90 seconds at 9 am

90 seconds at 9 am: US stocks up a touch; NZ$ firm; Focus on US Federal Reserve and Chinese 'hard vs soft' landing signs; Debt, oil hold back global recovery

26th Mar 12, 8:17am by Bernard Hickey

Here's my summary of the key news over the weekend in 90 seconds at 9 am, including news US stocks rose 0.2% on Friday night and the New Zealand dollar was firm.

See more here at Reuters on the rise in US stocks despite weak home sales figures.

But stocks globally posted their biggest loss last week for any week in 2012 as fears about global economic recovery returned to haunt investors.

See more here at Bloomberg.

Very weak factory production figures in China, France and Germany were the catalyst for the slide.

It seems that whenever signs of a recovery emerge, interest rates and the oil price rise, which in turn slams the brakes on any recovery.

The developed world's smothering debts and the strong demand from emerging markets for a limited supply of oil is acting like a kind of automatic braking system for the global economy.

US authorities are considering releasing special oil reserves to keep the pressure off oil prices.

Meanwhile oil prices rose again on Friday on a report that sanctions on Iran would reduce its exports by 300,000 barrels a day.

See more here at Bloomberg.

Petrol prices are near record highs in New Zealand.

No chart with that title exists.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

37 Comments

by skudiv | 26th Mar 12, 9:08am 1332706125

Most of the current high petrol prices has nothing to do with the price of oil. Look for taxes, and refinery margins. Dubai Crude high $137 in '08, currently sitting at $105.

http://www.interest.co.nz/charts/commodities/oil-and-petrol

That being said the world has hit the catch 22, where the mainstay of growth is debt and oil, and the constant demand for growth puts pressure on the ingredients.

Sir Richard Branson calling for a "war" on current capitalism, and then end of growth based economics.

Classical economics is fatally flawed, driven by Perpetual Growth mind-set. We will self-destruct unless we “turn capitalism upside down … shift our values.”

Get it? The central hypothesis of today’s economists — all of them from Bernanke’s Fed staff, the World Bank, IMF, CBO and White House economic advisors, to economists in Wall Street banks, think tank and academia — is their unquestioned acceptance of the core dogma of Perpetual Growth. Stick to that and America, the planet and civilization will all crash.

http://www.marketwatch.com/story/no-growth-capitalisms-post-crash-manifesto-2012-03-20?reflink=MW_news_stmp

by andyh | 26th Mar 12, 9:23am 1332707012

Err dubai crude is sitting now at just under $US123.

http://www.bloomberg.com/quote/PGCRDUBA:IND

Which fits in exactly with the more broadly based OPEC basket crude price (which was around $US124 last time I looked).

Tapis (from which much of SE Asia takes its price, including Aussie) is sitting @ $US133:

http://www.bloomberg.com/quote/APCRTAPI:IND

What data are you looking at?

by skudiv | 26th Mar 12, 9:49am 1332708571

Priced in NZ dollars, because that is the currency we use to buy oil. USD is relevant mainly to Americans. But yeah I did miss the very end of the chart somehow $123 so not as much as I thought.

by andyh | 26th Mar 12, 10:05am 1332709526

Sorry to go on about this skudiv (and I know we are broadly singing from the same song sheet) but in NZ$ a barrel of Dubai crude is now at over NZ$150............

by skudiv | 26th Mar 12, 10:19am 1332710378

No worries, it's not showing on interest.co.nz commodities charts, which is where I looked. Tssk.

by steven | 26th Mar 12, 10:42pm 1332754943

I dont think so...I think we have to buy USD and then buy the oil....

regards

by steven | 26th Mar 12, 9:25am 1332707101

The refinery margins are pretty close, yes maybe a bit more of a margin due to being a sellers market.....but really the price trend is upwards....because the price trend of oil is up. It has gone from $85 to $125.....50% increase....

OK, sure reduce tax say, then the Govn has to tax elsewhere, still the same problem...the trend is up...we might buy some time, or ppl see that petrol is getting expensive and move to something else....

Also where do you stop taking tax off? (waits for libertarians to jump in) electric transport? that should be tax free as well then, etc etc...

America has the attitude of "the American way of life is not up for negoitiation".....except of course the reality is America is falling apart at the seams......

regards

by goNZ | 26th Mar 12, 12:46pm 1332719202

thats all very well for rich dudes like Branson to say that , AFTER hes made his billions !

A bit like the Wests enviro fundies telling India,Brazil and China for example, to back off using energy and accept a c--p standard of living

by powerdownkiwi | 26th Mar 12, 9:27pm 1332750429

Ah yes Gonzo - of course. If you're poor, you can lie to yourself.

That'll work.

Foss reckons the underwrite is a long way short of what even I think - perhaps as little as 1 in 100 parts have a parcel apportioned, when everyone atempts to cash up.

You better be very worried - that's you too. Cashed up, are you? Got the real stuff you need, going forward?

by steven | 26th Mar 12, 10:35pm 1332754548

As bad as 1 in 100? so in musical chairs terms your have to run around and even find a chair.....

But you can improve or even worsen your odds I think.....most of the right wingers like GBH wont have a dime, they will be convinced to the end there will be an upside....and its buy buy buy.....

regards

by steven | 26th Mar 12, 10:40pm 1332754835

So he's finally got an education....but AGW isnt the pressing issue, Peak oil is.....it doesnt matter whether someone has figured it and can brace themselves, or in your case having your ass in the air and head embedded in the sand to navel.....its going to come its just when.....and its going to hurt.....just some will be hit harder and fall first....

regards

by Nic the NZer | 26th Mar 12, 11:33pm 1332757992

I disagree, serious climate scientists have repeateadly highlighted that AGW requires immediate attention and action. The world climate has already today warmed nearly a degree from its long term mean due to human emissions.

I think the latest analysis indicates that significant action is necessary within the next 10 years,

http://labspace.open.ac.uk/mod/oucontent/view.php?id=426580&section=1.5.12

Thats necessary regardless of an ability to source fossil fuels or not. Either way the only way forward is for the world to get off its fossil fuel habit, though I would hesitate to draw economic conclusions as to how that might effect the economy. I would also hesitate to draw the conclusion that its happening from economic indicators, such as price level.

by steven | 27th Mar 12, 7:07am 1332785225

With due respect to the AGW scientists, AGW isnt as pressing as peak oil....and such myopic vision is typical of academics. Now I totally agree its highly pressing and if we dont do anything about it in at most 5 years I think we will be extinct as a society if not a species inside 200 years... I dont think we have 10, looking at the rate data is changing 10 seems too long for a safety margin for me....

However if we dont move on peak oil inside 2 we will be extinct as a society inside 2 decades.....

The good news is most of what we can do for Peak oil applies to AGW mitigation...

But frankly on a global scale nothing will be done about either. Now NZ is fortunate in that we are small and in effect agile and have a lot of renewables already....but when the titanic sunk the lifeboats went well away....or they would have been swamped....

regards

by Hamish | 27th Mar 12, 9:23am 1332793433

OMFG!

'extinct as a society inside 2 decades...'

You do a great diservice to our not so distant, pre-oil, ancestors with that bold statement.

by Green Lantern | 26th Mar 12, 9:00pm 1332748858

The real reason for high petrol prices: http://www.youtube.com/watch?v=S8WReKlUFP4

by steven | 26th Mar 12, 9:22pm 1332750165

Nope, absolute rubbish, but if you want to believe taht be my guest.....lots of gold sounds a good bet.

honest............

regards

by andyh | 26th Mar 12, 9:34pm 1332750884

If that were true why did petrol hit equivelent highs in 2007/8 BEFORE any of this US$ printing began?

Folk seem to forget that as recently as 2003 oil prices were as low as $US35/barrel; they then quadrupled up to 2008 as supply struggled to keep up with demand, before falling back in the great shock year of 2009 but then regained the new lower baseline of $100/barrel in no time at all.

The surge to the new baseline of $100 oil took place before QE and all that money printing was even thought of.....

by andyh | 26th Mar 12, 9:18am 1332706712

The graph that is worth a hundred thousand words:

http://rhinohide.wordpress.com/2012/03/24/conventional-oil-production-8…

by steven | 26th Mar 12, 9:55am 1332708949

But its OK Phil Best says he will find us something else to use...he didnt give us a time frame....but Im sure a man of his obvious uh talents can do it in 2 years or so....and get it ramped up to 7mbpd per year from now on....

Cant you Phil?

Phil?

regards

by David B | 26th Mar 12, 10:10am 1332709847

Ok Steven, since you claim infallible knowledge on all things, how many gallons of biodiesel was produced in the United States last year? I want the number from you.

by steven | 26th Mar 12, 10:34am 1332711297

Where do I claim infallible? I never have, you put words in my mouth that are untrue...par for the course on your part. What amuses me so much about you is you have a great ability to make yourself look like a complete fool, do carry on...

Bio-fuels, the more important thing is how fast bio-diesel is ramping up against the world wide decline and the impact of its use for arable land area.....plus most "bio-deisel" uses fertilizer, so its an arbitrage....between Natural Gas for fertilizer being used to make bio-fuel........gas which will be wanted for synth in Alberta, which gives a better return.

Oh and by the way, try google.

http://cleantechnica.com/2011/12/05/us-biodiesel-industry-smashes-previ…

800,000,000 gallons = 2mbpd.....so it managed to say double from last year.....still 6mbpd short.....

Then there is the EROEI, synth crude is at best 6 to 1 (more like 5 to 1 or worse) where our world economy at best needs 8 to 1 (probably more like 10 to1) Biodesel is more like 2 to 1...maybe...

So sorry it just doesnt work...

If nothing else consider that biofuel is the conversion of sun to oil anually, where fossil fuel is millions of years worth of sun....

regards

by David B | 26th Mar 12, 9:41am 1332708097

The price of oil has gone up over the last 5-10 years. So what? So too has the price of milk. I suppose you Malthusian nincompoops given the level of your understanding about how the world works, will start screaming, peak cows, we're running out of milk!

by Trolleyboy | 26th Mar 12, 9:47am 1332708440

Know what a false analogy is?

by scarfie | 26th Mar 12, 12:09pm 1332716992

You know I don't think he does. It is getting to the stage where every time he posts he displays his total lack of cognitive ability.

by andyh | 26th Mar 12, 10:00am 1332709256

Wooppee David I do believe you are making progress! As you rightly state the price of oil has gone up in the last 5-10 years.

However, as the graph I linked to above demonstrates (linked again for your special benefit)

http://rhinohide.wordpress.com/2012/03/24/conventional-oil-production-8…

the supply of conventional oil has not (even when you include the much vaunted tar sands being produced in Canada which everyone gets so excited about). In fact an 8 year plateau in conventional oil production.

Thats odd dont you think? Price goes up (soars in fact) and yet no more conventional oil (even when you include tarsands) being produced? Whats that about then?

What could it mean?

I do believe there might be hope for the NZ branch of the Fox redneck fraternity yet.........

by David B | 26th Mar 12, 10:14am 1332710087

The price of bread has gone up in NZ as well, yet I imagine production of that has stayed fairly flat as well. So what does that mean, we're running out of bakers?

In spite of all your grandstanding and self-importance, you don't have the wit to get it, do you? But you’re good for a laugh!

by goldenfox | 26th Mar 12, 11:13am 1332713608

The only thing that has changed is the amount of money being used to price Oil. Bread, rates, oil, milk powder all up because the number of bank notes in the system are up.

The gold to oil ratio has largely been constant.

by steven | 26th Mar 12, 11:29am 1332714547

So you are saying there is no real oil shortage? because that is a huge stretch and I cant see such a point of view being supportable.....

If you look at supply of oil, its on a plataeu and we limit demand with price. So occams razor, a logical, simple answer is the price is rising because supply is limited. Now we can throw in speculation, and sure some of that rise will have a speculative %....

Gold is also nearing its peak limit....and its pretty clear we have a % of speculation on the price rising and a % of ppl wanting to protect their wealth as they think high inflation is coming.

Also gold has dropped over the last several month but oil has not.

If you look here at oil and pick 1 year,

http://oil-price.net/

and here and pick 1 year,

http://www.goldprice.org/

Its hard to see any real match....

Now if you take 1 month....looks different....gold is dropping oil is rising....

Plus you would need to figure out various effects such as the state of an economy....really hard to say there is anything there at all to say you are right, I ceratinly do not agree.

regards

by steven | 26th Mar 12, 10:01am 1332709303

LOL.....again you mix arguments, I cant figure out if you are really this ignorant, or that blinkered, think its both.............clearly you dont want to try and look at how the world, engineering, science or math works.....

maybe like Phil Best and Gonzo, try praying......

regards

by andyh | 26th Mar 12, 10:10am 1332709806

I am beginning to think he's just an out an out troll. There used to be a modicum of intellect to his postings but I think lurking under too many bridges has dulled him rather.

by Stephen Hulme | 26th Mar 12, 10:24am 1332710673

andyh

There mIght be some merit in asking AJ to re post the charts showing the recent dramatic fall in petrol consumption in the US.

As the most likely users of the highest precent of production, the US reduction in demand could possibly qualify the proposal that the recent USD price rise for crude is a fair representation of the devaluation of this currency unit .

Oil producers will only accept a debasing currency for so long at the wrong price.

by steven | 26th Mar 12, 10:39am 1332711593

There is an elastic component and in-elastic component in petrol use, so a sunday drive is elastic, driving to work isnt.

At some point most elastic has been removed....say its mostly the recorded falls.....it would be interesting to seperate out that elastic component and the % thats due to ppl losing jobs....

Hmm it maybe that the value of USD actually in some ways doesnt matter as its relative, ie the oil producer buys food with USD after selling for USD....

regards

by steven | 26th Mar 12, 12:35pm 1332718518

I wonder if its possible to plot the less use v pump price changes......

So as the price went up last time we should see less being used....as it drops that decline should flattren or even reverse and maybe look for a lag factor. Now if you are distressed ie un-employed you cant buy petrol at all...stepening the decline...and here today we see the price rising again....

I guess Im looking for factor in there that describes stress in the economy.

Its interesting that Obama is aiming to let go the strategic reserve in order to counter his vote losses come November....not at all what it was intended for, which was to protect the Nation. Now if he does so and Iran shuts the straight the US at least will be in a bad way.....

regards

by andyh | 26th Mar 12, 12:54pm 1332719682

Hi Stephen

The decline in US gasoline consumption is highlighted in the graph at the bottom of the page:

http://205.254.135.7/oog/info/twip/twip_gasoline.html

I am afraid the US story (in terms of oil consumption) is of declining significance in relation to the surge in demand from China (and to a lessre extent India etc). There is no doubt much fat to be cut in the US consumption profile (which of course is what is happening now), as they have always been profligate users of oil.

by steven | 26th Mar 12, 10:33am 1332711230

Troll, could be.....but I dont think so...more dilusional, I think he thinks he's someone so we should all listen and blindly accept what he says, no matter how shallow or silly....

regards

by goNZ | 26th Mar 12, 12:50pm 1332719455

You are making a goat of yourself ,steven

by scarfie | 26th Mar 12, 1:44pm 1332722680

Sorry the mantle of Goat remains with DavidB and his supporters at the moment for the inability to understand a decline in growth in Fridays top ten.