Tag: oil

The Inflation Going On Has Been Caused By A Complex Set Of Circumstances

by inmanb17cedcb09, posted in Current Events

April 12, 2022
   Inflation. Not a word we like to hear, that’s for sure, and unfortunately, we are getting nailed with it right now. And of course, the political blame game has ensued with finger pointing, mudslinging, and some trying to use it to their advantage in upcoming elections. But let’s get real about why we are being slammed with rising prices.
   Multiple factors are coming into play that are driving the inflation we are seeing these days. Early in the pandemic, demand for many goods and services (such as gasoline, dining out, buying vehicles, and more) dramatically decreased. Prices often decreased as well. This was seen with oil prices. Then, economies started to pick back up, and demand for many goods and services also increased correspondingly. But there have been serious supply chain problems creating a situation where supply has frequently not kept up with demand. This has created bottlenecks and raised prices of numerous goods and services. When this type of thing happens to enough goods and services, inflation results.
   As to why supply has often been lagging behind demand, there are multiple reasons, but the Pandemic has been a major one. The COVID Pandemic has been fluid and worldwide. Some areas get hit with surges more severely than others and often at varying times. Also consider how different places don’t necessarily respond the same way. Think about all that. This means that while one area has high demand for a product, another area that may be key in producing or transporting it could be facing serious limitations because of a surge. Consider it this way: when a bad surge is affecting an area, a significant number of factory workers may be out sick. Output from that factory thus decreases. At the same time, a significant number of truck drivers and port workers may be out with COVID, which in turn makes transportation of products being produced more difficult. And when the demand for the factory’s product is still high, it gets more expensive for those buying it. Another factor involved in worsening inflation is that when the prices of certain key items or services (such as oil) go up, they can have ripple effects, driving up the prices of many other goods and services. Oil is a good example of this. When oil prices go up, transportation costs of goods go up which make those goods more expensive (be it food in grocery stores or smartphones in electronics stores). Another example is the shortage of semiconductors and periodic disruption of other parts needed to build automobiles. This has led to a shortage in the number of vehicles being produced at a time when demand for new vehicles increased. The result: it’s more expensive to buy a new car. In the United States, there has also been a shortage of truck drivers (rising fuel costs and other factors have likely lessened the number of people wanting to pursue this career). Yet, products still need to be shipped, so here’s another factor in the supply chain problem going on. Greed also comes into play, with the oil industry being an example of that. Oil producers (including US companies and OPEC) have resisted the idea of temporarily increasing oil production to lower prices, in large part because they don’t want to lower their profits (they’ve had high profits lately).
   So when you consider the number of ways the supply of goods and services are being disrupted these days, it’s clear that this is a major driving force in the inflation that we are seeing around the world. That’s right: inflation is striking around the world. Not just in the United States. And Russia’s brutal invasion of Ukraine is also playing a role since Russia is an oil producer (European countries have relied heavily on Russian natural gas). It’s also clear that this inflation situation would have struck no matter who was in the White House and Congress. Government spending (which includes COVID stimulus bills during the Trump years) may be contributing to some degree as well, though I think the supply chain problems that have been exacerbated by the Pandemic (and now the war in Ukraine) are the primary factors. In terms of combating the rise in inflation that we are seeing, there is no single way to stop it. Fixing the supply chain problem would be a big one, but seeing how the supply chain situation is so complex and global in nature (and that COVID is still around), there is no simple fix.  President Biden is trying to battle rising gas prices by attempting to get oil producers (like US oil companies, Saudi Arabia, and others) to increase oil production, but he can’t order them to do so. Releases from the US Oil Reserves have also been authorized as has increasing the percentage of Ethanol allowed in gasoline). Efforts are being made to try to alleviate the bottlenecks US ports are grappling with (like getting the port of Log Angeles to operate 24/7), and the Federal Reserve is likely to increase interest rates several times this year as it fights inflation. I also think we need to speed up the process of shifting away from our reliance on fossil fuels and increase the use of renewable, clean energy because this would help combat Human Caused Climate Change as well as make us less susceptible economically to the whims of the oil market. But the brutal truth is that there are limitations on what the White House and Congress can do to slow down the inflation we are experiencing, especially in the short term. It will almost certainly take time for the situation to improve.

Current Events Reveal How Much We Need To Shift To Renewable, Clean Energy Sources

by inmanb17cedcb09, posted in Current Events, Science

March 7, 2022
   The rise in petroleum prices that we are seeing these days reinforces the need for the United States and other countries to speed up the shift to renewable, clean energy. Supply chain issues, the COVID Pandemic, and now Russia’s brutal invasion of Ukraine are all playing roles in the current rise of gas prices (and inflation) which we’re seeing around the world.
   Humanity started to increasingly rely on the use of fossil fuels in the 19th century with the use of coal to warm homes, power factories, and run railroads and steamships. With the invention of the combustion engine, fossil fuel use really exploded in the 20th century as more and more people relied on automobiles powered by petroleum products. Coal firing plants to supply energy to cities grew in size and number as did manufacturing facilities. The result of all this was a precipitous rise in CO2 levels in the atmosphere. According to NASA, during the last Ice Age, CO2 levels were around 185 ppm (parts per million)and rose to about 280 ppm by 1850. In January of 2022, it was up to 418. This dramatic increase since 1850 is clearly due to human activity (particularly from the use of fossil fuels). We know from exhaustive research that rising atmospheric CO2 levels causes average temperatures to go up as well, which in turn has created the Climate Change Crisis that the planet is experiencing today.
   In order to combat Human Caused Climate Change, we need to lower atmospheric CO2 levels, and the best way to do that is to decrease the use of fossil fuels while increasing the use of renewable, clean energy sources. Another added benefit will be less reliance on having to import petroleum from other parts of the world because as we are currently seeing how regional and world events can lead to rising petroleum prices that we have to pay due to our reliance on fossil fuels.
   With everything that is going on (including the likelihood of banning Russian petroleum exports),  in the short term, other parts of the world will need to increase oil production in order to prevent gas prices from getting too exorbitantly high. But in the long run, we need to speed up the process of shifting away from fossil fuels and towards the use of renewable, clean energy because it will be better for the planet and also will likely allow the United States and other countries to become less reliant on the necessity to import such significant amounts of their energy needs.

The US And Allies May Need To Ban Russian Petroleum Exports

by inmanb17cedcb09, posted in Current Events

March 6, 2022
   The world is finally recognizing how viciously brutal Vladimir Putin is with Russia’s bloody invasion of Ukraine. Things will not be the same, and we all will need to adapt to this new world.
   Nations around the globe must stand as united as possible against Russia, supplying Ukraine with military and financial aid while also isolating and punishing Russia both diplomatically and financially. The sanctions that have been implemented are important and will hurt the Russian economy significantly. The value of the ruble has already dropped precipitously which is certainly a step in the right direction. The current sanctions are stronger than any Russia has ever faced in modern times, but we need to realize that the international community may also need to ban Russia’s petroleum exports as well.
   In 2019, Russia’s top two exports were Crude Petroleum at 123 billion dollars and Refined Petroleum at 66.2 billion dollars. Current sanctions haven’t hit this area very hard thus far because of the world’s thirst for petroleum. The United States obtains about 5% of it’s petroleum products from Russia while for European countries, it’s much higher (about 50% for Germany). This is why nations have been hesitant about banning Russian petroleum exports. The world is already battling inflation, and there is legitimate concern about how much that could worsen if Russian petroleum gets prohibited. But we may need to implement such bans in order to really put the financial squeeze on Putin and his government seeing how horrendously brutal the Russian invasion has become and due to the fact that if we don’t stop Putin in Ukraine, there is a very real chance he will continue similar moves in other countries such as Georgia, Moldova, and perhaps even Finland.
   It’s time for the international community to stand up to Vladimir Putin and keep him in check. In order to accomplish this, we will all likely have to make some sacrifices. For most of the world it will mean higher gas prices and probably worsened inflation for a time. But that is a small price to pay when you consider what the Ukrainian people are suffering through right now and the need to prevent others from having to experience the same fate.