers to reduce costs and some rich dude says the politician is misdirecting or unaware of how the market works. This happened to flow right into some of my social media accounts.

This prompted one poster to reply with this. I won't do a screen capture, as it might be some violation of something. You can open the link. Crude Oil (WTI) is up 40% and Gasoline is up 60%, both from 1 year ago. It does seem to support the theory, that gasoline prices are out of line.

The problem being WTI and Brent are Global Benchmarks and Gasoline is basically a U.S. market... benchmark. So why is this? (click to enlarge)

This seems to have started diverging last fall. Here is the Price history of WTI Crude and Gasoline Futures. Which seems to be the product of exporting more gasoline than importing. For that information, here is the export history and the import history. (Weekly, in thousand of barrels).

IF gasoline futures had stayed in line with WTI, the futures would be around $3.44 and we (U.S.) would be averaging around $4.29 at the pump... nationally, and we would still be griping. 😭

I made this easy(?) to read graph on the difference...

Yes, we have upped the exports of gasoline and thereby forced the gasoline futures to battle with global pricing structures... just to keep gasoline in the USA. 

I didn't check on every country, as various countries are subsidizing, but I do keep tabs on the U.K. Even when factoring in the U.K. using a bit higher octane rating, the U.S. gasoline is a bit cheaper... when backing out taxes. This is not intended to explain away U.S. prices, but rather the nature of global pricing structures.

As to the patriotic theme, that is clearly intended for an American audience that sees a familiar name and thinks of it as an AMERICAN brand. In fact, they are Multi-National (Global) Enterprises. So they likely are being patriotic... but to what nationality?

Our patriotic politicians could reinstate the crude oil export ban, that was overturned in late 2015, and it would bring down the WTI price, but does not help the gasoline side of the equation, as there were no limits on gasoline exports. 

Has releasing 1 million barrels a day from the SPR done anything? Why yes, it has kept the WTI from going through the roof and gasoline following a similar track. 

Speaking of the SPR, with the draw of 1 million barrels per day to end at end of October... the U.S. is already planning to replenish those barrels.

Not sure what that will do to crude or gasoline futures, but there will be somebody, somewhere, ready to complain and blame someone. That someone will always be of the opposite political persuasion. 

It is sad to watch... but somehow, very entertaining as well. 

As for the Crude oil and petroleum products, much the same trend, for those interested...

NATO and the Western Alliance

 

Where to start? I really don't know and at times this might seem like a rant, so bear with me. 

We are being told that the NATO alliance has never been stronger but is that true. There is a lot of posturing in favor of NATO, but what are the real opinions of Europeans, Canadians, and Americans.

In 2019, PEW research published the results of their survey titled "NATO Seen Favorably Across Member States," with the subheading of "Many in member countries express reservations about fulfilling Article 5’s collective defense obligations."

Maybe I am misinterpreting the results, but it would seem that much of the public is opposed to their own military engaging on behalf of another member. I suspect this is due to the one- and only-time article V was invoked. It becomes difficult to determine the thought processes of those giving their opinions.

At that time, I would have suspected they meant if the U.S. was again attacked, but recent events suggest if any NATO member was attacked. The PEW Research addressed this in 2019 with the question... 

The expectation is for the U.S. to carry the load. This idea is firmly planted, in my opinion. Certainly, polls taken today might suggest something else, but is the respondent simply saying what is a safe answer?

The problem with all of this, is the U.S. might be able to do the heavy lifting, but at what cost and who bears the brunt of the criticism for any collateral damage. Collateral damage would include such things as economic turmoil, due to energy supply curtailment. Pause and think about that.

I have no doubt that European Citizens would blame the U.S. as it seems to be their historical go to when anything bad happens ... and unfortunately sometimes it is correct (rarely taking responsibility for their own mistakes). It would likely lead to the collapse of NATO. There would likely be a hue and cry over what the U.S. had wrought and lead the Americans to turn very negative towards NATO... to the point of opting out. Not that far away, in my humble opinion. A great many Americans are already questioning NATO's value.

Therefore, the U.S. must walk a razor thin line between supporting Ukraine and avoiding Russia cutting off energy supplies. 

Like a lot of folks, I originally thought Russia just wanted Ukraine, but I suspect the main objective is dissolution of NATO and severing U.S. ties with Europe. 

I realize this might seem far-fetched, but given the attitudes of various countries, towards the United States, ...it moves the needle towards that real possibility.

Unfortunately, there is a much bigger picture at play... which would be the Western Alliance, which in this case would also include some countries in the Pacific. In that regard, I am referring to a way of life we have become accustomed to.

Indecisive action is leaving the door open to further divisions and giving the enemies to our way of life, an opening to seize upon.

No, this was not a positive and uplifting blog article. I am old and won't likely see the end of all this, but I have children and grandchildren for which I worry.