Friday, June 06, 2008


In a brief period working on Wall Street many years ago I liked to go over and talk to the energy option traders who worked on my floor. It was a small group and the funny thing is that the group went out of business while I was there. This was the early 1990's and oil prices were low and not volatile enough to really justify a trading desk that only made money off of energy price volatility. It came to mind because I was just watching the change in oil prices today and as I was watching it the daily increase jumped to over +$10.75/bbl. Ten years ago next week the price of oil was under $12/barrel in total. They would typically measure the daily change in cents, not dollars, and certainly not tens of dollars. It's a little hard to get your head around.

but some back of the envelope math. 42 gallons of oil in a barrel. So today's price increase alone translates into at least +26 cents per gallon. It has to be more than that of course. A gallon of oil does not get refined into a full gallon of gasoline so right there you need to divide by something smaller than 42. Then it takes oil to get oil to market, by ship, rail, truck or whatever... eventually that gets translated into a price at the pump. So it compounds a bit. So unless it retracts quickly today's oil spike alone will translate to +30 cents? +40 cents per gallon?


Follow that story: CNN has a short video piece on the bankruptcy filing in the City of Vallejo, CA.


Blogger Bram Reichbaum said...

Linkee no workee. Javascript window. Maybe CNN has a special button?

Thanks for the heads-up on gas.

Friday, June 06, 2008 6:17:00 PM  
Blogger EdHeath said...

The reported cause for the increase in oil: the Israelis threatened to attack Iran if Iran gets a nuclear weapon. Meanwhile, a suburban republican on the Burgh report blamed the increase on Barack Obama's securing the nomination. Darn that Barack for being a communist with a proven track record of accomplishing nothing but underming the good people of the world...

By the way, the URL for the Vallejo story might be

Saturday, June 07, 2008 2:50:00 PM  
Blogger EdHeath said...

Oops, the URL got cut off. Trying again:

Watch the hard returns

Saturday, June 07, 2008 2:52:00 PM  
Anonymous Anonymous said...

It's summer and the buses down Forbes are packed like the full set of kids are still in school.

Saturday, June 07, 2008 6:28:00 PM  
Blogger EdHeath said...

Last day of school: June 11. According to the board of education clendar PDF.

Sunday, June 08, 2008 3:57:00 PM  
Anonymous Anonymous said...


I meant the Pitt/CMU students. Once they are out, it used to be easier to get a seat on an east-bound bus out of Oakland. This year, it's June and I'm still riding home with my face in somebody's giant back-pack.

Monday, June 09, 2008 10:07:00 AM  
Blogger EdHeath said...

Actually, the Pitt students have graduation in APril, I think, and the CMU students had graduation on 5/18/08. But summer school is big business at Pitt, so you may see backpacks until August. Assuming the backpack doesn't belong to a resident or Pitt employee.

Wednesday, June 11, 2008 11:32:00 AM  
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Tuesday, May 31, 2011 6:52:00 PM  

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