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Saturday, August 29, 2020

Zavanna's Panther Wells -- Production Updated -- August 29, 2020

Production data for the Zavanna Panther wells, updated for the month of July, 2020. The Zavanna Panther wells are tracked here. This page will not be updated.

The Panther wells:
  • 36421, SI/NC-->conf-->SI/A, Zavanna, Panther 16-21 2TFH, Stony Creek, producing as of 2/20; cum 118K 7/20:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-202031115201097519640000
BAKKEN6-2020301718715229244982523723916874
BAKKEN5-2020261653214531217891360312470746
BAKKEN4-20202826367238943288724090223971276
BAKKEN3-20203141254363324960354235486295145
BAKKEN2-2020655505131245075544538273
  • 21226, 996, Zavanna, Panther 16-21 1H, Stony Creek, t4/12; cum 468K 7/20; off line 5/19; remains off line 10/19; back on line 2/20; nice jump in production; note jump in production, 7/20:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-20203110133965319315000
BAKKEN6-20203081897259191941344012577416
BAKKEN5-20203182527253237991285712033363
BAKKEN4-202028680261843058593758737221
BAKKEN3-20203172106350559031300112314225
BAKKEN2-2020399291835262317225517
BAKKEN1-20200000000
BAKKEN12-20190000000

  • 36420, SI/NC-->SI/A, Zavanna, Panther 16-21 3TFH, Stony Creek, t--; cum 97K 7/20;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-202031130011238617611000
BAKKEN6-2020301597714161210442025018989814
BAKKEN5-2020241170610289167741581014856596
BAKKEN4-2020281507713692249921833517426492
BAKKEN3-2020313507330889546523132629956908
BAKKEN2-2020860205566165159177899563
  • 36419, SI/NC-->SI/A, Zavanna, Panther 16-21 4H, Stony Creek, t--; cum 123K 7/20;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-202031154081466719012000
BAKKEN6-2020301765215597228842722025875898
BAKKEN5-2020291619614236190562154320363748
BAKKEN4-20202729767267703271633616320531161
BAKKEN3-20203141485365364505947606460051139
BAKKEN2-2020827652556147453378318673
  • 36418, SI/NC-->SI/A, Zavanna, Panher 16-21 5TFH XE, Stony Creek, t--; cum 86K 7/20;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-20203110339985215469000
BAKKEN6-202030111669905173791983018815568
BAKKEN5-20202896988524151371467513796461
BAKKEN4-2020281643614948244802014319193533
BAKKEN3-2020313048126845419043353032269799
BAKKEN2-2020138289766427729105219622705

 


The CLR Anna Wells In Last Chance Oil Field Are Now Back On Line -- August 29, 2020

Wow, this is great news. Production data for the month of July, 2020, is not starting to be populated over at the NDIC site, but wow, there are still a lot of wells off line. I had difficulty finding any wells that were taken off line the past few months coming back on line. 

One exception: CLR's Anna wells in Last Chance oil field which are tracked here. This page won't be updated.

The wells and recent production data:

  • 30157, 2,057, CLR, Anna 5-34H, Last Chance, API: 33-105-03914, t7/17; cum 242K 7/20; holding up well; producing 15,000 bbls in 10/17; produced 9,000 bbls in 5/18; produced 3,000 bbls in 7/19 but on line only 24 days; full 30 days in 9/19, 4,400 bbls; (up m/m); holding steady, 10/19;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-20203128182365345533452377225
BAKKEN6-2020005700000
BAKKEN5-2020758248684810650577
BAKKEN4-2020292711279130684229653697
BAKKEN3-20203129282575292741843053708
  • 30156, 1,194, CLR, Anna 4-34H1, Last Chance, t8/17; cum 136K 7/20; production falling; API: 33-105-03913, producing 14,000 bbls in 10/17; produced 8,000 bbls in 1/18; produced 2,000 bbls in 12/18; 9/19; now at 2,300 bbls/month; huge jump m/m, 9/19; holding steady, 10/19;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-20203113021093529936652663252
BAKKEN6-20200000000
BAKKEN5-2020001920000
BAKKEN4-2020251097115340553495533056
BAKKEN3-20203113121158516440962989693
  • 30155, 1,306, CLR, Anna 3-34H, Last Chance, t7/17; cum 136K 7/20;  production falling; API: 33-105-03912, producing 14,000 bbls in 10/17; produced 2,000 bbls in 3/18; produced 2,500 bbls in 12/18; only 1,000 bbls in 7/19; only 14 days in 9/19; down to 370 bbls/month; huge drop m/m, 9/19; huge jump in production, 10/19;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-2020311004843697721251260119
BAKKEN6-20200000000
BAKKEN5-202000750000
BAKKEN4-20201142857518411258191100
BAKKEN3-20203111751072374341143002696
  • 30154, 1,320, CLR, Anna 2-34H, Last Chance, API: 33-105-03911, t7/17; cum 158K 7/20; production holding up; producing 10,000 bbls in 10/17; produced 7,000 bbls in 3/18; produced 2,500 bbls in 12/18; only 5 days in 9/19; down to 370 bbls/month; huge drop m/m, 9/19; huge jump in production, m/m, 10/19;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-202021742623263833222583244
BAKKEN6-20200000000
BAKKEN5-2020002310000
BAKKEN4-20202913231275450478211196838
BAKKEN3-2020149681011293347973500812
  • 32969, 1,391, CLR, Anna 9-34H1, Last Chance,  API: 33-105-04292, t8/17; cum 144K 7/20; production falling; producing 16,000 bbls in 10/17; produced 8,500 bbls in 4/18; producing only 400 bbls in 12/18; and only produced for 16 days in 3/19; produced only 145 bbls in 6/19; this one could be the first to go inactive; back to 1,000 bbls in 9/19; at 1,400 bbls,10/19;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-20202988236032925524
BAKKEN6-20200000000
BAKKEN5-2020002110000
BAKKEN4-2020251208130234984929754309
BAKKEN3-20203116141455315553103874899
  • 32968, 920, CLR, Anna 8-34H1, Last Chance, API: 33-105-04291, t9/17; cum 126K 7/20; okay; producing 15,000 bbls in 10/17; producing 5,700 bbls in 5/18; produced only 900 bbls in 12/18; production back to 1,000 bbls over 23 days; 9/19; off line, 10/19;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-20203116602193453664385197492
BAKKEN6-202030152625395388713004054
BAKKEN5-20203118542976452672703644
BAKKEN4-2020231466121031932694412355
BAKKEN3-20200000000
  • 32967, 1,104, Anna 7-34H, Last Chance, t7/17; cum 172K 7/20; maybe improving (5/19); API: 33-105-04290; producing 20,000 bbls in 10/17; produced 8,000 bbls in 3/18 (only 21 days); produced only 700 bbls in 12/18 and on-line for the entire month; at 2,500 bbls/month, 9/19; now down again, 10/19;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-20202352940121615615
BAKKEN6-20200000000
BAKKEN5-202000520000
BAKKEN4-20201129941922631757271536
BAKKEN3-202031908821646546813416792
  • 32966, 1,391, CLR, Anna 6-34H1, Last Chance, t8/17; cum 153K 7/20; production improving nicely (5/19); API: 33-105-04289; producing13,000 bbls in 10/17; produced 6,400 bbls in 4/18; produced 3,000 bbls in 12/18; produced almost 5,000 bbls in 6/19; around 3,500 bbls in 7/19; huge drop, down to 340 bbls over 30 days, 9/19; 800 bbls, 10/19;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-20200000000
BAKKEN6-20200000000
BAKKEN5-202000910000
BAKKEN4-20201052173024673352512931
BAKKEN3-202031158713927840847461831434

Sina -- Drums -- Nothing About The Bakken -- August 29, 2020

We'll start with this one for obvious reasons:

But if you have the time, I highly recommend you watch this next one. It's long but incredibly good. Some time ago, a long time ago, on the blog I mentioned that the drummer is the most important member of any rock and roll group. I think Sina would agree:

You can explore YouTube for Sina. 

Over at "Fugue" I've included two more Sina videos, including the one I saw first, and perhaps the one I enjoy most.

Oh, one more thing. If you like Sina, see her little sister, Milena

Just think, all this and more, with your subscription to The Million Dollar Way. What a great country!

Why I Love To Blog -- They Must Be Reading The Blog -- August 29, 2020

 I posted this note about 9:00 a.m. this morning. Two hours later, ZeroHedge posts this story:

While mayor Lori Lightfoot continues to try and assure the public that she has everything under control, the exodus from Chicago as a result of the looting and riots is continuing. Citizens of Chicago are literally starting to pour out of the city, citing safety and the Mayor's ineptitude as their key reasons for leaving. 

Hilariously, in liberal politicians' attempt to show the world they don't need Federal assistance and that they don't need to rely on President Trump's help, they are inadvertently likely creating more Trump voters, as residents who seek law and order may find no other choice than to vote Republican come November. 

And even though residents understand the looting and riots in some cases, they are not waiting around for it to get better on its own, nor are they waiting around for it to make its way to their house, their families or their neighborhoods.

One 30 year old nurse that lives in River North told the Chicago Tribune: "Not to make it all about us; the whole world is suffering. This is a minute factor in all of that, and we totally realize that. We are very lucky to have what we do have. But I do think that I’ve never had to think about my own safety in this way before.”

The city's soaring crime has been national news this year and many residents are claiming they "no longer feel safe" in the city's epicenter, according to the Tribune report. Aldermen say their constituents are leaving the city and real estate agents say they are seeing the same. 

The "chaotic bouts of destruction in recent months" are the catalyst, the report says.

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Politics

It's agreed: Joe Biden does not want to debate Trump. His supporters are telling Joe Biden not to debate Trump.

When that story line changes -- when Joe Biden begs to debate Trump -- one will know what Democrat internal polling is showing. Link here

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ESG

The folly of "Woke Capitalism."

Absolutely Predictable -- I Knew It Was Bound To Happen -- Flattening "Seasonal Peaks" -- August 29, 2020

Parents working from home and their student-children attending school from home, can "go anywhere/be anywhere" and still show up for "work" and "school." 

Already, I'm hearing parents planning cross-country trips to Florida or California -- two- or three-week vacations -- but still attending school and going to work.

Apple will sell a lot of mobile devices; RV manufacturers might do well; broad-band operators will be selling more bandwidth; gasoline / diesel is inexpensive; and it goes on and on. 

Seasonal peaks for Disneyland and other theme parks could flatten out. You heard it here first.

What a great country.

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Hope Springs Eternal

I'm watching a lot of golf, and then NASCAR later tonight, and I'm noticing a lot fewer masks being worn. And many folks -- even those national politicos advocating masks -- are seen wearing them around their necks, and / or only over their mouths.  

The Daytona stands -- a pretty good showing. Not much social distancing in the big scheme of things. Is anyone wearing a mask in the stands? I don't think so. But the drivers are. What's more dangerous: driving 200 mph in an-ethanol-fueled car or the virus? Speaks volumes about rational thinking.

Wow, so much to watch -- and I don't even have Netflix, Roku, Disney+, HBO, or the Playboy Channel. LOL. Does the latter even exist any more?  And if things really get bad, somewhere, on some station, 24/7, they are always airing The Bourne Ultimatum, or a Mark Wahlberg action movie. I like the Mark Wahlberg action movies way more than Tom Cruise movies. It's a close call between Mark Wahlberg and Matt Damon. Mark Wahlberg action movies are probably the best; occasionally I enjoy a (small) bit of Harrison Ford and Sean Connery in the Indiana Jones series. Can watch some of these action shows over and over. 

What amazes me, I can never find a David Lynch movie on Spectrum cable. My hunch: David Lynch has a tight, tight contract / licensing fee.

Distillate Fuel -- August 27, 2020

 From last month, July 22, 2020, Reuters:

U.S. crude oil and distillate inventories rose unexpectedly and fuel demand slipped last week, the Energy Information Administration said on Wednesday, as a sharp outbreak in coronavirus cases hit U.S. consumption. [As a sharp outbreak in coronavirus cases hit US consumption? Say what? The coronavirus pandemic has been going on since at least March, 2020, in US.]

U.S. crude production ticked higher and refined products supplied, a proxy for fuel demand, declined. The market has recovered from the doldrums of April, when U.S. prices briefly dropped to more than negative-$40 a barrel, as producers trimmed supply due to a slump in demand amid lockdowns to control the pandemic. [The "-$40/bbl" has become a meme -- in reality it was an anomaly reflecting the imperfections, the chaos, the imbalances of an energy revolution. The issue was quickly resolved.]

Crude inventories rose 4.9 million barrels in the week to July 17 to 536.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.1 million-barrel drop. Production rose to 11.1 million barrels per day, up 100,000 bpd.

Distillate stockpiles, which include diesel and heating oil, rose 1.1 million barrels to 177.9 million barrels, their highest since December 1982, data showed. Analysts had expected a 618,000-barrel drop.

Can anyone really take any of this seriously? Do folks really think analysts have such incredible precision, such incredible crystal balls? Distillate in storage is trending toward 200 million bbls; week-over-week, inventories rose by 1.1 million bbls (1.1 / 176.8 = 0.6% increase week-over-week). But even worse, the forecast was for a change of 618,000 bbls from 176.8 million = 0.3% change.

The takeaway is simply this: US distillate stockpiles are at their highest since 1982, almost forty years ago, Ronald Reagan was in his second year of his eight-year presidency. And this week, the US distillate inventory rose once again.

Idle Rambling On A Saturday Morning -- August 29, 2020

First thing that appeared in my 'in-box" this morning, from SeekingAlpha: the US is going into hyperinflation. We won't know for many years, of course, but I expect to see some scholarly articles on this very phenomenon: to what extent national debt drives inflation. Whether that linked article has validity or not, it lost all credibility when near the end it turned out to be nothing but another "gold" article. The contributor noted Warren Buffett added "gold" to his portfolio. Did Buffett add "gold" to his portfolio or did he add miners or did he add both? It makes a huge difference.

For ordinary folks not interested in gold, would the next best hedge against inflation be buying a home? Based on top stories of the week, it certainly seems a lot of folks are doing just that, buying new homes, although the real reason, I assume: the low interest rates, not as a hedge against inflation.

However.

I doubt anyone wakes up on a Saturday morning and says, "hey, mortgage rates are really, really low. Maybe I need to buy a house."

I think it works the other way around. Folks have a reason (other than mortgage rates) to buy a house. The ultimate decision to buy, after considering the other 37 reasons to buy or not buy, is the the monthly cash flow. And maybe the down payment. 

Could the surge in home buying have less to do with low interest rates and more to do with folks fleeing New York, Seattle, San Francisco, and Chicago? One thing I've noted after ten years of blogging: it doesn't take much to move the needle sometimes. I really have trouble imagining rural Americans buying houses moving that needle. If there is a surge in house buying, it has to be coming from the major population centers. And that means high-income families, or at least families paying taxes.

Why did Willie Sutton rob banks? That's where the money was. Why are home sales surging? Fleeing high-tax states, flee Antifa, and fleeing mostly peaceful riots.

*********************************
What Causes Inflation

See this article. See this post.


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What Causes Color Blindness?


I find these articles incredibly interesting considering that much of this was only "discovered" after 1986.

PCM, April 13, 2012:

In 1986, Nathans and colleagues isolated and sequenced the genes encoding the human long wavelength (L), middle wavelength (M) and short wavelength (S) cone opsins and took the first steps toward testing the long-held, two-part hypothesis that (1) variation in the amino acid sequences of the cone opsins are responsible for the spectral differences among the photopigments that all share the same 11-cis retinal chromophore, and (2) alterations in the cone opsin genes underlie inherited color vision deficiencies. 
Findings from these studies both confirmed what previous genetic studies had suggested, and they produced several surprises. As predicted by inheritance patterns of red-green and blue-yellow color vision deficiencies, the genes for human long-wavelength (L) and middle-wavelength (M) cone opsins were localized to the X-chromosome at Xq28, and the gene for the short-wavelength (S) cone opsin to an autosome, chromosome 7 at 7q32 . 
The official genetic designations for the L, M and S opsin genes are OPN1LW, OPN1MW, and OPN1SW, respectively. 
OPN1LW and OPN1MW are arranged in a tandem array. Among individuals with normal color vision there is variability in the number of OPN1LW and OPN1MW genes per X-chromosome array, with more variability in the number of OPN1MW than in OPN1LW genes; thus, contrary to expectation, most people with normal color vision do not have just one L and one M gene. 
OPN1LW and OPN1MW are nearly identical to one another, sharing more than 98% nucleotide sequence identity, whereas they share only about 40% nucleotide sequence identity with OPN1SW, indicating that OPN1LW and OPN1MW arose via a relatively recent gene duplication. 
Because of their similarity, the L and M opsin genes are prone to unequal homologous recombination, which has profound implications for visual function.

NIH, August 17, 2020: color vision deficiency.

Lyonization, NIH

Lyonization is commonly known as X-inactivation. In mammals, males receive one copy of the X chromosome while females receive two copies. To prevent female cells from having twice as many gene products from the X chromosomes as males, one copy of the X chromosome in each female cell is inactivated. In placental mammals, the choice of which X chromosome is inactivated is random, whereas in marsupials it is always the paternal copy that is inactivated.

Dinosaurs, monkeys, and humans, from Richard Dawkins' The Ancestor's Tale:

During their formative megayears, mammals were creatures of the night. The day belonged to dinosaurs, who probably, if their modern relatives (birds) are any guide, had superb colour vision. So, we may plausibly imagine, did the mammals' remote ancestors, the mammal-like repties, who filled the days before the rise of the dinosaurs. 

But during the mammals' long nocturnal exile, their eyes needed to snap up whatever photons were available, regardless of color. Not surprisingly, colour discrimination degenerated. 

To this day most mammals, even those who have returned to live in the daylight, have rather  poor colour vision (deer hunters use that to their advantage in the US) with only a two-colour system ("dicrhomatic"). This refers to the number of different classes of colour-sensitive cells -- "cones" -- in the retina.

Humans and Old World monkeys have three: red, green, and blue, and are therefore trichromatic, but the evidence suggests that we regained a third class of cone, after our nocturnal ancestors lost it.

Most other vertebrates, such as fish and reptiles but not mammals, have three-cone ("trichromatic") or four-cone ("tetrachromatic) vision, and birds and turtles can be even more sophisticated. 

Now, the New World monkeys:

Again, the "blue gene" sits on an autosome in both males and females, present in all individuals, but the red and green genes sit on the "X" chromosome, the female sex chromosome. 

The red and green genes, on the X chromosome, are more complicated. Each X chromosome has only one locus where a red or a green allele might sit.

Since a female has two X chromosomes, the has two opportunities for a red or green gene. But a male, with only one X chromosome, has either a red or a green gene but not both. (Again, we are talking about New World monkeys, not humans.)

So a typical male New World monkey has to be dicrhomatic. He has only two kinds of cones: blue plus either red or green. By our standards, all male New World monkeys are colourblind, but they are colourblind in two different ways: some males within a population lack green opsins, others lack red opsins. All have blue.

Females are potentially more fortunate. Having two X chromosomes, they could be lucky enough to have a red gene on one and a green gene on the other (plus the blue which again goes without saying). 

Such a female would be a trichromat. But an unlucky female might have two reds, or two greens, and would therefore be a dichromate. By our standards, such females would be colourblind, and in two ways, just like males.

By the way, humans are more closely related to Old World monkeys (Africa) than New World monkeys (South America). Humans are more closely related to apes, than to monkeys, and there are those who say Old World monkeys are "apes with tales" whereas New World monkeys are "true" monkeys.

Why Are Refiners Continuing To Produce So Much Distillate Fuel? -- August 29, 2020

Among the many things that don't make sense this year, one of the most glaring: refiners continue to add more distillate fuel to US inventories. 

Someone well versed in the energy sector wrote me, saying that it made no sense; he couldn't come up with any reason why refiners would do this.

I suggested that an analogy may be natural gas production in oil plays. For those in the Bakken, natural gas production is a necessary hassle / expense. One can't produce oil without producing natural gas, even in an oil play, and it gets worse as the oil field matures. 

I suggested the same might be true for refiners. A refinery is a complex operation made up many parts, perhaps not unlike a Rube Goldberg machine. Perhaps one can't simply turn off the one part of the refinery that makes distillate fuel if one wants to keep the entire operation running.

I don't know. 

The reader was hoping that someone with a background in refinery operations might weigh in, weighing in on whether there is some validity to that possibility

Links of interest:

 From last month, July 22, 2020, Reuters:

U.S. crude oil and distillate inventories rose unexpectedly and fuel demand slipped last week, the Energy Information Administration said on Wednesday, as a sharp outbreak in coronavirus cases hit U.S. consumption.

U.S. crude production ticked higher and refined products supplied, a proxy for fuel demand, declined. The market has recovered from the doldrums of April, when U.S. prices briefly dropped to more than negative-$40 a barrel, as producers trimmed supply due to a slump in demand amid lockdowns to control the pandemic.

Crude inventories rose 4.9 million barrels in the week to July 17 to 536.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.1 million-barrel drop. Production rose to 11.1 million barrels per day (bpd), up 100,000 bpd.

Distillate stockpiles, which include diesel and heating oil, rose 1.1 million barrels to 177.9 million barrels, their highest since December 1982, data showed. Analysts had expected a 618,000-barrel drop.

Hurricanes? Waffle House Index; US Economy? The LEGO Index -- August 29, 2020

These LEGO items are all on backorder. I could add a few more but this makes the point.

In addition to these items being on backorder, there is an even larger number of items classified as "hard to find" but not on backorder. Link here.

Backorder. Note the prices. By the way, there has been "no" inflation in the price of LEGO products for the past several years.


What Causes Inflation? -- August 29, 2020

Despite Jay Powell's speech this week ("inflation is not our main worry"), a recurrent theme on CNBC this past week, and in the business pages, has been talk about inflation.

The first thing that appeared in my 'in-box" this morning, from SeekingAlpha:  "the US is going into hyperinflation."

We won't know for many years, I suppose. But whether that article has validity or not, it lost all credibility for me when near the end it turned out to be nothing more than another "gold" article. The contributor noted Warren Buffett added "gold" to his portfolio. Did Buffett add "gold" to his portfolio or did he add miners or did he add both? It makes a huge difference.

What causes inflation?

Years ago I bought into that argument that high national debt causes inflation. About two years ago, I "converted." I no longer bought into that argument. 

I was converted when I started reading articles suggesting that increasing debt would cut into GDP growth but even under worse-case scenarios (at that time) the impact would be marginal. 

I don't follow macroeconomics very closely; I certainly haven't paid attention to the US history of the inflation rate. So let's take a look (see this link). 


To put that table in perspective, remember: the Fed is shooting for a 2% inflation rate. 

During my morning swim I thought about inflation and what drives it. For me, it comes down to this: a shortage of "things." 

A shortage of "things." A shortage of essentials. A shortage of commodities. A shortage of workers. 

I googled "what causes inflation shortage of goods debt."

This was the first hit, from economicshelp.org. 

From that site, definition:

Inflation means there is a sustained increase in the price level. The main causes of inflation are either excess aggregate demand (AD) (economic growth too fast) or cost push factors (supply-side factors).

From that linked site:

  • Summary of main causes of inflation
    • demand-pull inflation – aggregate demand growing faster than aggregate supply (growth too rapid) 
    • cost-push inflation – For example, higher oil prices feeding through into higher costs. 
    • devaluation – increasing cost of imported goods, and also the boost to domestic demand. 
    • rising wages – higher wages increase firms costs and increase consumers’ disposable income to spend more. 
    • expectations of inflation – causes workers to demand wage increases and firms to push up prices. 

Comments:

  • interestingly, I don't see national debt as one of the five major causes of inflation; one might argue that "devaluation" would fit but then one looks at the definition of "devaluation: increasing cost of imported goods"; anyone seeing that?
  • cost-push inflation as the #2 cause is not interesting; it would be expected. But using higher oil prices as an example is interesting; it raises two issues, which I will get back to later (maybe); for now, all I will say is that oil prices are the least of my worries when it comes to inflation;
  • wage increases, regardless how it happens; sure, that's gonna happen (eventually) but it appears any increase mandated by government will be marginal at best; 
    • right now, by the way, the discussion has changed from "my wages need to be increased" to "I need a job"; and, many of those needing a job, also need child care (most child care centers are either closed, or enrollment has been curtailed, by mandates);
  • I may be completely wrong; I may be thinking too simplistically, but Jay Powell (the "Fed") sees deflation as a much bigger risk than inflation. And as hard as the Fed works on hitting its inflation target, they are now focused on jobs -- which, I think is a euphemism for "lower rates for longer;" bully pulpit to get Congress to pass another huge "stimulus" bill to help stop companies from laying off employees;

Getting back to the price of oil and inflation.

When I look at the graphic at this page, the relationship between the price of oil and inflation raises a "chicken and egg" question.


But let's buy into the argument that the price of oil can cause inflation. Two immediate questions come to mind:

  • what's the boundary at which the price of oil meaningfully impacts inflation; is it the actual price or is it the velocity in the change of price? Is a surge in the price of oil from $40 to $80 over a short period worse than a melt-up from $40 to $80?
  • the second question: for the average American, where does the price of oil impact most? travel expenses (airlines, gasoline) or Walmart products? I think that's a bigger factor than the price of oil, per se.

I'll quit here now. Lots to digest. 

But one last thought. I agree with Jay Powell. Right now the biggest problem is the number of Americans not working; that number will jump in September. I expect the major story in September will be the number of Americans being laid off. Linked above; here it is again.