The price of gasoline (petrol, to us Britons) has reached record highs in both Europe and the U.S. Americans are now paying almost $5 per gallon at the pump, compared to half that amount at the start of 2020.
Two major reasons for these price spikes are well known. First: OPEC slashed production during the pandemic in response to cratering demand, and hasn’t yet boosted output to pre-pandemic levels. Second: sanctions against Russia, as well as self-imposed restrictions on some exports, have reduced total oil production and fuelled uncertainty in the global market.
Okay, if the supply of oil is down, but demand is back up, then all we have to do is pump more oil, and the price of gasoline will fall – right? Not so fast. There’s an additional reason why the price of gasoline is so high: lack of refining capacity.
In simple terms, the way the oil market works is as follows: producers pump oil out of the ground; they then send it to refineries, which ‘crack’ the oil into gasoline, diesel and jet fuel; these refined products are then sold to the market. Which means that – regardless of how much oil is actually produced – the supply of gasoline is limited by refining capacity.
As commodities analyst Javier Blas notes, we can tell that refining capacity matters by looking at the ‘crack spread’ – the difference between the price of crude oil and the price of refined products.
In January of 2020, crude oil was trading at $65 per barrel, while the price at the pump was $109 per barrel. (To get the price at the pump ‘per barrel’, you simply multiply the price per gallon by 42.) As of today, crude oil is trading at $122 per barrel, while the price at the pump is $209 per barrel. This means the ‘crack spread’ has increased from $44 per barrel to $87 per barrel. (Note: there are more appropriate measures of the ‘crack spread’; I used this one for ease of explanation.)
Since the end of 2019, global refining capacity has dropped by about 2 million barrels a day. Why?
Dozens of refineries in the U.S. and Europe were shuttered during the pandemic – when they were simply not profitable to operate. And while new ones have been built in China, “that capacity is effectively out of reach of the global market”, Blas tells us.
So why don’t we just build more refineries, or reopen the ones that are closed? It’s not quite that simple, as both of these things take time. And in any case, companies are reluctant to make the costly investments that would be required to meet new environmental regulations.
The upshot is that even if Biden manages to persuade the Saudis to pump more oil, the price of gasoline is unlikely to fall dramatically any time soon.
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Beautifully expressed, Jack. I have a child your age and thank you for speaking up on his behalf.
Seconded…except my kiddo is still in primary school. Always enjoy reading Jack’s articles as it’s so important and insightful to hear from a kid’s perspective just how much this whole fiasco impacted them. Never ever to be repeated. :-/
A suggestion I feel like making here: Can we perhaps stop making a topic out of the age of this guy? He tends to write sensible stuff and that’s what matters. Compared to that, whether he’s 14 or 1400 isn’t important.
It’s the perspective that matters, as Mogwai rightly says. my year 9 certainly couldn’t write like that so it’s great that Jack can represent his generation so eloquently.
”The origin of all correlation is causality.” I like that and think I’ll start using it. Anyway, here is a recent research paper which shows a strong relationship between the death jabs and infection/mortality in Europe. Any data-heads in the house may want to scrutinise it further as it gets very technical so here’s the abstract;
”This report investigates short-term causal vaccine-mortality interactions during booster campaigns in 2022 in 30 European countries (population ~530M). An infection-vaccination-mortality model is introduced with causal aspects of repeatability, random chance, temporal order and confounding. The model is simple, has few or even zero prior model parameters and is unbiased in causal mechanisms and strengths. Confounders are taken into account explicitly of mortality-caused fear incentivizing vaccinations and four related to covid infections, and generically for all long-term confounding. Bayesian probabilities quantify all interactions, and from
observed weekly administered vaccine doses and all-cause mortality, mortality on short-term caused by a vaccination dose is estimated as Vaccine Fatality Ratio (VFR).”
#VFR results are 0.13% (0.05%-0.21%, 95% confidence interval) in The Netherlands and 0.35% (0.15%-0.55%) in Europe, subtantially transcending covid IFR. Additionally, sewer-viral-particle experiments suggested vaccination induces covid-infections and/or reactivates latent viral reservoirs.”
#The evidence of a causal relationship from vaccination to both infection and mortality is a very strong alarm signal to immediately stop current mass vaccination programmes.”
https://www.researchgate.net/publication/368777703_Causal_effect_of_covid_vaccination_on_mortality_in_Europe
During the Covid years children were treated appallingly; our authorities most certainly took advantage of their ‘good nature’ and tolerance of authority.
IMO the worst aspect of this abuse was in the deliberate (and documented) use of peer pressure to force hesitant children to comply with state diktat (eg, in making peers socially isolate children who didn’t get a dose of vaccine) — this is deeply unethical and I can only hope that there is a review of the way in which psychological techniques were used to manipulate (relatively) innocent children.
Adults should be reminded that today’s children are tomorrow’s adults. It is always a mistake to treat children unfairly, as in time they’ll be making decisions on our behalf.
The way that children were treated was child abuse. I had regular training in child protection throughout my career, the frequency & quality of which decreased over time, it was emotional abuse & neglect.
Incredibly few professionals working with or advocating for children called it out for what it was. Abuse. Pure & simple.
Agreed. And delivered solely to support the fragile ego of an incompetent politician and the power trip of teaching union leaders. And none of the above will be called to account and suffer any sanctions for the suffering they caused. See you next Tuesdays the lot of them. A plague on all their houses.
Jack … this is a very well-written testimony to the damage done to a generation of schoolchildren by the egotistical idiots in Government. There is no justification for what was done to you and your cohorts.
However, I am very confident that you will “survive and thrive” and have a great career. Anyone who can write and express themselves so fluently at age 15 (or thereabouts) has a bright future.
Whilst I’m not trivialising the situation you have had to deal with, my late father who lived in a rural location in Hampshire, was age 13 when WW2 broke out. That’s when his education was permanently terminated …. he and the other older boys were needed to work on the farms, replacing the men who had been called up.
He continued to educate himself throughout his life.
What a sensible young man and well written. I wept just reading how that imbecile of a health minister has ruined so many young lives spuriously and idiotically.
Judging by the recent disgusting behaviour of those in our Parliament walking out during Andrew Bridgen‘s speech it would appear things haven’t changed much.
The really worrying thing is that governments are full of Hancocks.
My daughter dropped out from her degree in music technology because despite that her last year and a bit was supposed to be heavily biased towards practical work, she was told it was all going to be on-line and there would be no practical work due to covid. The course had already had less practical work than she expected and as the practical aspect was what she had hoped to be instructed in and was the reason she took the course, once this was eliminated from it, she saw no point in continuing with it. I imagine there are many similar cases in many courses that needed similar person to person interfaces, which became inadequate or not completed due to educational establishments following Hancock’s unnecessary restrictions.
Hancock and I agree about one thing: Teachers are lazy buggers who don’t want to work.