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I’m finding it ironic that those governments that hugely increased their money supplies to counter the effects of their COVID decisions now blame everything except their own actions for the inflation that’s arrived. Amazing to watch really.
The best thing is their response to inflation is itself extremely inflationary......California giving $400 per car grants for gas price relief
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@frank short answer yes
from dairy farmers point of view
from costs are through the roof
wages up 15 -20 %
fert up 200% +
sprays etc 200% +
some of these have happened over the last two seasons so havnt been adsorbed into this season but next season is going to be rough. eg sprays used may have been at a lower price but will have to pay more next season.
as a rule of thumb most farmers will have an increase in costs off $2 per kg of milksolds plus interest rates going up .
as a general i would expect alot of costs like detergents /cowshed costs/general cost will rise about 25% on what they started this season at for next. -
Once total inventory gets below a certain point, there will be no buffer, the market is going to freak out and oil will go ballistic. Keeping the price artificially low will stimulate demand and suppress supply accelerating the onset of the shortage and price spike. It is the exact opposite of what you would want to do prevent an actual shortage from occurring. So instead of opening up a pipeline to Canada or allowing the market to increase domestic production, they'll reduce the security that the reserve is meant to provide.
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Once total inventory gets below a certain point, there will be no buffer, the market is going to freak out and oil will go ballistic. Keeping the price artificially low will stimulate demand and suppress supply accelerating the onset of the shortage and price spike. It is the exact opposite of what you would want to do prevent an actual shortage from occurring. So instead of opening up a pipeline to Canada or allowing the market to increase domestic production, they'll reduce the security that the reserve is meant to provide.
It’s not so much the release of the reserves it’s the stated intent. Effectively so far we’ve just had an indication that he’s going to say he will release reserves and already it has reduced prices significantly. If it comes to them actually having to follow through I’d be surprised.
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@catogrande its the Saudis that arent playing ball isnt it, get them into upping production will ease things off at the pump.
While there really is endless buyers for oil in the current world we live in, the theory would be is if the US release reserves it eases pump prices, obviously this will hurt the Saudis so they up thier production slightly to take some heat while maintaining high prices, win win...
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I'm not sure that's quite right. There is no shortage of oil, there are no queues at the filling stations, no restrictions on amounts you can buy. There has been no real increase in the cost of extracting and refining crude oil. The high levels of volatility we've seen recently are down to speculation about future supplies. Given that the oil that is providing the petrol we are buying today was probably refined back when Brent Crude was under $70 a barrel it has never been about costs.
Where I'm sure that you are right is that the real player here is Saudi. If they reduce their prices or turn on the taps a bit more it will have a significant impact and maybe Biden is showing them as much as anyone that he is (maybe) prepared to do something about this spike in prices.
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If they do through with it, it had better work, because if it doesn't, you have the situation of the US govt having to replenish its emergency supplies when it might be $100+ barrel. What could possibly go wrong?
That's assuming that the US just holds a giant tank of oil that they extracted back in 1974 rather than simply holding back a degree of the ongoing output...
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@catogrande I didn't think I was implying a shortage.
Didn't Biden ask the Saudis to increase production at the start of the war, but they have thier own agenda before this will happen (aside from money)
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@taniwharugby said in Inflation:
@catogrande I didn't think I was implying a shortage.
Didn't Biden ask the Saudis to increase production at the start of the war, but they have thier own agenda before this will happen (aside from money)
Ah, I misunderstood that bit. Apologies.
I think there has been much discussion about how to manage the current volatility and too many conflicts of interests. If the Saudis were not listening to the US, maybe thinking Biden is weak, then perhaps this latest utterance is to persuade them otherwise. What is virtually certain is that, for the Saudis at leat, this is more than just the price of oil. So we agree on a broader scale.
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It’s all under control.
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@kid-chocolate the Biden takes over line is irrelevant. Inflation is up globally. Domestic policies anywhere are pretty much irrelevant.
Other than printing money in the early days of the pandemic to keep the economy(s) from tanking.
Which was on Trumps watch.
Which is also irrelevant.
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@kid-chocolate the Biden takes over line is irrelevant. Inflation is up globally. Domestic policies anywhere are pretty much irrelevant.
Other than printing money in the early days of the pandemic to keep the economy(s) from tanking.
Which was on Trumps watch.
Which is also irrelevant.
Wait - I thought it was Ardern's fault?
Serious question though, why do you think the money supply was irrelevant?
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@nzzp sorry badly worded. I meant you can't blame Biden - or even Trump given every country reacted similarly.
Economics 101: Demand exceeds capacity = Inflation
We have pent up demand due to the pandemic and reduced capacity due to supply chain issues and unavailability of labour (also largely pandemic related). Throw in wage inflation, high commodity prices across the board, crippling shortages of key components, uncertainty caused by over heated property and share markets and now a regional war that threatens to escalate.
You also have a couple of generations that are used to price stability, including the decision makers that we trust to bring inflation under control. For a couple of decades we have used interest rates to peg back inflation but (again pandemic) there has been a reluctance to draw that arrow out of the quiver....
Still as long as nobody panics it wouldn't take a lot to see a correction. Unfortunately I see plenty of signs of panic.
Inflation