To the extent my superannuation fund (401k, ROTH, IRA, hard to know what people call this in other economies) is invested in oil, it goes to .. me.
Super funds in Australia, Canada, the US, are now a massive component of capital investment both in the public market and in private equity. Australia's GDP is 2.5T and the super funds are up to 4T or 5T. Thats $trillion. The super funds are bigger than the GDP of the economy they reside in!
Some funds are just venal machines in the for profit sector. Some are run by boards aligned to union sectors, I am in the tertiary education union backed fund in Australia and it's been in the top 5 performing funds for my entire working lifetime, and given me a comfortable retirement. Most of the injection of funds was from me: I paid between 9 and 12% and on occasion up to 15% of my income into this fund over a 35 year working lifetime. Its accrual is all down to my fund manager, and if they invested in oil and have secured a windfall, at the cost of the future climate risk, thats on me, albiet indirectly. 35 years at the 150+ year 6-7% return in the market, (some say this trend is even older) is several doublings over my working lifetime. Those doublings were driven in .. the market.
Me here, is 75% or more of Australia. It's not some amorphous unknown nasty corporate investor in a sharp suit, its ordinary people. Oh, the article even points out that they pay out on insurance and capital costs rebuilding the exploded ships and production facilities. Guess who makes money? Thats right, the superannuation funds invested in the re-insurance market (Warren Buffett's favourite!) or in construction companies, public or private. So.. thats me again.
The money comes to us. Some of us may be in Saud. Sure. The Saudi state pays a huge stipend to its citizens. Some of us may be in Norway. That national investment fund is amazing. Why do you think Norway is now almost completely cut over to private EV drivers?
I'd love to ideate the hateful oil companies as the victors here but the thing is, they don't simply act like Smaug and sit on a pile of gold coins. Thats not held to be useful by them and their peers. They do shave off FAR TOO MUCH to swan about in those aforementioned sharp suits, but enough of the fat trickles into my hands, to keep me in the manner to which I am accustomed, as a retiree.
I'm as complicit, and so are "you" for many people reading this.
fooker 10 hours ago [-]
> The super funds are bigger than the GDP of the economy they reside in!
You are comparing the absolute value of something versus yearly performance.
Market cap vs revenue.
shoo 10 hours ago [-]
I agree - they're measuring completely different properties of different populations of things, over completely different time horizons. Comparing them doesn't seem very useful.
Market caps are roughly expected future earnings, discounted back to give some net present value. They're expectations about the profitability of businesses, with expected profits accumulated over forecasts decades into the future. Market caps ignore privately held businesses, small businesses, state owned businesses & economic activity, economic output that might be happening at a household level, etc.
GDP is some peculiar measure of a country's economic output, over one year. It doesn't care if the economic activity is profitable or not & it doesn't care if the surplus of the economic activity is extracted by public companies or not. It's not forward-looking & based on expectations.
all that said, ggm has a fair point that individual investors & retirees with share portfolios directly benefit from the profits of companies whose economic activities may not be particularly pro-social & beneficial to the world. it's similar for climate change -- easy to point the finger at the energy producer, the big dirty brown coal plant. harder to point the finger at the demand side of the same equation - much of which is household demand. but both the individual end consumer households and the energy producer & everyone else involved in the value chain benefit out of the trade, even if the trade is net-negative for the world if we were to properly account for the externalities (e.g. polluting the atmosphere with CO_2 pushes the costs to everyone on the planet, current & future generations, not just the folks benefiting from the trade).
ggm 9 hours ago [-]
True and fair. I committed a dimension sin.
eru 2 hours ago [-]
You can use interest rates and rates of return to convert between stocks and flows of money (or more generally, things we measure using money, like stakes in companies).
If you add that most people have some common sense notion of what reasonable or achievable rates of returns look like, then what you said was just a bit vague and implicit, not necessarily a sin of dimension.
For a similar example:
An CPU designer might tell you that one clock cycle is 'this long' (where she stretches out her arms in front of her). She's not committing a sin of dimension, more likely she's talking about how far electronic signals travel during one clock cycle.
ericd 8 hours ago [-]
Yes, but I think with bafflingly huge numbers, it's a useful reference point. ~the value of all the stuff and services made in Australia for the year!
eru 8 hours ago [-]
> It's not some amorphous unknown nasty corporate investor in a sharp suit, its ordinary people.
That 'nasty' guy usually serves investors, instead of investing his own money. For all he cares, these investors might be widows and orphans.
Btw, Singapore's sovereign wealth funds are also big players in basically the same space. Their revenue contribution to the national budget is bigger than any single tax we levy.
supertrope 9 hours ago [-]
In the book Catch-22 character Milo Minderbender helps the enemy conduct an aerial attack on his own base. He successfully defends his actions by pointing out how profitable his syndicate is. “Everyone gets a share.”
WalterBright 5 hours ago [-]
> they don't simply act like Smaug and sit on a pile of gold coins
That's because a pile of gold coins does not make money. One makes money by investing the coins, not investing in coins.
I always thought Smaug's hoard (as depicted in Jackson's movie) was beyond ridiculous. If it was unleashed on the economy, the price of gold would drop to the point you could pave the roads with it and make sewer pipes out of it.
b112 2 hours ago [-]
Middle Earth was supposed to be huge, massive, so I wonder if spread evenly that would be so. And I wonder, comparatively, how that hoard would look compared to 10 year's output of any Dwarf gold mine.
Maybe gold was already cheap. Maybe a gold coin was as silver to you and I.
I think I'll have Claude do a deep dive and research into this report, then release a paper on it.
(This goes under the theory of 'the more capacity you have, the more capacity is used' concept, and so, within a few years, we'll have 100 page reports on musings like this, instead of a two or three line post)
Razengan 5 hours ago [-]
Thankfully they invented another war soon after to ""iNvEsT"" all that good!
MiroslavPokorny 8 hours ago [-]
As an Australia, i agree with most of what you say, but you have skipped some important parts of the cycle. Firstly there are many hands along the way asking for their cut. This is why everything is going up so quickly, because there are so many hands, who dont add value but tax the process.
nextaccountic 10 hours ago [-]
What % of your funds are invested in oil?
supertrope 9 hours ago [-]
Energy is 3.7% of VTSAX. Oil is just a portion of that.
ggm 9 hours ago [-]
no idea. I'm a hands-off investor. I don't ask. I didn't select ethicals either.
It's diversified, but the biggest holdings tend to be in Australian Banks, BHP and the "big" US tech stocks.
aleksandrm 10 hours ago [-]
I wish I could downvote this, because what a bunch of baloney! Unless you have hundreds of thousands, and to be precise millions, invested in oil already, you're not going to see any significant changes to your portfolio. The rich will get richer playing the market, the regular folk are left out as always paying the price.
cpncrunch 10 hours ago [-]
Anyone can decide to put their spare cash or retirement funds into oil stocks, but I don't think that it's a recipe for getting rich. Renewable energy is rapidly replacing oil, and if the Strait of Hormuz opened and the Ukraine war ended, oil prices would sink and you would end up with huge losses.
Nobody really gets rich by playing the market. You get rich by working hard and/or starting your own business, and investing in a diversified portfolio of index funds and dividend paying blue chips.
lesuorac 10 hours ago [-]
Let's not put the horse before the cart.
Exxon is up 40% year-to-date (YTD), BP is up 20% YTD while SNP500 is up 12% YTD.
So I'm not even sure the premise of this tangent is correct; oil stocks aren't shown to be the recipient of the current price spike.
cpncrunch 9 hours ago [-]
>Exxon is up 40% year-to-date (YTD), BP is up 20% YTD while SNP500 is up 12% YTD.
But it's not sustainable in the medium term.
ggm 9 hours ago [-]
> But it's not sustainable in the medium term.
You think this is the only basis of investment in a large fund? You think they don't make plays which respect this fact, in their risk profile?
cpncrunch 8 hours ago [-]
That's the point I was making.
vinyl7 7 hours ago [-]
> You get rich by working hard
Yeah, right
SturgeonsLaw 8 hours ago [-]
> You get rich by working hard
Come on now
cpncrunch 8 hours ago [-]
Hard and smart, with good negotiating skills, in the right industry.
marcusverus 8 hours ago [-]
[flagged]
stickfigure 10 hours ago [-]
Big US oil companies like Exxon, Chevron, Conoco, et al are mostly owned by mutual funds and index funds. So it really is "regular folk", though of course not everyone has the same size 401k.
georgemcbay 9 hours ago [-]
> So it really is "regular folk", though of course not everyone has the same size 401k.
Depends on how you define "regular folk".
40% of American adults don't have any retirement savings account at all. And entirely unsurprisingly whether they do or not correlates extremely strongly with income/wealth.
So one could easily claim that the further from actual "regular folk" you are the more likely you are to benefit.
darkwater 3 hours ago [-]
> Depends on how you define "regular folk".
> 40% of American adults don't have any retirement savings account at all.
So, 60% have, 60% is more than half, so it takes the value of "regular folk". Ah, statistics.
ggm 9 hours ago [-]
Superannuation in Australia is most typically a not-for-profit mutual fund. So .. yes. Most Australians invest in "industry super" which means the union backed nfp model.
mistrial9 8 hours ago [-]
that is fundamentally self-centered, the way it is put there. Capital is under the control of certain companies and their decisions are binding financially.. it starts there AFAIK. Upon that stable core is built layer upon layer of related business including things you mention. A framing that the business practices are 'on you' wears thin quickly while simultaneously taking up airspace from very difficult business topics
MrVandemar 3 hours ago [-]
> I'm as complicit, and so are "you" for many people reading this.
But rather than advocating, or even agitating, for a change in the system that perpetuates unacceptable -- and now unavoidable -- climate risk, you seem pretty sanguine about the whole thing.
With bespoke human-crafted em-dashes, not slop-dashes.
thelastgallon 9 hours ago [-]
A few public servants in Australia, Norway and the kingdom of saud doesn't translate to all the people are benefiting. Nice try to shift the blame to 8.5 billion people instead of oil billionaires and corporations. Old people have set up systems to transfer wealth from future generations. The corporate profits are mirror images of debt: https://www.hussmanfunds.com/wp-content/uploads/comment/mc25...
US has $40T federal debt (+state, +municipal, +household) and probably 100T+ debt worldwide which the future generations have to pay.
More than a century of subsidies and yet not profitable on its own.
roenxi 8 hours ago [-]
> US has $40T federal debt (+state, +municipal, +household) and probably 100T+ debt worldwide which the future generations have to pay.
Future US citizens are clearly not going to repay the debt, simply because they can't feasibly pay that much back in real terms. They cannot achieve the impossible. The magnitude of the debt is far beyond what it makes sense for the US to make good on.
Future generations of the US won't be able to borrow on such favourable terms (ie, people will stop donating to the US cause) and all the capital investment that would have happened in the US to power their consumption happened in China instead - but the effects of the debt won't look like repaying anything.
cavemandaveman 8 hours ago [-]
You don't repay in real terms, you repay in nominal terms. That's priced in. The US isn't going to straight up default but it'll pay you back with inflated currency.
AndrewDavis 8 hours ago [-]
> A few public servants in Australia
A few public servants in Australia? I'm not sure what you mean?
Superannuation may have been limited to a public servants and employees of large corporations in the 1970s, but was expanded to blue collar workers in the 1980s (see industry super funds), and mandatory for all employers in the 1990s. Almost every worker in Australia has a superannuation fund. Whether a given person's fund is invested in fossil fuels is another questio (mine has a radio button to choose green only investments or not).
thelastgallon 8 hours ago [-]
Okay, assume 100% of people in Australia. 27 million people. The world has 8.5 billion people.
jmull 8 hours ago [-]
Yeah, the people who didn’t set up the system and don’t control or understand it are responsible for it.
Let’s forget about the people who did set up the system, and do control and understand it.
Very reasonable. Very logical and sensible.
kleiba2 4 hours ago [-]
Spoiler alert: "But ultimately, the bulk of the money heads in the direction of the source of the oil itself – the oil companies. [...] The money largely goes to company owners – meaning shareholders"
kakacik 2 hours ago [-]
Thats why OPEC exists, no? To manipulate markets for biggest possible profit for oil owners. They are not even hiding it in any way. While everybody else is on the paying side.
pjc50 2 hours ago [-]
OPEC are a bit of a dead letter. Two of the key members (Iran and Saudi) are at war with each other!
If anything prices are being kept artificially _low_ by the US withdrawing from the strategic petroleum reserve, and similar (unquantified) actions being taken by the Chinese government. We'll have to see how the situation changes after the US midterms.
kleiba2 4 hours ago [-]
Can anyone explain how to read that first graph? Like, there's a line for demand, say, but given the axes labels, it seems to say "for greater demand, the price goes down", so the exact opposite of what basic price theory predicts.
Same for the supply lines, just the other way around.
Also, the use of straight lines indicates a linear relationship. Is that really the case in practice?
317070 4 hours ago [-]
it's the other way around. For there to be a demand for large quantities, the price must be low. The graph seems correct.
kleiba2 3 hours ago [-]
So you're reading it as a "prerequisite chart"? That seems odd because the common way to read graphs is that what's reported on the y-axis is a function of the values of the x-axis.
I find it also hard to read it that way when I look at that "Price in February -> Price in April" annotation: if those two points on the y-axis mark points in time, then so do the correlating points on the x-axis. I can only read that as "from February to April, the demand went up while the prices went down".
kleiba2 3 hours ago [-]
I suppose one thing they're trying to express here is the idea of the equilibrium price of oil, by marking the intersection of the demand line with the two supply lines. However, why they are lines in this graph in the first place, or why they are located at these specific positions is unclear to me.
NooneAtAll3 3 hours ago [-]
it's classic "economists don't know what they're doing" case - traditionally they switch labels, with input variable on the y axis
why? no idea
kleiba2 3 hours ago [-]
Maybe because "economists don't know what they're doing"?
rossjudson 8 hours ago [-]
Does this mean the industry is now able to clean up the underfunded environmental disasters they created in the Gulf of Mexico?
Oh, right.
DivingForGold 9 hours ago [-]
When oil prices spike, producers may choose to be even more benevolent (bribes / paybacks) to politicians / administration who created the means which caused the price hike.
jsrozner 8 hours ago [-]
It's simpler: people who were long oil make money (on paper) and those who were short oil lose money (on paper).
You were long oil if you are an oil producer, or, e.g., if you owned oil futures. You were short oil if you are an oil consumer, or, e.g., if you had sold oil futures. If you are both (e.g., airlines might hedge future oil consumption by buying futures, and producers might hedge future production by selling away their future production), then you need to net it out across the futures curve.
Price responses to supply shocks in theory serve to allocate resources appropriately (e.g., if your consumption did not matter that much, you might curtail it); if another person's consumption is more productive (i.e. profitable), then they're likely to eat the input cost and still buy it. In the long run, you might hope that high prices lead to more investment in producing the scarce good, or in more hedging activity to prevent future harms. The net effect of (long) hedging activity is generally to slightly increase the future price because folks buy futures / futures options, and market makers, in addition to selling the option, buy the underlying to remain market neutral. This potentially increases future supply because it can, in theory, push up the futures price, or estimates of future price, which can make new resource extraction economical.
Unfortunately, today, given the degree of inequality, it is mostly poor people whose consumption is curtailed when there are supply shocks. This is consistent with the above interpretation: the implication of wealth inequality is that the poor people matter less and are less productive to the capitalist machine. As a real example of this, the oil price would likely be higher even, if the oil consumption of Southeast Asian countries had not decreased because they could not afford the higher prices. This is the great thing about inflation in a highly unequal society: it is partially tempered because demand goes away as prices rise.
ThrustVectoring 25 minutes ago [-]
Note that the amounts of money involved here are not equal, companies respond to price movements and expected price volatility with less efficient behavior, so the volatility itself causes economic losses.
Like, there's a trade you can do where you load up an actual tanker with oil, park it, and sell an option to buy that oil. The cost of using this tanker and holding this oil a pure waste compared to just having a market-clearing quantity available at a consistent price at all times, but if the market is scared enough it makes money.
WalterBright 5 hours ago [-]
> This is the great thing about inflation in a highly unequal society: it is partially tempered because demand goes away as prices rise.
Inflation is the result of devaluing the currency by creating money (i.e. deficit spending).
Oil prices do not cause inflation. Increases in the price of X cause the demand for X to drop, as people shift their spending elsewhere.
pjc50 2 hours ago [-]
People on HN really want to believe this because they tend to be hard-money weirdos of various kinds, but no: commodity price rises are inflation.
> Increases in the price of X cause the demand for X to drop
There has been a lot of "demand destruction", but because oil is an intermediate input to so many things, especially anything that requires transporting, what actually happens is it forces up the overall price level.
sethammons 28 minutes ago [-]
> Increases in the price of X cause the demand for X to drop, as people shift their spending elsewhere.
Elasticity of goods has entered the chat. If a significant amount of inelastic goods' price increase, cue inflation. Energy costs, especially fuel, are classic drivers of inflating prices.
davidgay 5 hours ago [-]
Or, in another world, the official US CPI definition (https://www.bls.gov/cpi/) is 16.3% based on energy prices.
I strongly suspect this definition strongly correlates with what most people call inflation (my fuel bill went up! and strangely, not heading to work wasn't really an option).
WalterBright 4 hours ago [-]
Inflation is characterized by a general price increase, not a price increase in one commodity.
blitzar 3 hours ago [-]
If everything has an oil component to its price i.e. energy to produce it or transportation to move it, a (large) price increase in one commodity would produce a general price increase.
avadodin 1 hours ago [-]
Almost as if currency should be backed by a rare commodity that requires the same stuff that causes inflation to increase supply.
If printing value-free money wasn't how we are ruled, we could even come up with a diversified scheme where an alchemist could discover a way of turning silicon into gold and it wouldn’t affect the economy much.
jsrozner 4 hours ago [-]
> Inflation is the result of devaluing the currency by creating money (i.e. deficit spending).
Though I agree that printing new money causes inflation (not all economists agree!), inflation does not have to be the result of new money creation. Shifts in behavior can lead to short term changes in price levels. All inflation is measured relative to a basket of goods. If prefs change for diff goods, then price levels (and thus inflation) can change.
> Oil prices do not cause inflation.
This is probably not true in the short term. If the input costs for everything go up, then price levels change, and the CPI basket likely changes (up).
If we more reasonably measured inflation as some notion of quality of life, then increases in energy prices (which factor into everything) would definitely reduce per capita material well-being.
> Increases in the price of X cause the demand for X to drop, as people shift their spending elsewhere.
My point is that if you have a collection of people who can just barely afford something, and the price of that thing goes up just a little, those people will not be able to buy it. A person who gets priced out of participating in society (and, e.g., dies) contributes nothing to inflation. On the other hand, folks who have some capacity to adjust their consumption or who have a savings /capital buffer, may be able to reallocate funds to the purchase of oil (or other goods whose prices are increasing). This can lead to a further rise in the price of goods (hence, inflation).
frollogaston 4 hours ago [-]
Producing oil is different from having a long position in oil itself, or oil futures. I'm not saying this to be pedantic, cause long is already a technical term.
seanhunter 4 hours ago [-]
It’s a good job you’re not saying it to be pedantic, because it is certainly incorrect. If you produce oil you are long spot oil (from your inventory available for delivery) and you are long future oil as well (from your proven reserves and inventory in transit and refining). It is different in that you long in the cash market and are long your specific grade of oil (which is not precisely identical to that on the futures contracts) but you’re still long.
hanwenn 4 hours ago [-]
"Where does all that additional money go, and who benefits from it?"
Doesn't reduced overall supply usually mean that the total amount of money (price * supply) also reduces? ie. in total, there is no additional money.
altacc 4 hours ago [-]
Price change and supply are not linear. I see the price of oil as largely a human decision, based on how much people are willing to pay for oil and its derivatives, or buy oil for thinking they can sell it for more later. It's linked to supply/demand but not directly controlled through a formula. You can look at the profit statements of oil companies around the world to verify that there is indeed much more money being made when supply is limited.
hanwenn 2 hours ago [-]
that doesn't negate my point: with the attacks in the middle east, Saudi Arabia can't export its oil, and therefore, they are not going to make any money. Norway, the US and others, may get a windfall because they can charge more, but does that compensate for the loss of profit in SA ?
pjc50 2 hours ago [-]
Because it's so critical, money will be redirected into oil from other less critical spending.
gblargg 8 hours ago [-]
The money goes around and around. Money ultimately is just a tool to allocate resources. Higher prices mean the resource is less available than the demand, so it needs to be allocated more carefully (higher prices tend to make people more careful with their choices).
factorialboy 4 hours ago [-]
Insurance for transiting oil is primary culprit, along with supply shocks when pipelines or refineries get hit.
CosmicShadow 11 hours ago [-]
No mention of Alberta or Canada at all??
seiferteric 9 hours ago [-]
Good point. It will go to producers that have a higher cost of production mostly.
NordStreamYacht 10 hours ago [-]
To the oilygarchy.
protocolture 8 hours ago [-]
Somehow I read that in popeyes voice.
genxy 8 hours ago [-]
RIP Robin Williams
Shelley Duvall was amazing in Popeye.
bawolff 5 hours ago [-]
> For a major exporter such as Saudi Arabia, the government owns and controls nearly all oil production, so high prices generally benefit the government’s finances
I mean, i guess, but i suspect Saudi Arabia would rather not be dragged into this war (incl. the proxy part with yemen). I doubt the higher oil profit compensates for the other consequences.
r3trohack3r 8 hours ago [-]
Having not read the article yet: it goes to the people still able to provide you oil. Some of which were already providing you oil and they get it as almost pure margin, some of which couldn’t afford to provide you oil at a lower price point.
Super funds in Australia, Canada, the US, are now a massive component of capital investment both in the public market and in private equity. Australia's GDP is 2.5T and the super funds are up to 4T or 5T. Thats $trillion. The super funds are bigger than the GDP of the economy they reside in!
Some funds are just venal machines in the for profit sector. Some are run by boards aligned to union sectors, I am in the tertiary education union backed fund in Australia and it's been in the top 5 performing funds for my entire working lifetime, and given me a comfortable retirement. Most of the injection of funds was from me: I paid between 9 and 12% and on occasion up to 15% of my income into this fund over a 35 year working lifetime. Its accrual is all down to my fund manager, and if they invested in oil and have secured a windfall, at the cost of the future climate risk, thats on me, albiet indirectly. 35 years at the 150+ year 6-7% return in the market, (some say this trend is even older) is several doublings over my working lifetime. Those doublings were driven in .. the market.
Me here, is 75% or more of Australia. It's not some amorphous unknown nasty corporate investor in a sharp suit, its ordinary people. Oh, the article even points out that they pay out on insurance and capital costs rebuilding the exploded ships and production facilities. Guess who makes money? Thats right, the superannuation funds invested in the re-insurance market (Warren Buffett's favourite!) or in construction companies, public or private. So.. thats me again.
The money comes to us. Some of us may be in Saud. Sure. The Saudi state pays a huge stipend to its citizens. Some of us may be in Norway. That national investment fund is amazing. Why do you think Norway is now almost completely cut over to private EV drivers?
I'd love to ideate the hateful oil companies as the victors here but the thing is, they don't simply act like Smaug and sit on a pile of gold coins. Thats not held to be useful by them and their peers. They do shave off FAR TOO MUCH to swan about in those aforementioned sharp suits, but enough of the fat trickles into my hands, to keep me in the manner to which I am accustomed, as a retiree.
I'm as complicit, and so are "you" for many people reading this.
You are comparing the absolute value of something versus yearly performance.
Market cap vs revenue.
Market caps are roughly expected future earnings, discounted back to give some net present value. They're expectations about the profitability of businesses, with expected profits accumulated over forecasts decades into the future. Market caps ignore privately held businesses, small businesses, state owned businesses & economic activity, economic output that might be happening at a household level, etc.
GDP is some peculiar measure of a country's economic output, over one year. It doesn't care if the economic activity is profitable or not & it doesn't care if the surplus of the economic activity is extracted by public companies or not. It's not forward-looking & based on expectations.
all that said, ggm has a fair point that individual investors & retirees with share portfolios directly benefit from the profits of companies whose economic activities may not be particularly pro-social & beneficial to the world. it's similar for climate change -- easy to point the finger at the energy producer, the big dirty brown coal plant. harder to point the finger at the demand side of the same equation - much of which is household demand. but both the individual end consumer households and the energy producer & everyone else involved in the value chain benefit out of the trade, even if the trade is net-negative for the world if we were to properly account for the externalities (e.g. polluting the atmosphere with CO_2 pushes the costs to everyone on the planet, current & future generations, not just the folks benefiting from the trade).
If you add that most people have some common sense notion of what reasonable or achievable rates of returns look like, then what you said was just a bit vague and implicit, not necessarily a sin of dimension.
For a similar example:
An CPU designer might tell you that one clock cycle is 'this long' (where she stretches out her arms in front of her). She's not committing a sin of dimension, more likely she's talking about how far electronic signals travel during one clock cycle.
That 'nasty' guy usually serves investors, instead of investing his own money. For all he cares, these investors might be widows and orphans.
Btw, Singapore's sovereign wealth funds are also big players in basically the same space. Their revenue contribution to the national budget is bigger than any single tax we levy.
That's because a pile of gold coins does not make money. One makes money by investing the coins, not investing in coins.
I always thought Smaug's hoard (as depicted in Jackson's movie) was beyond ridiculous. If it was unleashed on the economy, the price of gold would drop to the point you could pave the roads with it and make sewer pipes out of it.
Maybe gold was already cheap. Maybe a gold coin was as silver to you and I.
I think I'll have Claude do a deep dive and research into this report, then release a paper on it.
(This goes under the theory of 'the more capacity you have, the more capacity is used' concept, and so, within a few years, we'll have 100 page reports on musings like this, instead of a two or three line post)
https://www.unisuper.com.au/investments/our-investment-optio...
It's diversified, but the biggest holdings tend to be in Australian Banks, BHP and the "big" US tech stocks.
Nobody really gets rich by playing the market. You get rich by working hard and/or starting your own business, and investing in a diversified portfolio of index funds and dividend paying blue chips.
Exxon is up 40% year-to-date (YTD), BP is up 20% YTD while SNP500 is up 12% YTD.
So I'm not even sure the premise of this tangent is correct; oil stocks aren't shown to be the recipient of the current price spike.
But it's not sustainable in the medium term.
You think this is the only basis of investment in a large fund? You think they don't make plays which respect this fact, in their risk profile?
Yeah, right
Come on now
Depends on how you define "regular folk".
40% of American adults don't have any retirement savings account at all. And entirely unsurprisingly whether they do or not correlates extremely strongly with income/wealth.
So one could easily claim that the further from actual "regular folk" you are the more likely you are to benefit.
> 40% of American adults don't have any retirement savings account at all.
So, 60% have, 60% is more than half, so it takes the value of "regular folk". Ah, statistics.
But rather than advocating, or even agitating, for a change in the system that perpetuates unacceptable -- and now unavoidable -- climate risk, you seem pretty sanguine about the whole thing.
With bespoke human-crafted em-dashes, not slop-dashes.
US has $40T federal debt (+state, +municipal, +household) and probably 100T+ debt worldwide which the future generations have to pay.
Fossil fuel is unsustainable without substantial subsidies from Govts. Global Fossil Fuel Subsidies Reached $7 Trillion in 2022, an All-Time High: https://e360.yale.edu/digest/fossil-fuel-subsidies-2022
More than a century of subsidies and yet not profitable on its own.
Future US citizens are clearly not going to repay the debt, simply because they can't feasibly pay that much back in real terms. They cannot achieve the impossible. The magnitude of the debt is far beyond what it makes sense for the US to make good on.
Future generations of the US won't be able to borrow on such favourable terms (ie, people will stop donating to the US cause) and all the capital investment that would have happened in the US to power their consumption happened in China instead - but the effects of the debt won't look like repaying anything.
A few public servants in Australia? I'm not sure what you mean?
Superannuation may have been limited to a public servants and employees of large corporations in the 1970s, but was expanded to blue collar workers in the 1980s (see industry super funds), and mandatory for all employers in the 1990s. Almost every worker in Australia has a superannuation fund. Whether a given person's fund is invested in fossil fuels is another questio (mine has a radio button to choose green only investments or not).
Let’s forget about the people who did set up the system, and do control and understand it.
Very reasonable. Very logical and sensible.
If anything prices are being kept artificially _low_ by the US withdrawing from the strategic petroleum reserve, and similar (unquantified) actions being taken by the Chinese government. We'll have to see how the situation changes after the US midterms.
Same for the supply lines, just the other way around.
Also, the use of straight lines indicates a linear relationship. Is that really the case in practice?
I find it also hard to read it that way when I look at that "Price in February -> Price in April" annotation: if those two points on the y-axis mark points in time, then so do the correlating points on the x-axis. I can only read that as "from February to April, the demand went up while the prices went down".
why? no idea
Oh, right.
You were long oil if you are an oil producer, or, e.g., if you owned oil futures. You were short oil if you are an oil consumer, or, e.g., if you had sold oil futures. If you are both (e.g., airlines might hedge future oil consumption by buying futures, and producers might hedge future production by selling away their future production), then you need to net it out across the futures curve.
Price responses to supply shocks in theory serve to allocate resources appropriately (e.g., if your consumption did not matter that much, you might curtail it); if another person's consumption is more productive (i.e. profitable), then they're likely to eat the input cost and still buy it. In the long run, you might hope that high prices lead to more investment in producing the scarce good, or in more hedging activity to prevent future harms. The net effect of (long) hedging activity is generally to slightly increase the future price because folks buy futures / futures options, and market makers, in addition to selling the option, buy the underlying to remain market neutral. This potentially increases future supply because it can, in theory, push up the futures price, or estimates of future price, which can make new resource extraction economical.
Unfortunately, today, given the degree of inequality, it is mostly poor people whose consumption is curtailed when there are supply shocks. This is consistent with the above interpretation: the implication of wealth inequality is that the poor people matter less and are less productive to the capitalist machine. As a real example of this, the oil price would likely be higher even, if the oil consumption of Southeast Asian countries had not decreased because they could not afford the higher prices. This is the great thing about inflation in a highly unequal society: it is partially tempered because demand goes away as prices rise.
Like, there's a trade you can do where you load up an actual tanker with oil, park it, and sell an option to buy that oil. The cost of using this tanker and holding this oil a pure waste compared to just having a market-clearing quantity available at a consistent price at all times, but if the market is scared enough it makes money.
Inflation is the result of devaluing the currency by creating money (i.e. deficit spending).
Oil prices do not cause inflation. Increases in the price of X cause the demand for X to drop, as people shift their spending elsewhere.
> Increases in the price of X cause the demand for X to drop
There has been a lot of "demand destruction", but because oil is an intermediate input to so many things, especially anything that requires transporting, what actually happens is it forces up the overall price level.
Elasticity of goods has entered the chat. If a significant amount of inelastic goods' price increase, cue inflation. Energy costs, especially fuel, are classic drivers of inflating prices.
I strongly suspect this definition strongly correlates with what most people call inflation (my fuel bill went up! and strangely, not heading to work wasn't really an option).
If printing value-free money wasn't how we are ruled, we could even come up with a diversified scheme where an alchemist could discover a way of turning silicon into gold and it wouldn’t affect the economy much.
Though I agree that printing new money causes inflation (not all economists agree!), inflation does not have to be the result of new money creation. Shifts in behavior can lead to short term changes in price levels. All inflation is measured relative to a basket of goods. If prefs change for diff goods, then price levels (and thus inflation) can change.
> Oil prices do not cause inflation. This is probably not true in the short term. If the input costs for everything go up, then price levels change, and the CPI basket likely changes (up).
If we more reasonably measured inflation as some notion of quality of life, then increases in energy prices (which factor into everything) would definitely reduce per capita material well-being.
> Increases in the price of X cause the demand for X to drop, as people shift their spending elsewhere. My point is that if you have a collection of people who can just barely afford something, and the price of that thing goes up just a little, those people will not be able to buy it. A person who gets priced out of participating in society (and, e.g., dies) contributes nothing to inflation. On the other hand, folks who have some capacity to adjust their consumption or who have a savings /capital buffer, may be able to reallocate funds to the purchase of oil (or other goods whose prices are increasing). This can lead to a further rise in the price of goods (hence, inflation).
Doesn't reduced overall supply usually mean that the total amount of money (price * supply) also reduces? ie. in total, there is no additional money.
Shelley Duvall was amazing in Popeye.
I mean, i guess, but i suspect Saudi Arabia would rather not be dragged into this war (incl. the proxy part with yemen). I doubt the higher oil profit compensates for the other consequences.
Edit: yup