Why the delta?

From Slate:

The Reason Home Prices Are Finally Dropping

National averages mask significant variation at the metropolitan level.

Every one of California’s major cities—including Los Angeles, San Diego, and the Bay Area, some of the most expensive real estate markets in the country—has seen dramatic price declines over the last four months. Other Western and Southwestern cities, including Austin, Phoenix, Las Vegas, Portland, and Seattle, have also seen big drops.

At the other extreme, a number of Southern cities—especially in Florida—continued to enjoy substantial home price gains over the last four months. The Northeast and Midwest were somewhere in the middle, with Chicagoland homes losing 0.5 percent over the last four months and homes in the New York area gaining 0.7 percent.

While the regional pattern is clear, it’s not obvious why things are breaking down this way. Experts I talked to offered several possible explanations, but I didn’t find any of them fully convincing.

Two factors are significant here. First, Eastern cities tend to have older housing stock, which means more opportunity to expand the supply of housing by renovating or replacing older homes. Western cities lack this safety valve, and as a result they tend to see bigger booms when demand is strong, followed by sharper price declines when demand weakens.

Tech workers seem to have been particularly successful at resisting employer pressure to return to a physical office. Perhaps as tech workers realized they could work remotely indefinitely, they began to doubt whether it made sense to pay a big premium to live physically close to their employers.

Fortune housing reporter Lance Lambert suggested to me another possible tech connection: The falling values of many tech stocks could be reducing the amount of cash sloshing around West Coast housing markets.

There’s an obvious partisan ax someone could grind here: Most of the biggest losers are blue cities in blue states, while the winners are mostly smaller cities in red states. Maybe blue-state policies on COVID, crime, or something else are making those states less attractive places to live.

But I don’t think this withstands close scrutiny. Most obviously, Salt Lake City has seen faster home price declines than most other cities, and Utah isn’t a blue state. Las Vegas and Phoenix are located in swing states. On the flip side, home prices in New York City have held up better than those in Dallas, Houston, or Atlanta.

This entry was posted in Housing Bubble, National Real Estate, New Jersey Real Estate, NYC. Bookmark the permalink.

83 Responses to Why the delta?

  1. grim says:

    Janet don’t buy it..

    CNN Exclusive: Treasury secretary says she’s not seeing signs of a recession in the US economy

    Treasury Secretary Janet Yellen said Thursday in an exclusive interview with CNN that she did not see signs of a recession in the near term as the US economy rebounded from six months of contraction.

    During a one-on-one interview in Ohio that aired on CNN’s “Erin Burnett OutFront,” Yellen said the third quarter GDP data released Thursday underscored the strength of the US economy as policy makers urgently move to cool off pervasive and soaring inflation that has had a sharp effect on American views of the economy – and endangered the Democratic majorities on Capitol Hill less than two weeks from the midterm elections.

    “Look, what we’re seeing right now is solid growth this quarter. Growth has obviously slowed following a very rapid recovery from high unemployment,” Yellen said when asked about whether the latest GDP data assuaged any recession concerns. “We’re at a full employment economy. It’s very natural that growth would slow. And it has over the first three quarters of this year, but it continues to be OK. We have a very strong labor market. I don’t see signs of a recession in this economy at this point.”

  2. dentss dunnian says:


  3. Juice Box says:

    Even if she did she would never say so. Did not see inflation coming either, and even then it was transitory.

    Slowing Home sales, Real GDP is flat, there are plenty of signs that we are on that road.

  4. BRT says:

    Yeah, no signs of recession. Just all your biggest companies reporting negative results on earnings. Other than Exxon Mobile, let’s now make them the bad guy again like last time.

  5. Juice Box says:

    Elon should change Twitter’s name to Hooli…

  6. Juice Box says:

    Today is the day. Supreme Court is about to hear oral arguments against Harvard’s practice of excluding Asian applicants from Harvard admission by using race based quotas..

    Students for Fair Admissions Inc. v. President & Fellows of Harvard College

    “Whether the Supreme Court should overrule Grutter v. Bollinger and hold that institutions of higher education cannot use race as a factor in admissions; and (2) whether Harvard College is violating Title VI of the Civil Rights Act by penalizing Asian American applicants, engaging in racial balancing, overemphasizing race and rejecting workable race-neutral alternatives.”

  7. Bystander says:

    From the immortal words of Upton Sinclair:

    It is difficult to get a [wo]man to understand something when his [her] salary depends upon his [her] not understanding it.

  8. Fast Eddie says:

    In the immortal words of Pierre Francois de la Brioski:

    La Plume dans sez von ze zon…

  9. OC1 says:

    “In the immortal words of Pierre Francois de la Brioski:”


  10. Very Stable Genius says:

    Man Who Dragged Officer Into Jan. 6 Mob Is Sentenced to 90 Months.

    The sentence for the defendant, Albuquerque Cosper Head, was one of the most severe penalties handed down so far in the Justice Department’s investigation of the Capitol attack.
    As part of his plea, Mr. Head, a 43-year-old construction worker, admitted that during the violence outside the Capitol, he grabbed Mr. Fanone around the neck and told the crowd around him, “I got one!” Mr. Head then forcibly hauled Mr. Fanone down the Capitol steps and into the mob, where he was beaten, kicked and attacked with a stun gun.
    Some in the crowd tried to strip Mr. Fanone of his service weapon as one rioter threatened to kill him with his own gun.
    The 90-month sentence Judge Jackson handed down was slightly less than the 96 months that prosecutors had requested. In court papers, prosecutors called Mr. Head’s attack on Mr. Fanone “some of the most barbaric violence on Jan. 6.”

    “He was protecting the very essence of democracy, the peaceful transfer of power after a democratic election,” Judge Jackson said of Mr. Fanone. “He was protecting America.”

  11. TenPercentForTheBigGuy says:

    A Florida Republican canvasser clad in a Marco Rubio T-shirt and a Ron DeSantis hat was brutally attacked in a Hialeah, Fla., neighborhood by Democratic residents, Rubio tweeted Monday morning.

    “Last night one of our canvassers wearing my T-shirt and a DeSantis hat was brutally attacked by 4 animals who told him Republicans weren’t allowed in their neighborhood in #Hialeah #Florida,” Rubio wrote. “He suffered internal bleeding, a broken jaw, & will need facial reconstructive surgery.”

  12. 3b says:

    PCE number still running hot, Fed will keep going with their hikes.

  13. Bystander says:

    Someone stayed up late watching MeTV..

    Taking opinions, why the f* do people push trunk and treat? Seriously..it has become huge and it is the dumbest and least spirited event I can think of. We get invited to three per Halloween and decline every single one.

  14. Libturd says:

    Interesting 10%. Hialeah is like 80% Cuban. I thought the Red Team and Cubans were honeymooning together? Blacks too.

  15. Phoenix says:

    Seriously..it has become huge and it is the dumbest and least spirited event I can think of. We get invited to three per Halloween and decline every single one.

    It’s so the mothers can hang out together, and so they don’t have to walk or exercise.

  16. Libturd says:


    I hate it too. I think it’s related to the same phenomena which has parents of 6th graders not trusting their kids to be able to wait at a bus stop without supervision. Well, the white parents (mostly) that is, in these parts. It’s kind of odd too. In Glen Ridge, where there is no busing, parents allow their kids, pretty much from kindergarten and up, walk up to a mile to and from school without any supervision, though they tend to walk in groups of 4 or more.

  17. Juice Box says:

    Pelosi’s husband attacked in his home with a hammer….The brigades of wanna be social media stars have already said it was a Republican supporter with zero evidence……Perp was arrested but not identified.

  18. Libturd says:

    Maybe it was one the people he crashed into while drunk driving? Or maybe it was Ye?

  19. Juice Box says:

    We will have at least 200 kids trick or treating here on monday. They come from all over as our development has no busy 40 mph roads…Trunk or Treat too at school tonight, always fun…

  20. Phoenix says:

    Trunk or treating is great. Collect massive amounts of high fructose caloric fuel with minimal expenditure of same.

    It’s great at filling up your strategic solid oil reserve.


  21. crushednjmillenial says:

    Buy: $680,000 (December 2020)

    Ask: $800,000 (today)

    For sale since August, and dropped by $100k, so far. How low will it go? This house’s footprint and square footage, if built in the 1990’s was routinely for sale in Mount Olive for mid- to high-$500s in 2015-2019.

    2 Berry Ct.
    Mount Olive, NJ
    4 Bed/2.5 Bath
    Built: 2020


  22. OC1 says:

    “Someone stayed up late watching MeTV..”

    Dude, I was watching the Honeymooners waaaaay before MeTV.

    Used to run constantly on channel 11 (along with The Odd Couple).

  23. Bystander says:

    Hah, it surely is mid-term season. I think a transgender and illegal immigrant will attack Dr Oz shortly

  24. Fast Eddie says:


    If that house were to sell at the price with 20% down and at the current 30 yr. fixed rate, the monthly PITI would be around $6000.

    This is Mount Olive… a nice community, picturesque and pretty, a nice area to raise a family, etc. but… it’s Mount Olive. It’s not Mountain Lakes or Chester or Mendham… it’s Mount Olive.

  25. Juice Box says:

    r# Mount Olive – Every time I drive that far west on Rt 80, I roll down my windows and listen for the faint background noise, it sounds like this…..


  26. Chicago says:

    But this is North New Jersey. Plenty of NYY fans.

    I think it sounds more like this

  27. Ex says:

    I really think the ancient public servants, Biden & Pelosi included, need to step aside.

  28. Ex says:

    I really think the ancient public servants, Biden & Pelosi included, need to step aside.
    Cannot believe that everyone under the age of 30 in this country is so biased they cannot make good decisions.

  29. Trick says:

    Juice, we are the same. Large development with sidewalks and 25mph. They come from surrounding towns and park in the school across the street. A lot of family’s have parties then all the kids go out, so you get huge clumps of kids. All good.

  30. Trick says:

    There are a lot of NY plates in Mt Olive, especially were they just built the new town houses off of 46.

  31. The Great Pumpkin says:

    Dow up 14% in October. Largest monthly gain in 46 years.

  32. hughesrep says:


    First, the victim in question has been identified as Christopher Monzon, a white supremacist nicknamed the “Cuban Confederate” who participated in the neo-Nazi rally in Charlottesville, Virginia, has a history of violence, and is deeply involved in Miami Republican politics.


  33. The Great Pumpkin says:

    This market is nuts….

  34. Very Stable Genius says:

    Dow rallies 700 points on Friday, heads for fourth-straight winning week

  35. Juice Box says:

    Paul Pelosi attacker is quite a character, media is doing their best to portray him as QAnon Trump follower but there is not much to work with. He is a Former San Fran Castro neighborhood nudist and hemp bracelet manufacturer, and possibly a homeless drug addict now.

  36. Bystander says:

    “neighborhood nudist and hemp bracelet manufacturer”

    Hey Ed could be this and still have his R beliefs.

    JK, Ed..off to see Phil Lesh with Marcus King and Eric Krasno tonight. Two of my favorite guitarists. I saw Marcus recently but have not seen Eric in 8 years. One of great funky guitarists on planet. Happy Friday.


  37. BRT says:

    Time to short SPY and QQQ again

  38. Libturd says:

    Don’t get your face ripped off here peeps. This is the Yellin rally for sure. We’ll see new lows soon enough. Any rally will keep the economy overheated and will just prompt further and greater interest rate increases.

  39. Libturd says:

    BRT…We are getting close to that time.

  40. Fast Eddie says:

    off to see Phil Lesh with Marcus King and Eric Krasno tonight

    And I still didn’t get an invite.


  41. Fast Eddie says:


    NASCAR opens their broadcast every racing Sunday with this song:


  42. Hughesrep says:


    You forgot to include:

    Assailant tried to tie up Paul Pelosi in home attack and shouted, ‘Where is Nancy?’ sources say
    Last year, David DePape posted links on his Facebook page to multiple videos produced by My Pillow CEO Mike Lindell falsely alleging that the 2020 election was stolen. Other posts included transphobic images and linked to websites claiming Covid vaccines were deadly. “The death rates being promoted are what ever ‘THEY’ want to be promoted as the death rate,” one post read.

    DePape also posted links to YouTube videos with titles like “Democrat FARCE Commission to Investigate January 6th Capitol Riot COLLAPSES in Congress!!!” and “Global Elites Plan To Take Control Of YOUR Money! (Revealed)”


    Probably just a typical San Francisco hippie liberal. Maybe it’s a false flag!

  43. Bystander says:

    Sorry man..my buddy got tickets. They are pricey, like $200. His treat otherwise I was not going. He came into some inheritance. Dad passed. New car..living life. Guy did not have a nickel a month ago

  44. Libturd says:

    Sources say a lot of stuff when they are not identified.

  45. 3b says:

    Got my John Mellencamp tickets for the Beacon theater; just saying.

  46. Fast Eddie says:

    He came into some inheritance.

    Look up to the skies and thank the dude’s dad for the ticket. I have a feeling your buddy is going to be nickel-less again sooner rather than later.

  47. The Great Pumpkin says:

    Without the cooperation of China’s government, we can’t know exactly what did or didn’t happen at the WIV, or what precise set of circumstances unleashed SARS-CoV-2. But the dispatches that Reid unearthed, when overlaid with additional evidence the Senate team compiled, point to a catastrophe in the making: political pressure to excel, inadequate resources to safeguard risky work, and an effort to skirt blame once a crisis hit.
    As Reid sees it, the international community must continue to demand answers.“If you just throw your hands in the air and say, ‘We’ll never know because it’s China,’ and just move on—if you take that defeatist approach to things—you can’t prepare yourself to prevent something like this from happening in the future.”


  48. The Great Pumpkin says:

    “In the last 6 months, $ARKK has seen $709 Million of inflows while the Fund that shorts it , $SARK has lost 50% of all Assets. Perhaps shorting ARKK went out of style in the Spring.

    There’s also a Fund called $NOPE that has had $ARKK and $TSLA as it’s top 2 targets as Shorts. Nope is on pace to become the fastest delisted ETF I’ve ever seen. It charges 1.82% fees and has absolutely ruined its new shareholders. Here are the other shorts today. Brutal.”

  49. Juice Box says:

    Hughes – re: Maybe it’s a false flag!

    As I said they are trying hard to spin this as a MAGA person. As is there is absolutely nobody that identifies on the left that followed QANON?

    There was also supposedly a FB post of the Perp saying democrats must win the mid-terms…we shall see if it surfaces again…

    I really feel bad for Paul Pelosi man at 82 yrs old had to have brain surgery…that sucks…meanwhile with all that money and the fact his home was attacked many times in the past by the left mostly antifa? who did not want to pay rent etc, he should have perhaps spent a few $$ on security as he is not covered by his wife’s detail.

    Sucks all around….regardless of spin…

  50. 3b says:

    As per WSJ, credit card balances as of end of September are back to where they were pre- Covid; 916 Billion end of this past September.

  51. BRT says:

    Lol, ark goes down to 35 from 140 and you are trying to claim victory. Funny.

    Lib, I went short on spy and qqq at the close. I’m looking to hold this one out long term instead of swinging in and out. Treat it as my downside hedge.

  52. Bystander says:

    Absolutely no doubt Ed. I know his stories. Great dude, big heart. Complete stoner even with son. He has liver problems..so has Phil. Kind of last hurrah thought for Phil. Hopefully not my friend. He was alkie for 35 years but not a drop in 20. Train is late so hope I make it

  53. The Great Pumpkin says:

    “Uninformed mom and pop real estate investors might be panicking, but not the rest of us. The cost of money is still lower than inflation, and institutional investors have helped a raise the floor on available inventory.”

  54. The Great Pumpkin says:


    Look at this chart. Based on the market law of supply and demand, how can real estate crash under these supply conditions? No one is abandoning their cheap rates until the price appreciation sucks them in and makes them think about selling.


  55. The Great Pumpkin says:

    In order to have a real crash, you have to have a bunch of sellers competing with each other en masse to the downside. Not going to happen.

  56. The Great Pumpkin says:

    Wonder if any truth…

    “25 days until US diesel supplies run out. This can be fixed, of course, if refineries switch from gas to diesel, but that would send gas prices soaring.

    What a dilemma: this is where a brilliant energy expert like Hunter Biden is sorely needed”

  57. Fabius Maximus says:


    You get Mellencamp, I’m stuck at Tommy Foxes listening to School of Rock.

  58. Juice Box says:

    re: ” if refineries switch from gas to diesel”

    Whomever thinks you can take a barrel of crude and make straight #2 diesel needs to read up on the issue.

    lol….What you need is an Unobtainium catalyst that will make the conversion of branched hydrocarbons to straight-chain hydrocarbons. If you manage to find one, you will become wealthy beyond belief.

    The reality is for every 42 gallon barrel of crude you only get 11 gallons of diesel during refining. What we really need is more refineries and more storage.

    Coal on the otherhand is a different story.

  59. BananaJoe3rdWorldPres says:

    Melloncamps voice is shot from smoking for 40 years. His woke music is garbage. Pass.

  60. 3b says:

    Mellencamp s voice has always been gravelly, I don’t deny smoking has had an impact on it. As for his new material, I don’t care, woke or not. He has always been a rebel, perhaps today with his wokeness he is not. But, his original work is fantastic in my opinion, absolutely classic, and that’s why I am going. Shocking to some perhaps but I can separate someone’s art from their politics.

  61. Fast Eddie says:

    Speaking of voices, Bon Jovi sounds like a cat being struck by a city bus. I always said he is the most overrated rock singer but his voice is beyond shot. Not only can’t he sing but when he does, it’s out of key. Oofa.

  62. Fast Eddie says:

    Shocking to some perhaps but I can separate someone’s art from their politics.

    It’s hard for me to do though I saw Roger Waters and it was one of the best concerts I ever saw. And I always said the song “Born to Run” is one of the top 10 greatest rock songs of all time. Springsteen’s politics along with some others disappointed me. I wished they said nothing. Oh well.

    Quick story: I was working on the turnpike as a gas jockey in the early 80s. In pulls a nondescript dark blue Camaro. I walk up to the window and it’s Springsteen. I filled the car… super unleaded (lol), washed the windows, didn’t say a word. He’s about to hand me the money, my buddy comes up to me from the other gas island and I say to my buddy, “Baby you born to run.” Bruce laughs, pulls out the “Born in the USA” album from a box on the seat. It was a promotional version, very rare, gold stamp on the cover. He signs it, gives a signed copy to my buddy. Two weeks later, Bruce comes in again, on a Saturday again. I fill the tank, wash the windows, chat with him for a few.

    Fast forward a few years. Mom yells at Dad to please get rid of some of the stuff in the basement. I had the Springsteen album in a box with other albums; all boot leg albums from concerts… Zep, The Who, etc. Dad tosses the box in the garbage without asking what was in it. I find out a week later. End of story.

  63. BRT says:

    Bon Jovi has coasted on two songs his entire career. For whatever reason, nobody ever gets bored of it.

  64. BananaJoe3rdWorldPres says:

    I like to separate them as well. you’ll get a good shot of politics while you’re there. Count on it. Tell him to stfu and play. And there is declining and collapsing. His voice collapsed.

  65. 3b says:

    Mellencamp says politicians of whatever party don’t give a feck about you: he is right. He has always been a Liberal , and claims he leans a little more Democrat than Republican, but in the end politicians don’t care about anyone but themselves. He also believes big corporations have destroyed the middle and working class. A lot of truth in what he says, and I can’t say I disagree with any of it.

  66. 3b says:

    Fast: Never cared for Bon- Jovi, and prefer Mellencamp to Springsteen, of course I was not born and raised in Jersey, so that makes a difference.

  67. joyce says:

    Individuals in which professions are allowed to voice their political opinions? Actors, musician and athletes are out, of course. Garbage man? Doctor? Finance? Cop? Lawyer? Teacher? Construction? Janitor?

  68. BRT says:

    I’d prefer none of them do. No one wants to hear it. ..but if they do, it should at least be an intelligent statement rather than than rehashing mindless talking points that are not based in reality.

  69. joyce says:

    The only difference between celebrities and non-celebrities voicing their opinions is that the former have a much larger platform at their disposal. Easy solution if what they say is too bothersome… ignore them, don’t buy things they sell or promote. If they become less popular, whether from the ‘grassroots’ or from within their industry, they will either have to rethink what they’re saying or they’ll have much less of a platform in the long run.

    No one wants politics in the workplace or at the dinner table; I guess all that’s left is the Internet.

  70. BRT says:

    Actually, there is another difference. Most of them don’t have the educational background or any expertise on anything they have opinions about.

  71. The Great Pumpkin says:

    Might be some truth to this…

    “Secular inflation. The Fed wants to deny it. But inflation is becoming entrenched in the services side.”

  72. joyce says:

    If we limit the topics of conversation to only ones which we’re all experts on, there won’t be much discussion at all.

  73. Libturd says:

    There was hardly a Republican event where one didn’t hear Blood on the Plough during the 80s. I’ve never been Star struck. I’ve met a lot of famous people over the years. When you have an open conversation with them, you find out they really are little different than you and me. Kind of what BRT said. Most are more lucky than talented and more so less educated.

  74. Fast Eddie says:

    Bon Jovi has coasted on two songs his entire career.

    I said this exact same thing for years. Amazing, isn’t it? And they put him in the Rock n Roll hall of fame. Not that I give it much credit. I mean, an artist like Madonna is inducted but Motorhead and Iron Maiden aren’t?

    As for celebrities and athletes using their fame for political rhetoric, why alienate 50% of your fans? Some have even said it. They’re the smart ones.

  75. joyce says:

    Why potentially alienate a large group of people… because they’re not the brightest bulbs in the shed. Or maybe they’re true believers or both. I wouldn’t do it

  76. BRT says:

    We don’t have to limit conversations. People should be free to discuss, ask questions, and learn. But to act like authority figures on things they have no idea about, is the height of arrogance and often hypocrisy. I’ve watched it happen for the past 15 years on the energy industry, the environment, and now most recently, viruses.

    Primary example. Leo DiCaprio, fantastic actor, amazing, has all these opinions on carbon footprint, doesn’t know what he’s talking about…and then, flies home on his private jet to his yacht the size of the titanic. Guy didn’t even go to college. Why should he open his mouth when he’s never bothered to actually learn anything?

    Greta Thunberg? 16 year old high school dropout who sits in a chair that retails for $8000, gets to lecture us on the energy industry?

  77. Juice Box says:

    re: Bon Jovi – No takers on his NJ crib…$22 Million Ask.. 18,000 sq ft on 15 acres waterfront.. It’s been for sale now for at least 5 years, house looks like it belongs in France.. He decamped to Palm Beach, Florida about 2 years ago.

    BTW Zillow says not worth that much..only 2.6 mil…taxes are $32,307 ……way low I think our governor pays somewhere around $200,000 a year in property taxes.


  78. Juice Box says:

    Remember days of skipping school, racing cars and being cool!

    Nobody here can emulate this. I have a brother who has tried for nearly 35 years now, best he can do is get a new groupie every 6 months…


  79. joyce says:

    That’s fair. I think for some of the types of individuals you mentioned (doctors, etc) society, right or wrong, has automatically made them authority figures and for others (celebrities) they have the appearance of authority figures given their following. Absolutely some have arrogance… absolutely even more are hypocrites… I think that separate, related but separate. Every politician, celebrity, yada yada that espouses one thing while blatantly acting the opposite is a POS. But the original comment was akin to ‘just shut up a play’.

  80. The Great Pumpkin says:

    “There is a liquidity crisis brewing. I spent the week in NY meeting with banks and institutional investors. Sometime next year, it comes to a head.”

  81. The Great Pumpkin says:

    Like so much of Tucker these days, this is an exaggerated, bowdlerized, and politicized description of what is happening. There is a kernel of truth (more on this below) but it is obscured and distorted by the exaggerations.

    First off, it is complete bollocks to say “in 25 days there will be no diesel.” Current inventories–stocks–are about equal to 25 days of consumption. But production continues, at a rate of about 4.8 million barrels per week. So, yes, if US refineries stopped producing right now, in 25 days the US would be out of diesel. But this isn’t France! US refineries will keep chugging along, operating close to capacity, supplying the diesel market.

    Stocks v. flows, Tucker, stocks v. flows.

    Yes, by historical standards, stocks are very low, although there have been other periods when inventories have been almost this low. But low stocks are not a sign of a broken market, or of impending doom.

    Low stocks do happen and periodically should happen in a well-functioning market. That is, “stock outs” regularly occur in competitive markets, for good economic reasons.

    Assume that stock outs never occurred. Well that would mean that something was produced but never consumed. That makes no economic sense.

    The role of inventories is to buffer temporary (i.e., short term) supply and demand shocks. I emphasize temporary because as I show in my book on the economics of storage, storage is driven by scarcity today relative to expected scarcity in the future. A long term demand or supply shock affects current and expected future scarcity in the same way, and hence don’t trigger a storage response. In contrast, a temporary/transient shock (e.g., a refinery outage) affects current vs. future scarcity, and triggers a storage response.

    For example, a refinery outage raises current scarcity relative to future scarcity. Drawing down on stocks mitigates this problem. For an opposite example, a temporary demand decline raises future scarcity relative to current scarcity. This can be mitigated by storage–reducing consumption some today in order to raise consumption in the future (when the good is relatively scarce).

    To give some perspective on what “short term” means, in my book, I show that for the copper market inventory movements are driven by shocks with a half life of about a month.

    Put differently, storage of a commodity (diesel, copper) is like saving for a rainy day. When it rains, you draw down on inventories. When it rains a lot for an extended period, you can draw inventories to very low levels.

    And that’s basically what has happened in the diesel market.

    Carlson is right about one thing: the Russian invasion in Ukraine precipitated the situation. This is best seen by looking at diesel crack spreads–the difference between the value of a barrel of diesel (measured by the Gulf Coast price) and the value of a barrel of oil (measured by WTI):


  82. Juice Box says:

    Down in Toms River for soccer, west of the parkway, huge amount of new townhouse developments and strip malls being built up and down the Rt 9 corridor.

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