At 3.78 gallons/L wouldn’t you be paying $3.23/gal at $0.85/L? California’s also the only place in the US that currently has greater than $3.00/gal right now. Many places in the south are less than $1.86, which is $0.49/L. The earliest memory I have of gas prices was in the 90’s and I’m pretty sure it was around that mark…40ish cents a litre.
Edit: I’m looking at some of the posted rack prices in Canada, which to my understanding is the wholesaler cost before tax. (correct me if I’m wrong). How is it possible that Ottawa has a lower rack price than Edmonton (0.57 vs 0.61)? Proximity to the oil may not be everything, but it’s got to count for something. I understand that Alberta probably has much lower taxes on gasoline than Ontario, but I don’t understand how Edmonton is paying more for wholesale gas than the east. Maybe proximity to refining I suppose.
WCS is C$ (at least from my perspective, I know it trades in US$ south of the border, but Canadian firms seem to quote it primarily in CAD in their reporting) and its gooey shit that requires lots of clean up. Many US refineries are equipped for it as feedstock though. Its similar to California heavy crude. Synthetic crude is a refined light oil product . A big part of the price gap between WCS and WTI is transportation limitations (WCS is at Hardisty, AB). Its expensive to ship it from Hardisty to Oklahoma on a train, as pipeline capacity is constrained. Hence the Keystone XL need.
the spike due to air strikes in Yemen is dumb. shouldn’t prices fall when the problem is being solved? i mean, if the market didn’t rise when these guys starting advancing why is it rising when they are being strucken from the earth? the market is sometimes very dumb.
Concern is whether Iran steps in and whether the whole area becomes a Shia Sunni blood match. And the west is completely screwed as we are supporting different sides in different places.
I used to think that when the media said “prices for X rose because of Y event” that it was actually a 1 to 1 relation. Now I’m more of the opinion that most of the time the rise or fall in price has very little to do with the “causing” event, and is actually just a tidy way of making it seem like we can predict and explain every movement of the market, when really we can’t.
^ When oil spikes $4 last night on news the Saudis were chucking bombs on Shites, you can draw a mostly 1:1 conclusion. Though in 90 percent of other cases, I agree with you.
The media tries to attribute cause. I think cause is more ‘direct’ now than it was before due to rule based computers making trades off of tweets. The guy I follow on Twitter who catches market manipulation through the data posted recently about it will be interesting when one fund tricks the others with a fake news story and that becomes a new investment strategy.
not to gloat but i did call an Iran deal due to internal budget pressures back when nobody was even talking about Iran. expect more ME countries to increase production.
^ My understanding was there’s a fair amount of private equity capital chasing some of the oil and gas stuff, but we didn’t see much activity in 1Q. Not necessarily full buy-outs, but I thought we’d some large preferred investments into projects or acreage. We saw some equity issuance instead with a handful of companies.
I’d guess we may see some leveraged buyouts of some offshore service companies that have some of the more advanced rigs/drillships, or even service vessel operators. You have to be selective but there are major discounts out there and these are cash flow generating assets. Deepwater has been thrown out w/ the bathwater and I don’t see a secular change away from it long-term.
Anyone follow this Samson Resources (private company) $2.25B sr. unsecured debt issue (2020) from last July? Oh sweet baby Jesus it’s nasty. It’s 15 cents on the dollar only nine months into it’s life – YTM of 80%. It’s amazing b/c there’s still some very low grade high yield E&P issues trading very well. Interesting market.