Biden Administration to Buy Three Million Barrels of Oil
The move appears to signal an end to the government’s effort to sell oil from a strategic reserve to help tamp down energy prices, which soared after Russia’s invasion of Ukraine.
By Clifford Krauss, The New York Times,
Dec. 16, 2022
Three million barrels, which represents roughly 15 percent of daily U.S. demand for oil, is quite small compared with the 180 million barrels the administration has sold from the reserve since the Russian war began. … [end quote]
The price of Crude Oil Prices: West Texas Intermediate (WTI) peaked at $123 on June 8, 2022. It’s now $73 a barrel.
Gas prices have also dropped sharply, now $3.24 a gallon.
I don’t know whether the sale of crude from the Strategic Petroleum Reserve actually helped push down the price of oil. Buying the small amount the government plans now probably won’t be enough to push it up.
The question is: how will energy stock prices be affected? It’s typical for energy use to drop during a recession and the stock prices follow.
There’s plenty of talk out there that it may not work this time around. Because oil stock prices didn’t drop nearly as much as the oil commodity dropped. XOM is still higher than when I sold it the day oil cracked $100/bbl.
Weird. I didn’t see anything inappropriate to board rules, especially since Wendy herself potentially brought up an ‘offending’ word (the actual name of a political leader), which I also think is perfectly OK.
I am not sure exactly what you are saying, so I am not sure I am actually disagreeing are not.
But, while not a cartel, there was a swing producer that set the price of oil from the 1930’s to the 1970’s. That producer was Texas and the organization that controlled the price of oil was the Texas Railroad commission.
In fact, OPEC was modeled on the Texas Railroad commission. So while not a cartel, we did have some one controlling the price of oil for 35 years from the 1930’s to the early 1970’s.
Opec has been working with the free markets to manage the supply. Opec steers the price of oil. More so than the industrial nations in the west.
Back studying econ there were writings on responses to Opec’s control of the oil supply. One hypothesis which the academics thought was very powerful, more powerful than Opec over oil and NG, would be the formation of a “Western Cartel”. The Western Cartel to manage the price of oil.
Opec can cut production but then the western cartel will demand we pay less for oil even if we do not have enough oil. In other words by hook or by crook the western cartel is managing prices downwardly.
Opec members have always cheated. SA wishes they could stop the cheating. SA has never stopped the cheating by the other dictatorships that are bought off for back door supplies of crude.
That was also part of the discussion in econ that if one country would not supply another would. Meaning Opec is weak.
The US right now is turning a blind eye to Iran supplying the EU with more NG. Russia’s missing supply has become less important.
Russian oil prices for India and China are being set by the Western Cartel around $34 bbl. Opec is under pressure and their oil has since dropped $20 bbl. It will drop at least to $60.
Denny, SA can not flood the market just because of some cheating by another opec nation not without sinking their own price targets. That is no solution for SA.
Also SA needs to pump the oil for profit even if the profits fall. In fact at lower prices most of the producers have to pump more oil to make the same money.
Qaz, the western cartel was formed by the US admin and western allies in the first half of this year in the face of the Russian war and Europe’s energy problems. The price was around $100 bbl as the cartel was formed. Rightfully the price could be higher right now. But the Western Cartel is deciding on price targets and setting up the producers against each other to meet our targets. But not just the producers all other elements the buyers, the shippers, the refineries are being set up to bring down the costs of oil and ng.