Gas...how low can it go?

And what exactly am I supposed to do about that? Overthrow the government? Stage a coo? Or are you implying that I should feel guilty about buying cheap gas?

Yes lots of people are out of work. And others, myself included, are still working but at greatly reduced salary so that more of my employees can stay working. Nearly all who aren't working, including the 1099 gig workers, are eligible for unemployment compensation. That unemployment compensation is worth almost as much as what tons of them normally made, in some cases it will actually pay them more. And while there will definitely be businesses that fail because of this, most will not. Which means lots of those jobs will be back in a month or so.

None of that is meant to imply that this isn't bad because it is. But it could be far far worse than it actually is. I have employees who are asking me to lay them off because they'd rather stay home and collect than show up and work to insure their company is still there for them when this is all over. And you want me to fell guilty about buying cheap gas? Yeah that ain't happening. My company will survive this. The people I have laid off will come back. Or at least most of them will. The ones who have let us know they could care less about trying to keep the company afloat and would rather sit home and collect for as long as possible? Yeah they probably won't be asked back. The company is better off without them.

The thing is, the O&G issues started before the Covid-19 stuff did. Russia and KSA having a hissy fit, which they probably wouldn’t have done had either of them known what was going to happen with the pandemic stuff. They took a step towards resolving the production glut with OPEC today, but it’s going to take a while to dig out of the hole they made.

I don’t think Okie was implying that you should “feel bad” for paying low fuel prices. He was just lamenting that the absurdly low prices cut the legs out from a lot of people, especially those in smaller towns in rural America. The jobs that were cut in O&G probably won’t come back for a year or two. Most of the jobs that were cut/furloughed for Covid will likely be reinstated in a few months.
 
Enjoy the cheap gas. Just remember, for every dime you save on a gallon, it's likely that a couple thousand of your countrymen lost their job.

They are screwed any how unfortunately, at least in the short term. I haven't put more than 30 miles on my cars in the past 6 weeks. I love cheap gas, but what is going on now is stupid. I think part of it is a scheme to take the American companies, especially shale, out. Fortunately, these companies have been resilient to this in the past, plus the new oil deal, reducing production, should stabilize things a bit, while it lasts. OPEC would love the days when we could not produce enough oil and they controlled the price. Hopefully we will never see that again.
 
I just bought 100 gallons of 93oct E0 for the farm equip & plane yesterday for $1.89/gal.

Today I'll be driving to Tulsa & back to pick up the GF's son. I definitely plan to stop at Miami and fill up at $0.98...just to be able to say I did!
 
I don’t think Okie was implying that you should “feel bad” for paying low fuel prices. He was just lamenting that the absurdly low prices cut the legs out from a lot of people, especially those in smaller towns in rural America. The jobs that were cut in O&G probably won’t come back for a year or two.
Roger that, thanks for clarifying. I still don't feel bad about it. Even a little.
 
I think the BJ's discount today was $1.38. I don't really pay attention to gas prices.

A grocery store here that also has gas stations is offering up to $1 off per gallon if you collect enough points buying groceries. I drove past today and the price is $1.47, so 47 cents a gallon.
 
And what exactly am I supposed to do about that? Overthrow the government? Stage a coo? Or are you implying that I should feel guilty about buying cheap gas?

Yes lots of people are out of work. And others, myself included, are still working but at greatly reduced salary so that more of my employees can stay working. Nearly all who aren't working, including the 1099 gig workers, are eligible for unemployment compensation. That unemployment compensation is worth almost as much as what tons of them normally made, in some cases it will actually pay them more. And while there will definitely be businesses that fail because of this, most will not. Which means lots of those jobs will be back in a month or so.

None of that is meant to imply that this isn't bad because it is. But it could be far far worse than it actually is. I have employees who are asking me to lay them off because they'd rather stay home and collect than show up and work to insure their company is still there for them when this is all over. And you want me to fell guilty about buying cheap gas? Yeah that ain't happening. My company will survive this. The people I have laid off will come back. Or at least most of them will. The ones who have let us know they could care less about trying to keep the company afloat and would rather sit home and collect for as long as possible? Yeah they probably won't be asked back. The company is better off without them.

What SoonerAviator said. It's just difficult to see folks happy about something that is going to be devastating to so many in my community, the community itself, and so many around the country. It just sucks all the way around. I didn't mean any offense and didn't mean to imply anyone should feel guilt.
 
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I saw $1.40 here but we have a relatively high gas tax in this state. I'm always conscious to fill up if I can before crossing back over the state line when I travel.
 
Go ahead and point out the undisguised glee you claim exists in this thread. I missed it.

C'mon, it's fairly obvious from context that he's not directing that sentiment at PoA in general. It's the sentiment of the public at large when fuel prices drop, and most citizens don't understand (possibly don't even care) about the repercussions those absurdly low prices have on the O&G industry and the number of jobs that disappear when wild swings occur. O&G industry as a whole will probably lose 30% of the jobs before year end, that's a pretty hefty impact on the US economy, and an even bigger impact on the local economies of states where O&G is the dominant industry.
 
We’ve been buying from our small independent gas station owner. His prices are a tad higher than the corporate owned stores, but we’d rather see any small profit go into his pocket right now. He’s open and providing a significant rural service out here. His station has various supplies that he’s managed to keep in stock, as well as a takeout kitchen for various fast foods and pizza. Not the healthiest fare but nobody delivers out here. We don’t partake too often but there’s still a convenience factor when desired.

As far as the grocery points systems, we’ve chased those in the past, but various sources say the supermarkets here blend the absolute max of ethanol into their base stock to reduce their costs, and we all know it just means you’re paying $10 for the groceries in the cart in the end. No such thing as a free lunch. I don’t really want that much ethanol sitting in tanks that aren’t going anywhere.
 
C'mon, it's fairly obvious from context that he's not directing that sentiment at PoA in general. It's the sentiment of the public at large when fuel prices drop, and most citizens don't understand (possibly don't even care) about the repercussions those absurdly low prices have on the O&G industry and the number of jobs that disappear when wild swings occur. O&G industry as a whole will probably lose 30% of the jobs before year end, that's a pretty hefty impact on the US economy, and an even bigger impact on the local economies of states where O&G is the dominant industry.

Shale gas and shale oil extraction is a technology intensive industry. Home grown technology. A lot of that knowledge and expertise is going to be lost as skilled people get laid off and many of them are forced to find some other career, as the economy recovers, to pay the bills.

The virus is having a much more devastating impact than the Saudi-Russia spat - which had sfa to do with US shale and everything to do with Middle East geopolitics.

Earlier this week I was on the phone with one of my largest clients in the Permian. They've been in Midland for a long time; not a new player that popped up to use NY private equity money and bank debt to play the shale boom. They said it was the worst and most uncertain planning situation they've ever faced. With 75% of the world's commercial aircraft grounded, large parts of the seaborne cargo carriers anchored and much of the world self-isolating in our homes with our industry shut down and our cars parked, there's not enough product take-away. It is now backing up through the refinery, pipeline and storage network as the tanks (at Cushing, OK and elsewhere) and tankers fill up.
This producer has a large portion of its 2020 production hedged between $45 and $49 per barrel. They are about to start shutting in economic production and laying off more employees because there is no place to put it.

Until this COVID-19 virus thing runs its course, the economy is re-started and people are back at work things look pretty dismal. Nobody has any real idea when the all-clear is going to sound to even start that process.

But when we do re-start I sure hope we see some solid investment to produce our own vaccines, our own prescription drugs, our own medical equipment, our own oil and a whole bunch of other critical things we were all totally stupid to have allowed to have been farmed out in the first place.
 
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But when we do re-start I sure hope we see some solid investment to produce our own vaccines, our own prescription drugs, our own medical equipment, our own oil and a whole bunch of other critical things we were all totally stupid to have allowed to have been farmed out in the first place.

Don't lump me in that all, nope, I've been against outsourcing since it started. Back in the 70's, I was a kid and we were a world leader in machine tools. I had a neighbor, who worked at a company called Norton Tool company, it may have been sold to Heald at this point, but that doesn't matter. My uncle worked there too. This neighbor came over one day to ask how my uncle was, then he told me that Ted Kennedy had just spent the past few weeks giving tours to Asian engineers who were allowed unfettered access to the factory with cameras and were given blueprints and technical data on how things were done. This company had just perfected technology that allowed cam shafts to be ground to within 10 millionths of an inch among other things, which was unheard of at that time and meant a shortened to no break in period for car engines. He was incensed, he said he couldn't understand why we are sharing that technology and giving up all the secrets that they as employees were sworn not to share. He said "you watch, within 20 years this company will be closed" I'll never forget that day, and he was right, there's a movie theatre where this company once stood.

Our oil industry needs to be protected because it is the only reason our fuel costs are reasonable now, OPEC knows this and is trying to take it out. These low prices are not good for us in the long run because if our domestic oil production fails, we will be at the mercy of the Middle East once again.
 
Shale gas and shale oil extraction is a technology intensive industry. Home grown technology. A lot of that knowledge and expertise is going to be lost as skilled people get laid off and many of them are forced to find some other career, as the economy recovers, to pay the bills.

The virus is having a much more devastating impact than the Saudi-Russia spat - which had sfa to do with US shale and everything to do with Middle East geopolitics.

Earlier this week I was on the phone with one of my largest clients in the Permian. They've been in Midland for a long time; not a new player that popped up to use NY private equity money and bank debt to play the shale boom. They said it was the worst and most uncertain planning situation they've ever faced. With 75% of the world's commercial aircraft grounded, large parts of the seaborne cargo carriers anchored and much of the world self-isolating in our homes with our industry shut down and our cars parked, there's not enough product take-away. It is now backing up through the refinery, pipeline and storage network as the tanks (at Cushing, OK and elsewhere) and tankers fill up.
This producer has a large portion of its 2020 production hedged between $45 and $49 per barrel. They are about to start shutting in economic production and laying off more employees because there is no place to put it.

Until this COVID-19 virus thing runs its course, the economy is re-started and people are back at work things look pretty dismal. Nobody has any real idea when the all-clear is going to sound to even start that process.

But when we do re-start I sure hope we see some solid investment to produce our own vaccines, our own prescription drugs, our own medical equipment, our own oil and a whole bunch of other critical things we were all totally stupid to have allowed to have been farmed out in the first place.

Absolutely. Lots of talk right now about not allowing anyone to put any oil in the pipeline unless you have storage space secured on the other end. When the market collapses like that, it will take time to get airliners/trains/transport trucks/cruise ships back moving again to help out the demand-side of the equation. The Saudi/Russia spat was just ill-timed (and as you mentioned, likely nothing more than the typical geopolitical nonsense). Lots of players will probably layoff a good portion of their production workforce to conserve cash in the short-term, and may just throw in the towel altogether if they are leveraged heavily enough. Everyone knows that O&G is a cyclical industry and they should expect downturns and layoffs. However, this one went from a fairly decent run of stability and slow climb back toward $60-$70 bbl oil to the bottom falling out in a matter of weeks. Not too many businesses, large or small, can shift gears that quickly.

It would be nice if we took a more in-depth look at what makes sense strategically to produce, at least in large part, here on US soil to avoid those shocks to critical supplies. However, that increased cost isn't usually accepted by the American people and their affinity for cheap goods.
 
It's the sentiment of the public at large when fuel prices drop, and most citizens don't understand (possibly don't even care) about the repercussions those absurdly low prices have on the O&G industry and the number of jobs that disappear when wild swings occur.
Can you blame them? As an individual I have nearly ZERO power to change global demand for oil. I use the fuel that I use. And if I bought 10x more or none at all, it wouldn't move the needle one bit.

Does it suck that those oil workers are out of work? Sure. But did I hold a gun to their heads and make them take a job in such a volatile industry? Oil field trucker jobs pay amazing rates. But there's a reason I never took one.
 
Can you blame them? As an individual I have nearly ZERO power to change global demand for oil. I use the fuel that I use. And if I bought 10x more or none at all, it wouldn't move the needle one bit.

Does it suck that those oil workers are out of work? Sure. But did I hold a gun to their heads and make them take a job in such a volatile industry? Oil field trucker jobs pay amazing rates. But there's a reason I never took one.

I don't think there's anything wrong with enjoying a bit of relief from fuel prices when they've been held at inflated levels. Personally, I don't feel like auto gas prices were excessive prior to recent events, so there wasn't much need for relief. I guess it's because fuel prices are a bit more visible to most people, where they don't notice bread or meat price swings as much.

As far as holding guns to people's heads . . . if a farmer/rancher in Bloomfield, IA goes through a bad year because the US gov't screwed up the market with tariffs or there was a drought, are you going to tell him he should've just done a different job that was less volatile? Some states/regions of the country are heavily leveraged with one or two major industries. When that industry falters, people lose jobs/homes, small towns die, state gov't revenue tanks and services are cut, etc. Not every state is diversified enough to where enormous swings in agricultural or energy segments don't affect a majority of the population. I don't think it's quite as easy as just implying that "they didn't have to work in O&G". Sure, everyone could just move to other areas of the country, but then there would be more people in those states than jobs available. Trust me, most folks in O&G (sans oil barons) would rather the market be steady and predictable so that fuel prices were always reasonable. Unfortunately, we have to deal with those swings and it puts a huge strain on lots of people in OK/TX/KS/ND/SD/CO/OH.
 
As far as holding guns to people's heads . . . if a farmer/rancher in Bloomfield, IA goes through a bad year because the US gov't screwed up the market with tariffs or there was a drought, are you going to tell him he should've just done a different job that was less volatile?
Well that depends. Is the farmer telling me I should feel bad about paying less for my corn puffs because he had a bad year as though I had something to do with it? Most of the farmers I know understand that bad years happen and they accept it as part of the deal.
 
Well that depends. Is the farmer telling me I should feel bad about paying less for my corn puffs because he had a bad year as though I had something to do with it? Most of the farmers I know understand that bad years happen and they accept it as part of the deal.

He might be inclined to tell you to 'shove it' if you were gloating about how nice it was that corn puffs were 50% of their usual cost and you wish it would stay that way, and he should just quit whining about it because no one held a gun to his head telling him to be a farmer . . .
 
He might be inclined to tell you to 'shove it' if you were gloating about how nice it was that corn puffs were 50% of their usual cost and you wish it would stay that way, and he should just quit whining about it because no one held a gun to his head telling him to be a farmer . . .
Well some farmers are jerks that way I guess. o_O
 
I don't think there's anything wrong with enjoying a bit of relief from fuel prices when they've been held at inflated levels. Personally, I don't feel like auto gas prices were excessive prior to recent events, so there wasn't much need for relief. I guess it's because fuel prices are a bit more visible to most people, where they don't notice bread or meat price swings as much.

As far as holding guns to people's heads . . . if a farmer/rancher in Bloomfield, IA goes through a bad year because the US gov't screwed up the market with tariffs or there was a drought, are you going to tell him he should've just done a different job that was less volatile? Some states/regions of the country are heavily leveraged with one or two major industries. When that industry falters, people lose jobs/homes, small towns die, state gov't revenue tanks and services are cut, etc. Not every state is diversified enough to where enormous swings in agricultural or energy segments don't affect a majority of the population. I don't think it's quite as easy as just implying that "they didn't have to work in O&G". Sure, everyone could just move to other areas of the country, but then there would be more people in those states than jobs available. Trust me, most folks in O&G (sans oil barons) would rather the market be steady and predictable so that fuel prices were always reasonable. Unfortunately, we have to deal with those swings and it puts a huge strain on lots of people in OK/TX/KS/ND/SD/CO/OH.

And I would add that those of us in the industry, and/or living in O&G producing areas fully understand, expect, and accept the cyclical volatility that is part and parcel of being involved with it. We understand it much more than anybody, I would venture. However, it's double whammy that is the killer here. The lack of demand due to coronavirus compounds that typical volatility to an extent that none before us have seen in the modern O&G industry. Nobody is blaming members of this forum, and anybody getting their panties in a twist over my comments is reading way too much into them. It was simply a reminder that the cheap gas comes with a major blow to an industry that over 10 million Americans are involved in. It is just unfortunate all the way around. I will also apologize for anything I said that sounded like I blamed anyone, or that I demanded their guilt. Those that know me, would never assume that was my intent here, and I appreciate my friends here that have tried to back me up.

All that said, I'm paying $1.69 for pure dino juice, smack in the middle of oil country, 30 miles from the refinery. The penalties the refinery has to pay for not having sufficient sources of ethanol to blend keeps the price up. Not complaining though. It makes wonderful go-juice for the Skylane and is still way cheaper than 100LL.
 
I think we have 'bottomed out' at around $1.75 to $1.79 here in GA. Almost makes me wonder if there are some taxes based on percentage of price with a minimum cents per gallon rate built in.
 
IL gas tax is 55 cents and federal is 18 cents so it can’t go below 73 cents there. I believe most if not all gas taxes are set levels, not percentages.
 
IL gas tax is 55 cents and federal is 18 cents so it can’t go below 73 cents there. I believe most if not all gas taxes are set levels, not percentages.

I'll have to do some digging on GA taxes. I know it is noticeably cheaper as soon as you cross the state line going into SC or AL.
 
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GA is 35 cents. AL is 21. SC is 23.

Yeah. Just found the info about it: https://dor.georgia.gov/taxes/business-taxes/motor-fuel-tax/calculating-tax-motor-fuel

Looks like a portion of the total tax is percentage based (up to 4.5% in the ATL metro counties and as low as 2% in very rural counties). Looks like there "should" be about a 2 cent drop in the tax on June 1. What a wonky way for calculating fuel tax - based on a location-based tax percentage multiplied by the "average retail price" which is only updated twice per year. I guess that's to smooth the bumps for budgeting purposes?
 
Gasbuddy.com is reporting $0.97 at Oshkosh. :eek:


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And I see this morning is yet again witness to the usual completely idiotic, uninformed mainstream media over-dramatization.

The West Texas Intermediate (WTI) front month futures contract (May 2020) expires tomorrow. That means holders of that contract (which are mainly financial traders/speculators and the oil exchange traded funds or ETFs) either have to sell the contract before expiry, or risk having to take physical delivery in a market that has little demand (due to the COVID-19 economic shut down) and increasingly scarce available-for-contract storage (at Cushing, OK or elsewhere). The ETFs, that never ever take physical delivery, have to roll the contract into the next month by selling May, before it expires, and buying June.

The market does NOT see this oversupply glut lasting very long. The "soon-to-be-extinct" West Texas Intermediate (WTI) May 2020 contract, currently at $2.61 per barrel, is getting breathless air play this morning from the airheads on Bubblevision.

But as I type this the June 2020 contract is trading at $22.06, a contango of $19.45 per barrel. The December 2020 contract is trading at $33.47. And oil one year out, June 2021, is currently being sold for $35.75 per barrel.

Enjoy it while it lasts because the domestic and global oil markets are going to do what they always do in this situation. Rebalance. And that will happen as physical storage, domestic and international, fills beyond the 85% mark. Most likely this quarter.
 
Y’all might want to make a trip to Cushing, OK! Oil companies will currently PAY YOU .66¢ per barrel to take the oil off their hands! WTI for May ‘20 is currently negative for the first time in history.
 
He might be inclined to tell you to 'shove it' if you were gloating about how nice it was that corn puffs were 50% of their usual cost and you wish it would stay that way, and he should just quit whining about it because no one held a gun to his head telling him to be a farmer . . .

Thing is, like now, the farmer may be getting jack diddly for his crop, but corn puffs are still as high as they ever were. Anybody seen retail milk prices come down recently? Me neither.
 
Thing is, like now, the farmer may be getting jack diddly for his crop, but corn puffs are still as high as they ever were. Anybody seen retail milk prices come down recently? Me neither.

Well, corn puffs may enjoy a bit of a higher price for a time, until a competitor comes in and sees the market imbalance. Then a new corn puff maker sells them for less money because there was still a healthy profit to be made when undercutting the higher priced puffs. The market always rebalances.
 
Well, corn puffs may enjoy a bit of a higher price for a time, until a competitor comes in and sees the market imbalance. Then a new corn puff maker sells them for less money because there was still a healthy profit to be made when undercutting the higher priced puffs. The market always rebalances.

Not always, some markets aren't terribly efficient. There are high barriers to entry into corn puff manufacturing and marketing. Few have the capital to compete in commodity business. What generally happens is your box of corn puffs gets smaller or lighter, and incrementally cheaper, and the name brand corn puff maintains market share over the new entry.


In this milk case, a handful of co-ops control the packaging and distribution of product. Since commercial milk buyers are dead in the water, the co- ops don't want to spend the money it would take to re-work product lines for retail distribution. It's cheaper for them to just dump it. No other firm is going to make that investment.
 
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In this milk case, a handful of co-ops control the packaging and distribution of product. Since commercial milk buyers are dead in the water, the co- ops don't want to spend the money it would take to re-work product lines for retail distribution. It's cheaper for them to just dump it. No other firm is going to make that investment.

What stinks about that is that the dairy farmers can't just stop milking. Can't flip the switch on the supply side and their overhead and operating costs are the same whether they ship product or not. Sad state of affairs for livestock farmers across the board right now. I hope something triggers a business opportunity or it forces some flexibility in the supply chain somewhere so things like this aren't as impactful to the ones really doing the heavy lifting (the farmers) in that supply chain.

Signed,
Someone who remembers having to wait to open presents on Christmas morning for his dad to get back home from going to feed the cattle at his feed lot
 
And I see this morning is yet again witness to the usual completely idiotic, uninformed mainstream media over-dramatization.

The West Texas Intermediate (WTI) front month futures contract (May 2020) expires tomorrow. That means holders of that contract (which are mainly financial traders/speculators and the oil exchange traded funds or ETFs) either have to sell the contract before expiry, or risk having to take physical delivery in a market that has little demand (due to the COVID-19 economic shut down) and increasingly scarce available-for-contract storage (at Cushing, OK or elsewhere). The ETFs, that never ever take physical delivery, have to roll the contract into the next month by selling May, before it expires, and buying June.

The market does NOT see this oversupply glut lasting very long. The "soon-to-be-extinct" West Texas Intermediate (WTI) May 2020 contract, currently at $2.61 per barrel, is getting breathless air play this morning from the airheads on Bubblevision.

But as I type this the June 2020 contract is trading at $22.06, a contango of $19.45 per barrel. The December 2020 contract is trading at $33.47. And oil one year out, June 2021, is currently being sold for $35.75 per barrel.

Enjoy it while it lasts because the domestic and global oil markets are going to do what they always do in this situation. Rebalance. And that will happen as physical storage, domestic and international, fills beyond the 85% mark. Most likely this quarter.

Thanks for this explanation, too lazy, like most, to figure it out myself. My biggest fear with this is that when things start rolling again we will end up in a shortage situation. In my view, that situation, when prices start rising due to demand exceeding supply is why our domestic supply capability has been so crucial over the last 8 or so years. The price hits that sweet spot, which recently seems to be in the $50 bbl range maybe (?), the domestic supply goes into overdrive balancing out demand, keeping us from $100 or $150 bbl, a price that is too high and kills the economy. The cartels have been trying to take our domestic companies out of the picture for years by over producing. This crisis may do it, take out these domestic companies, which would be devastating for the American consumer. Hopefully they will weather this storm.
 
What stinks about that is that the dairy farmers can't just stop milking. Can't flip the switch on the supply side and their overhead and operating costs are the same whether they ship product or not. Sad state of affairs for livestock farmers across the board right now. I hope something triggers a business opportunity or it forces some flexibility in the supply chain somewhere so things like this aren't as impactful to the ones really doing the heavy lifting (the farmers) in that supply chain.

Signed,
Someone who remembers having to wait to open presents on Christmas morning for his dad to get back home from going to feed the cattle at his feed lot

Some things are getting done. Sodexho is usi g some of their closed cafeterias in corporate settings as outlets for commercially packed eggs, dairy and other items. I think Chik-fil-a is doing a little too. Don't see why school cafeterias couldn't. Lots of opportunities for creative thinkers.
 
Regular ethanol-free gas is still well over $2 here. A ripoff.
 
Regular ethanol-free gas is still well over $2 here. A ripoff.

That’s crazy. We saw two stations in Parker, CO drop to $1 and $0.99 as a gimmick this week.

The cool one was one station owner said screw it, and offered all nurses a free fill up of gas and windshield washer fluid done by his teenage kids. LOL. He clearly needed them out of the house.

Karen didn’t go over that day (that’s still a drive for us), but she appreciated the gesture.
 
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