Archive for the ‘Crisis in Japan’ Category
Social unrest and revolt during the Arab spring led to a restricted N African supply of crude. Japan’s catastrophic quake halted her industrial production lines. These events created unprecedented volatility in the raw commodities industry, the volatility is set to continue through 2012 as more austere fiscal measures are adopted.
The human cost to natural disasters like the one in Turkey weeks ago include injuries and temporary and permanent disabilities, temporary and permanent displacement of people, increased poverty and disease, and psychological scars. In addition Economic costs, based largely on direct infrastructure or losses of fixed capital and inventory, are also underestimated. Many indirect effects on economic activity include long-term consequences of the reallocation of investment resources, and the loss in human capital. Over the past year the incidence of natural disaster has increased.
The El Niño and La Niña events, associated with anomalous floods, droughts, and storms, are getting larger and more frequent.
In fact commodity producers are already bracing for another La Niña, a weather phenomenon that wreaked havoc earlier this year on commodities markets, sending prices to multiyear highs. La Niña is a shift to cooler than normal temperatures in the Pacific Ocean, causing above normal rainfall in south-east Asia and northern and eastern Australia, and an increase in tropical cyclones. Here in the USA, our Pacific Northwest and Northern Plains are wetter while the southern states face a lack of rain. In South America the heavy rains threaten coffee, corn and soybean production. India experiences an increase in monsoons, threatening their iron and ore. South East Asia and Australia experience heavy rains that destroy the harvests of rubber, palm oil, coal, wheat, and sugar. The change in the elements has a huge impact on commodities production.
One day we’ll tell our grandkids how awesome everything was before the governments decided to bailout the banks and bankrupted themselves.
Crude oil is a large component of production costs for heating oil and gasoline, and therefore fluctuations in the price of crude oil translate to simmilar fluctuations in heating oil and gasoline prices.
The volitility of crude oil, heating oil, and gasoline are found to be highly correlated. On the other hand, crude oil is a close substitute for natural gas as an energy source, and thus crude oil price fluctuations should also affect natural gas price.
Factors behind their price volatility:
WEATHER plays an important role in the demand side of energy markets. Colder than normal temperatures in winter and hotter than normal temperatures in summer can increase natural gas demand and push up prices.
DEMAND for crude oil and heating oil peak in winter.
ECONOMIC GROWTH results in increased demand for goods and services from the
commercial and industrial sectors, generating an increase in demand for both crude oil and natural gas.
SUPPLY, OPEC decisions about production and prices, political events, storage levels, and natural events are among the determinants of energy prices.
MACROECONOMIC factors affecting energy prices inclued bilateral exchange rates, price indices, monetary aggregates, convenience yield, Treasury bill yields, equity dividend yields, and junk bond premiums.
When people are disatisfied with a reality they try to change what is within their hands.
Toyota: Evacuation of employees at car plants that make braking and suspension systems.The factory in Miyagi, was destroyed.
Nissan: 1500 Infiniti automobiles were destroyed at the ports.
Sapporo: The beer brewer’s Sendai plant was destroyed.
Sony: Plants that manufacture magnetic tapes, blu-ray disks, batteries, and rd offices were severely damaged.