Friday, June 24, 2011

$6 Billion in Oil

U.S., allies to release 60 million barrels from oil reserves

$6 billion is all it took to play a game of whack-a-mole with oil speculators.

I know what you are thinking. $6 billion sounds like a lot of money. I can't disagree.

However, we borrow about $1,700 billion per year just to keep the party going. We could lose $6 billion in the couch cushions and not even know it.

Just trying to put it in perspective.


Stagflationary Mark said...

For those who appreciate a pillar of retail strength, I see that Sears is in the news again today.

MaxedOutMama said...

Mark, I just wished to convey that the Sears stuff if the pillar of sarcasm. You may have reached a personal best.

There's always the chance of a peakier peak, though, and think of the bountiful material with which you have to work!

I agree that 6 billion is nothing. For example, they are looking to pass the hat for at least another 100 billion to keep Greece staggering on for another year.

Mr Slippery said...

The scary thing is that they dumped part of the strategic reserves and it knocked oil all the way down to $90. Take that, speculators, eat that $4 loss.

What are they going to do in 3 months when it is back at $100, unemployment is still over 9% and the election is 12 months away? Dump more political, strike that, strategic reserves?

Oil is going to defy Fed manipulation and drive a stake through the heart of the vampire economy. (vampire seems to work better than zombie here).

Stagflationary Mark said...


I thought it was the "softer side" of sarcasm. ;)

MaxedOutMama & Mr Slippery,

I think the oil move was one of desperation. If anything, it makes me more stagflationary long-term.

Price controls never work. If we are now to the point when we are willing to try them then we are in big trouble.

I am no more a fan of using emergency oil reserves to control prices than I would be using my emergency toilet paper reserves to temporarily control my toilet paper expenses.

Now we know how rigged oil futures are - Jim Cramer

All people did Thursday when I asked them about this Strategic Petroleum Reserve gambit was tell me how silly it was, how it won't work and how it is just a sign of desperation.

Cramer disagrees with me. All we need now is for Jeremy Siegel to claim the brilliance of the maneuver too. Then we'll know for sure that we're doomed.

Stagflationary Mark said...

Put another way, I did not expect oil to hold at the $100 level back in late 2009. I did not envision this as the reason we'd be seeing $90 though.

November 9, 2009
I'm Deflationary

As such, I am changing my short-term inflation mood in the upper left hand corner of my blog to show my deflationary bias. That doesn't mean that I think oil can't make it to $100. Who knows? I don't think it will stay there if it does though, any more than it could stay at $140 the last time.

This oil dumping move might actually change my opinion going forward.

In just the last few years we've seen an extreme oil price of $145 and another extreme of $30. The average is roughly $88 which is right where we are now.

With unemployment where it currently is, heaven help us all if $88 is a fair value going forward. In nearly the words of Yoda, "Much pain coming there may be. Hmmmmmm."

Stagflationary Mark said...

(The $88 is an average of the two extremes.)

Stagflationary Mark said...

Sears is at it again.

See #5.