While the gas shortage is a marginal annoyance, which should be solved logistically soon, it may be a harbinger of much worse news to come. This is not Rod Serling’s Twilight Zone. You are witnessing a controlled demolition of America. The Biden Administration is waging war on American energy and small business while printing $trillions without any backing, which is causing massive inflation.
US inflation continues to soar. The highest rise in consumer prices CPI inflation since 2008 sends Dow and Nasdaq futures down. It’s actually pretty impressive just how quickly Joe “Applesauce” Biden managed to mess everything up.
The economic news Friday, as we’ve seen all this month, is really bad. Retail, IP, etc. is tanking. Right now, we’re headed for a deep, prolonged recession — a real one, not a policy-induced one we were already recovering from — and it’s going to entail massive inflation, and worse.
Consumer sentiment has “tumbled” to 82.8, driven by “the highest expected year-ahead inflation rate as well as the highest long term inflation rate in the past decade.” “Rising inflation also meant that real income expectations were the weakest in five years.” That’s with all the government $dollars.
Much of this is (mostly) due to the supply chain issues that began with lockdowns in early ’20. Price increases now in things like meat, steel, and plastics are part lagging indicators of raw material dollar increases months ago, part displaced demand and logistics constraints now.
Most of the issues we face are largely a result of our basic command-and-control systems not being able to fully calculate the whole range of potential threats or even comprehend their inability to do so. Our enemies ruthlessly exploit this so-called “Dunning-Kruger” tactic, which occurs when a person’s lack of knowledge and skills in a certain area causes them to overestimate their own competence. The result is an epic fail, which seems to sum up every policy coming out of the Biden White House.
Ocean freight could very well hit $20,000 per 40′ to the US East Coast from Asia in the coming weeks. Larger importers have offered a monthly fixed rate through mid-June at $19,500 per 40′ to the USEC for a small allocation of guaranteed space from China. For comparison, it was between $2,700 to $3,000 this time last year. If the pandemic taught us anything, it should have been that the concentration of supply chains can lead to major breakdowns when they are disrupted.
An ominous note, though the Mississippi River has been re-opened, this brings up a darker second-order thought: Are we prepared for a severe-to-catastrophic Gulf hurricane this year?
MEMPHIS, Tenn. (AP) — River traffic has reopened on the Mississippi River near Memphis, Tennessee, three days after it was closed when a crack was discovered in the Interstate 40 bridge that connects Tennessee and Arkansas, the U.S. Coast Guard said Friday. The Arkansas Department of Transportation, meanwhile, said a video taken by an inspector two years ago found “significant rust and the beginning of a crack” in the same area as the fracture that prompted the bridge’s shutdown this week. Economic development officials had been concerned that an extended closure of river traffic could hurt the region’s economy and have ripple effects on the nation’s supply chain.
US export rail and container congestion (normal alternatives) will not be clear for the duration of hurricane season. A whole lot of people won’t see the impact here: >50% of all US grain and oilseed exports are via NOLA ~20% of US oil refining capacity is in Louisiana ~55% of all natural gas exported from the US leaves via two terminals in Louisiana There are no good contingency options this year.
In other news of the dumb, Michigan Gov. Gretchen Whitmer (D) successfully kills a crude oil pipeline that has been in operation for over 50 years. Whitmer has ordered Enbridge to cease operating Line 5 by May 12, a pipeline that runs from Canada through Michigan.
The volume of crude oil that moves through Line 5 is the equivalent of 40 percent of the crude capacity of regional refiners. That’s not going to come from anywhere else. The crude is shipped from Canada to one of PBF Energy’s refineries in Toledo, Ohio, and then provides gasoline, diesel, and propane to significant portions of the Great Lakes region.
The Toledo area refineries alone supply:
- 30 percent of Ohio’s gasoline,
- 42 percent of southeastern Michigan’s gasoline,
- 35 percent of Ohio’s diesel,
- 14 percent of southeastern Michigan’s diesel, and
- 100 percent of Detroit Metro airport jet fuel.
If you are in the midwest, and you think that the gas lines and the pictures you saw from Colonial were bad, you’ll have that on steroids with the shut down of Line 5.
The region would need 2,000 trucks a day continuously to make up for the severe shortage created by a voluntary shutdown of the pipeline.