TITLE: Oil prices drop to 3-month low amid record U.S. production
https://www.axios.com/2023/11/09/oil-price-today-chart-production
EXCERPT: The decrease comes even as Russia and Saudi Arabia are sticking to their voluntary production cuts to prop up prices.
Yes, but: Global demand has been slumping, too, especially from China.
China is the second-largest consumer of crude oil behind the U.S., and it continues to struggle with a lackluster economy.
Meanwhile, U.S. oil production is steadily ratcheting up: In the last week of October, U.S. crude oil production was 13.2 million barrels per day, a new record.
The intrigue: The decline of oil prices also comes despite the current war between Israel and Hamas in Gaza, the kind of geopolitical conflict that would traditionally result in some kind of fear premium in the oil market.
Previous wars between Israel and Arab states, such as the 1973 Yom Kippur War, resulted in massive oil shocks.
The bottom line: U.S. production is a far bigger factor in global markets now, as is Chinese demand, and both are currently developing in a way that would favor lower prices.
TITLE: GOP Candidates Say Lack Of Energy Is Causing Inflation — Despite Record Oil Production
https://www.huffpost.com/entry/gop-debate-energy-inflation_n_654c482fe4b0ea0b7f95a411
EXCERPT: In response to a question from NBC debate moderator Lester Holt on what could be done to immediately help Americans manage the cost of living, biotech [CEO] Vivek Ramaswamy said, “Increase the supply of energy. That brings down the cost of energy, grows the economy.”
“Drill. Frack. Burn coal. Embrace nuclear,” he added.
Former New Jersey Gov. Chris Christie took the same tack in his answer.
“When you go ahead and you tell people we are going to unleash every bit of American energy, every bit of its potential, what happens in the futures markets? The prices go down,” he said.
“We should focus not just on being energy independent. We should focus on being energy dominant,” said Sen. Tim Scott (R-S.C.).
But according to the Energy Information Administration, U.S. oil fields saw their most productive month in history in August, surpassing the previous record set in November 2019, just before the COVID pandemic hit.
TITLE: The problem isn’t inflation. It’s prices.
https://www.vox.com/money/2023/11/8/23951098/economy-inflation-prices-job-market-sticker-shock
EXCERPT: If you’re looking at 2023 through a pre-pandemic lens, even if not intentionally, the situation feels pretty gross. “People might just be still annoyed that prices are high compared to where they were. Even if prices have stopped going up at the rate that they were, it still sucks if you still are anchored to what things were in 2019,” said Matthew Klein, the founder and publisher of The Overshoot, an economic research service.
The Fed’s interest rate hikes to combat inflation mean higher interest rates for consumers as well, meaning buying a house or a car or just paying your credit card bill is more expensive, too.
Some prices have declined and will likely bounce around and fall, such as for commodities and goods. Lumber prices, which soared in 2021, have settled. The same goes for eggs. Oil prices and many food prices depend on global factors, from weather to geopolitics, that are impossible to control. Airfare prices have fallen, but they’re likely to pick back up again soon.
In many areas where prices have come down, they’re not where they were pre-pandemic. As the Wall Street Journal noted in October, the prices of a number of items, from milk to gasoline to new cars, have declined from their recent peaks but are still above where they were ahead of the outset of the Covid-19 outbreak.
“There’s a couple prices people might track that might decline, and some things might normalize here and there. But, in general, the level of spending in the economy is not going to decrease, and the level of spending supports a level of goods and prices,” said Mike Konczal, director of macroeconomic analysis at the Roosevelt Institute. “That is unlikely to have a huge shift unless people start spending a lot less, at which point, there would be a recession.”
Prices tend to be “downwardly rigid,” Konczal added, meaning they tend not to go down (the same goes for wages). On the consumer end, once companies increase a price for, say, shampoo or soda, they don’t often revise them back down. Corporations have been quite open that people are largely hanging with them on price increases over the past couple of years, which has allowed them to hike more. There isn’t much consumers can do about it.