Category Archives: commodities

Department of Dubious Statistics, Oil Imports Edition

Posted on October 20, 2008 by Felix

The $700 billion the US pays each year to nasty oil-exporting countries — the $700 billion that both Barack Obama and John McCain have cited in their paeans to energy independence — doesn’t exist: According to government agencies that track … Continue reading →

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The Burst Commodity Bubble

Posted on October 7, 2008 by Felix

Do you remember the food and commodity bubble? Sure you do. It wasn’t that long ago. The rise of India and China was inexorable, and the supply of food in general and meat in particular was never going to keep … Continue reading →

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Index Funds Aren’t Speculators

Posted on September 12, 2008 by Felix

One of the first rules of headline writing is that you shouldn’t go with anything which just sounds stupid. Like, say, this: Speculative Bets by Index Funds Didn’t Push Oil Prices Up, Report Says Of course, the whole point of … Continue reading →

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Drilling for Revenues

Posted on September 6, 2008 by Felix

Free Exchange has it right, I think, and Tyler Cowen is being needlessly self-abnegating. Drilling for US oil might well make sense as a matter of fiscal policy, especially for Alaska; it gets us nowhere fast as a an "energy … Continue reading →

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The Dynamics of Oil Prices

Posted on September 2, 2008 by Felix

Sometimes, price action in financial markets really is a consequence of news in the real world. Cause: Hurricane Katrina takes out a huge amount of refinery capacity. Effect: Oil prices rise. Simple. But journalists aren’t having such an easy time … Continue reading →

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Polyvalent Transition Metal of the Day

Posted on August 21, 2008 by Felix

If you want a leveraged play on long-term energy prices, rhenium might be a good place to look. The obscure metal has a very high melting point of 3,186°C — only tungsten’s is higher — which means that if you … Continue reading →

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Gas Mileage: Overrated

Posted on August 19, 2008 by Felix

I never thought I’d say this, but America has become too obsessed with gas mileage. Prius owners use their real-time mileage readout to try and get the absolute maximum number of miles out of every tank; politicians talk dreamily of … Continue reading →

Posted in climate change, commodities | 1 Comment

Oil Datapoints of the Day

Posted on August 11, 2008 by Felix

Krishna Guha: At today’s prices the value of oil in the ground exceeds the combined value of all the world’s equity and debt markets. Oil-importing nations are paying oil-exporting nations roughly $1,500bn per annum for oil – about 2.5 per … Continue reading →

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Supply and Demand in the Oil Market

Posted on August 7, 2008 by Felix

Stan Collender just doesn’t believe that the volatile oil price can really be function of old-fashioned supply and demand: It’s not that I’m not a big believer in this most basic rule of economics. It’s just that the higher prices … Continue reading →

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Why the Energy Crisis Won’t Solve Itself

Posted on August 5, 2008 by Felix

Will Wilkinson is optimistic about energy. Don’t worry about peak oil, he says: as oil prices rise, alternative energy sources will become more attractive, and eventually innovation and competition in the alternative-energy space will drive alternative-energy prices down below the … Continue reading →

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Gasoline Datapoint of the Day

Posted on August 4, 2008 by Felix

Comes from Edmunds.com: The median household is spending 11.5% of its income on gasoline, up from 4.6% of its income five years ago. It’s a pretty basic calculation, which assumes that both miles driven per year and fuel economy have … Continue reading →

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World Bank Biofuels Report Finally Released

Posted on July 30, 2008 by Felix

Three weeks ago, the Guardian’s Aditya Chakrabortty published "the biofuels report they didn’t want you to read": the research paper from the World Bank’s Don Mitchell saying that 75% of the rise in global food prices could be attributed to … Continue reading →

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Oil Company Economics

Posted on July 17, 2008 by Felix

What would constitute price manipulation in the oil industry? Howell Raines doesn’t blame speculators for high prices in his latest column; instead, he blames the oil companies themselves. Supply and demand? Sure, but as John Lee, a business journalist at … Continue reading →

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When Energy Speculators Move the Market

Posted on July 9, 2008 by Felix

Bethany McLean’s interview with Brian Hunter talks a lot about speculators like Hunter driving prices in the natural gas market. Everybody seems convinced that can happen, although there’s disagreement about whether it’s illegal. It’s predictable enough that US politicians would … Continue reading →

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Chart of the Day: They are the Eggmen

Posted on July 7, 2008 by Felix

This is a chart of the S&P 500, priced in terms of eggs. Notes DeForest McDuff: With the price of eggs going up 75% since 2001, one share of the S&P 500 used to buy as much as 1200 eggs … Continue reading →

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When Oil Strength Isn’t Dollar Weakness

Posted on July 3, 2008 by Felix

Barry Ritholtz asks: Here’s a question — at what point does ECB Central Bank Chief Trichet realize that every time the ECB hikes rates, it pummels the dollar and sends oil higher? The answer, it would seem, is "not today": … Continue reading →

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The Cost of Commuting: 500GD/M

Posted on July 2, 2008 by Felix

SAR asks: Is there a simple formula that combines the price of gasoline, the one-way commute in miles, and per-hour wages that will let those in the exurbs (and soon, suburbs) figure out when it’s time to move back to … Continue reading →

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Wheat and Water Subsidy Datapoints of the Day

Posted on June 23, 2008 by Felix

Elie Elhadj reports on Saudi Arabia’s misadventures in agricultural subsidies: Between 1980 and 1992, wheat production grew 29-fold–from 142,000 tons in 1980 to 4.1 million tons in 1992–making the Saudi desert the world’s sixth-largest wheat exporting country… For the sixteen … Continue reading →

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Invert Gas Mileage!

Posted on June 22, 2008 by Felix

Dan Ariely makes a good point: why do we talk about miles per gallon, when gallons per 100 miles would be a much more useful and intuitive measure? The primacy of mpg as a metric means lots of attention paid … Continue reading →

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Joe Lieberman’s Dangerous Blame Game

Posted on June 19, 2008 by Felix

Floyd Norris sticks his knife today into Joe Lieberman, who thoroughly deserves it. Liberman’s blaming speculators for the fact that asset prices are rising, and by golly if he isn’t going to do something about it: One proposal would require … Continue reading →

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Oil Prices Up, Illegal Immigration Down?

Posted on June 17, 2008 by Felix

Mark Thoma has a rather interesting idea: Producers may shift production closer to the markets where the goods are sold as transportation costs increase with energy prices. If so, it’s possible that higher energy costs could cause producers to shift … Continue reading →

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Exxon’s Hoard

Posted on June 5, 2008 by Felix

I missed this, last week: Exxon Mobil has amassed a large pile of common stock held in treasury. At the end of 2007, the company had 2.367 billion shares held in treasury, for which it paid $113 billion over the … Continue reading →

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How to Burst the Rice Bubble

Posted on May 13, 2008 by Felix

Tom Slayton and Peter Timmer have an excellent brief out on which does much more than just explain why rice is so expensive right now: it also comes up with an elegant way of bringing the price down quite dramatically … Continue reading →

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How the Futures Conundrum Causes Higher Food Prices

Posted on April 22, 2008 by Felix

On March 28, Diana Henriques examined the weird phenomenon of futures prices expiring well above cash prices in the agricultural-commodities market. Today, she returns to the same subject, from the point of view of farmers, who can be significantly damaged … Continue reading →

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Food is Made from Natural Gas

Posted on April 22, 2008 by Felix

Paul Scheckel: Fertilizer production is second only to petroleum refining when it comes to industrial use of natural gas in the United States: 97 percent of the fertilizer applied to crops is manufactured from natural gas. With spiking energy costs, … Continue reading →

Posted in commodities, food | 1 Comment