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One Chart That Explains The Stupidity Of Congress' SPR Plan
Submitted by Arthur Berman via OilPrice.com,
Buy high, sell low. The definition of stupid.
That’s what Congress is considering as it eyes selling oil from the U.S. Strategic Petroleum Reserve (SPR) to pay for certain projects in its latest spending plan.
The last time the U.S. bought oil for the SPR in 2000 through 2005, oil prices were rising (Figure 1). Now Congress wants to sell oil when prices are the lowest in a decade and continuing to fall.
Figure 1. U.S. Strategic Petroleum Reserve stocks and WTI crude oil price in October 2015 dollars per barrel. (Click Image To Enlarge)
Source: EIA, U.S. Bureau of Labor Statistics, Federal Reserve Board of St. Louis & Labyrinth Consulting Services, Inc.
Members of Congress who routinely tell us that they are good at business need to look at the chart above and explain why we should believe them.
Selling oil from the Strategic Petroleum Reserve now is a terrible idea.
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#Winning
"The definition of stupid."
No, more likely it's the definition of corrupt. There seems to be a lot of it going around.
Anything that makes us more dependent on Middle East oil is all good. Israel needs the US in the Middle East so pissing away the strategic reserve is good for them. Whatever is good for Israel Is all that matters.
Yeah that. What is up with people around here? This egotistical "I'm smarter than the oligarchs" just comes across like ignorant hick posturing.
No sorry you are not smarter than any of the 1%. Not even smarter than the guy brings them their morning coffee and crumpet. People, look up "asymmetrical information warfare" and report back in no less than 1,000 words. You do that, maybe you'll "know" something.
They are not stupid, got that part? These are rich fuckers from rich families have been fucking with money and influence for 800 fucking years solid. Collectively they know more about corruption -- and where the skeletons are -- than any of you could write down in the entirety of your natural life on Earth. Period. Yammer on and on about how stupid they are, they sit back in their padded chairs and have a nice chuckle at the quaint protests of the lower classes. Brandish your long rifles, roll out the guillotines, you just look like helpless redneck farmers at a town meeting.
Get crafty or GTFO.
.
England did the same thing with gold.
Paul Eberhart woulda never fallen for this shit...
The politicians pay no attention to the price. Remember to them debt doesn't matter.
It doesn't matter to them because it doesn't matter to them. Meaning, it never sticks. Your debts matter -- your debts follow you around until you die and you better be ready to pay up you low-brow loser -- but their debts are money. Wealth. Influence. They can sell their debts -- sell them to fund managers with too much money laying around. Your pension contribution -- the result of your life's labor -- buys their debt no matter what you think on the topic, and the politicians and banksters skip town with their own legacy secured.
Because it never once mattered to them.
It's necessary to collapse this country to get a one world government. It's all falling into place, one piece at a time.
From chaos comes order.
The time for chaos is soon. Get yourself ready, it's going to be magnitudes worse than the Great Depression.
Buy Hi Sell Lo, way to go
Standard Operating Proceedure in government.
But what does Gartman think about this?
Thanks for reminding me how well my namtraG Fund is doing (now closed to new investors due to overwhelming demand)
Many wow!
Much pointy graphness!
I buy now. Big hurry up.
/.
Destiny sucks.
Such is the course of Empire : (
Congressional rationale. Lets help the Saudis get rid of the frackers. (The energy industry, the industry that has given America high paying jobs in the last two decades.) This is the definition of shooting oneself in the foot
"Selling oil from the Strategic Petroleum Reserve now is a terrible idea."
NOT if the money lost is not your own personal money,
AND IF you gain politically from the sale,
THEN it is good politics for the political winners.
The hillbillies like pretending this "buying & selling" thing is about the exchange of goods and services on an open market with the aim of an honest profit from a day's work.
It might be amusing if it wasn't so damned embarrassing.
Transfer oil to the military instead of continuing to buy on the outside, wholesale market. Refiners get a small margin depending upon the grade each service reuires.
It's a strategic way to pay off their buddies in the energy field with taxpayer money. The government is all about theft and graft.
Oil market could use another Bush in the Whitehouse these days. Their family "owes" hydrocarbons.
why sell into a glut? why not just get the money from janet yellen?
Government is nothing but a shell, a tool for oligarchs to use to structure things to their advantage. Knowing that then you also know that selling oil even at low prices opens up storage or demand in the future. Then you buy from your friends later on. Plus, having your reserves full is bearish for oil futures, you want to reduce your reserves to make it look like you can fill them later, bullish for futures.
But what if you have information that oil is going a lot lower?
According to reports, the plan is to sell 58 million barrels during 2018-2025 to "raise cash". At the all-time high of $147/barrel, 58 million barrels is about $8.5 billion. Over the same 8-year period, the federal government is projected to spend at least $35 trillion. Even in the bestest of best cases, these sales will raise one-fiftieth of one percent of the federal budget, 0.02%. This isn't even a rounding error.
So, what's really going on?
What is really going on? Congress is about to allow US oil producers to sell overseas. That would raise prices at the pump and voters would be furious. But by dumping SPR reserves, they hope to hide their corporate cronyism for a while
WTI is $46/barrel and Brent is $49/barrel. If crude is exported, WTI should converge with Brent. Even if Brent remained unchanged and WTI rose to meet Brent, that's $3/barrel, about 6-7%. Crude prices rise and fall that much nearly every week. Consumers would hardly even notice.
Isnt this what the English did with their barbaric relic?
What difference does it make? We're talking about the bottomless pockets of peons and peasants. They are nothing more than dirt on the shoes of our overlords. Every so often, it gets cleaned off by the shoe shine boy.
SPR === Stupid Petroleum Reserve
They are not selling it to make money, or to raise funds like Bloomberg stated. They are selling it low, to dump oil into the market to lower the price further.
It is called strategic for a reason and the current reason is to economically destroy Russia.
The US and S. Arabia are doing everything in their power to destroy the price of oil.
If I were China and India, I'd buy as much as I can and I'd build as many storage sites as possible.
For a nation without oil producing capabilities, This crash in the price of oil is a God send. It is artificial. It won't last.