Oh,the damage is long term and done! Project 2025 is made to kill democratic rights of the indentured servants and they are allowing it to be done to them by the criminal US regime.
Roll guillotine! We need to tear this government down and rebuild EVERYTHING because we have allowed the greedy and hateful into power. Let it get uncomfortable; I am waiting for the rest of the country to figure out what many decent people saw decades ago for the need to make the UD government work for its citizens, not us to support Oligarchs and senators.
You and i have seen the trainwreck coming for years and unfortunately most citizens are reactive instead of proactive. How much pain will this country and world have to endure before Americans Wake Up and force a return to honest governing?
There used to be trusted sources of facts and rational cost/benefit discussions, but until that returns expect more chaos.
Keep in mind that it takes 5-6 weeks for ships leaving the Gulf to reach China or Europe. Ships leaving before the closure are just now reaching their destination. Thus, there really hasn't been an experienced shortage up until now. The price spikes have been anticipatory. Ships that didn't leave the Gulf during the shutdown are only now starting to not arrive, so even if the Strait opened fully, we'd see a shortage for the next month or so.
After a decade in commodity trading and risk management, this is the clearest articulation I've seen of why the consumer price impact of supply disruptions has different timing characteristics than most current commentary acknowledges. The "elevator up, stairs down" framing captures exactly the asymmetric price behavior that practitioners watch for during commodity transmission cycles.
The rockets and feathers point on gas prices is well-supported in the empirical literature, and your asymmetric framing is correct. The piece I'd add from the operational side is that the asymmetry exists not just because of consumer search behavior but because of how wholesale gasoline procurement contracts are structured. Retail station operators typically buy on rack pricing that updates daily, but their contracts with wholesalers include pricing formulas that smooth out daily volatility through averaging mechanisms. When wholesale prices fall, the smoothing works against retail margins because the formulas lag the spot decline. When wholesale prices rise, the same smoothing works in favor of retail margins because retailers can pass through increases faster than the formulas capture them. The contractual architecture reinforces the consumer behavioral asymmetry you're describing.
The restart timeline point in the second half of the post is particularly important and underdiscussed. The infrastructure restart problem is more complex than even the Bloomberg piece you quoted captures. Reservoir pressure management for shut-in oil wells requires careful procedures because rapid pressure changes can damage formation integrity permanently. Some shut-in barrels may never return to full production because the reservoir physics responded poorly to the unexpected shutdown. Refinery restart requires recommissioning sequences that take weeks per facility under normal conditions and significantly longer when multiple facilities across multiple countries are restarting simultaneously, because the supply chains for replacement parts, specialty chemicals, and qualified technicians get stressed by simultaneous demand.
The 60 to 90 day inflation transmission lag you're tracking through the PCE and CPI data is consistent with what the physical commodity signals are showing. Dated Brent assessments and freight rate indices are leading indicators for the consumer price impacts that will appear in the data through Q2. The contractual mechanisms that lock in higher costs are already in place. The freight surcharges have been renegotiated. The fertilizer purchases that determine fall harvest costs have been priced at current natural gas levels. None of this reverses if the situation resolves through diplomatic channels in the coming weeks.
The watch item from the operational side: when dated Brent stays elevated and freight rates remain stretched even after diplomatic progress, the consumer price pressure continues to flow through the supply chain regardless of what spot commodity markets are doing. The transmission lag means the inflation impacts being locked in right now will appear in CPI through summer.
As you imply, the greed factor, raising prices and pointing to tariffs and SoH or whatever and incrementally reduce prices when the “good times roll,” far less than the original increases.
Is the economy being held together by glue? or are good times on the horizon? You and Paul seem to be saying the dark clouds may be a precursor of a hurricane…
Oh,the damage is long term and done! Project 2025 is made to kill democratic rights of the indentured servants and they are allowing it to be done to them by the criminal US regime.
Roll guillotine! We need to tear this government down and rebuild EVERYTHING because we have allowed the greedy and hateful into power. Let it get uncomfortable; I am waiting for the rest of the country to figure out what many decent people saw decades ago for the need to make the UD government work for its citizens, not us to support Oligarchs and senators.
Wake up, America!
You and i have seen the trainwreck coming for years and unfortunately most citizens are reactive instead of proactive. How much pain will this country and world have to endure before Americans Wake Up and force a return to honest governing?
There used to be trusted sources of facts and rational cost/benefit discussions, but until that returns expect more chaos.
You hang in there because an FDR revival is coming ( assume WW3 doesn't blow up most of us)
Continue to make Good Trouble necessary trouble 🤓 WE can out stubborn them and do the right thing!
exactly
Keep in mind that it takes 5-6 weeks for ships leaving the Gulf to reach China or Europe. Ships leaving before the closure are just now reaching their destination. Thus, there really hasn't been an experienced shortage up until now. The price spikes have been anticipatory. Ships that didn't leave the Gulf during the shutdown are only now starting to not arrive, so even if the Strait opened fully, we'd see a shortage for the next month or so.
Oops it didn’t hold.
After a decade in commodity trading and risk management, this is the clearest articulation I've seen of why the consumer price impact of supply disruptions has different timing characteristics than most current commentary acknowledges. The "elevator up, stairs down" framing captures exactly the asymmetric price behavior that practitioners watch for during commodity transmission cycles.
The rockets and feathers point on gas prices is well-supported in the empirical literature, and your asymmetric framing is correct. The piece I'd add from the operational side is that the asymmetry exists not just because of consumer search behavior but because of how wholesale gasoline procurement contracts are structured. Retail station operators typically buy on rack pricing that updates daily, but their contracts with wholesalers include pricing formulas that smooth out daily volatility through averaging mechanisms. When wholesale prices fall, the smoothing works against retail margins because the formulas lag the spot decline. When wholesale prices rise, the same smoothing works in favor of retail margins because retailers can pass through increases faster than the formulas capture them. The contractual architecture reinforces the consumer behavioral asymmetry you're describing.
The restart timeline point in the second half of the post is particularly important and underdiscussed. The infrastructure restart problem is more complex than even the Bloomberg piece you quoted captures. Reservoir pressure management for shut-in oil wells requires careful procedures because rapid pressure changes can damage formation integrity permanently. Some shut-in barrels may never return to full production because the reservoir physics responded poorly to the unexpected shutdown. Refinery restart requires recommissioning sequences that take weeks per facility under normal conditions and significantly longer when multiple facilities across multiple countries are restarting simultaneously, because the supply chains for replacement parts, specialty chemicals, and qualified technicians get stressed by simultaneous demand.
The 60 to 90 day inflation transmission lag you're tracking through the PCE and CPI data is consistent with what the physical commodity signals are showing. Dated Brent assessments and freight rate indices are leading indicators for the consumer price impacts that will appear in the data through Q2. The contractual mechanisms that lock in higher costs are already in place. The freight surcharges have been renegotiated. The fertilizer purchases that determine fall harvest costs have been priced at current natural gas levels. None of this reverses if the situation resolves through diplomatic channels in the coming weeks.
The watch item from the operational side: when dated Brent stays elevated and freight rates remain stretched even after diplomatic progress, the consumer price pressure continues to flow through the supply chain regardless of what spot commodity markets are doing. The transmission lag means the inflation impacts being locked in right now will appear in CPI through summer.
Trump Strong !!
As you imply, the greed factor, raising prices and pointing to tariffs and SoH or whatever and incrementally reduce prices when the “good times roll,” far less than the original increases.
Is the economy being held together by glue? or are good times on the horizon? You and Paul seem to be saying the dark clouds may be a precursor of a hurricane…