Has the alliance between the oil states and west changed

Iran is bringing a lot of pressure. Has Opec changed its tune.

Going into Memorial Day be safe out there. I do not know what will happen next. I am not claiming that but someone is pumping oil. Might even be the Russians.


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I am not sure exactly what you are talking about, but thanks for the chart. I have not looked at West Texas Intermediate in a long time. I put the 10 year moving average on the chart and we are about 15 dollars a barrel above it. It has been my rule of thumb for about a quarter century that WTIC above the 10 year moving average has a drag on the economy. A drag can be a slowing economy or inflation. As all of the the three primary inputs, energy, labor and capital play off of each other there is no hard rule. Rather I look for blemishes in the economy to show up with any of the three inputs mis priced. Because of this belief, I would consider persistent inflation to be at least partly caused by elevated oil prices for the last two years. This is not a straight relationship, the shortage of labor and low capital costs would be responsible for high energy costs. However, I am guessing the Ukraine war ath Israel unrest and its fallout with shipping is causing the elevated prices as much as anything.

In the other hand, the normalized capital cost and the easing of the labor shortage may be causing enough demand destruction to drop prices. A steady drop in to low 60’s high 50’s would indicate a market coming into alignment and economy coming into sweet spot of sustainable growth. However, that is not what generally happens, generally the market collapses and all the spigots get turned off and lot of wealth is destroyed and a lot of labor is thrown into turmoil and a lot of capital is mis allocated.

Oh well. its probably a go time to buy a gas guzzling boat because next summer you will be able to run it cheap.


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The competition between Iran and SA has heated up.

Usually into Memorial Day prices rise. But this year looking at that chart more oil is being pumped than usual. More oil may be refined as well.

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