I want to say thank you to the Europeans and President Obama for insuring that all of us will be warmer next winter and driving farther this year. The price of oil is collapsing.
The first sign of an oil collapse was the dropping of the euro. Oil is priced in US dollars; when the dollar goes up, oil goes down, when the dollar goes down, oil goes up. (It’s like a teeter-totter.) You can manipulate the commodity and currency markets by exploiting these relationships. Throw in some phony geopolitical crisis and use the lie of peak oil, and voila, you can control the world’s economy.
The euro is collapsing because of the European debt crisis, a crisis created by Wall Street and European banks. This started a year ago and the euro has fallen from $1.48 to its present $1.22. The reality of the European crisis is so grave that there is little hope of the euro recovering for years.
As all currencies are priced in an interrelated way, movement in one currency affects all of them. When the euro goes down, the dollar has to rise.
Canada’s loonie has risen from 66 cents to par with the U.S. dollar for only one reason; Canada’s economy is based on oil and other raw resources.
When the price of oil rises, so does the loonie. And the dollar drops.
There has been an army of folks who trade currencies whose only reason for being is to short the U.S. dollar, to drive the dollar down to enrich their friends, the commodity traders on the other side of the room. When the dollar goes down, the commodity (oil) goes up.
But the European debt crisis is not a manufactured geopolitical crisis, it’s real. The traders can’t manipulate the euro and they can’t stop it from sliding. That is why oil has to drop; the euro drops, the dollar goes up, oil has to go down.
That’s the plan unless OPEC and Big Oil turn off the spigot, then “supply and demand” would rule the market. This would be the first time that “supply and demand” would actually drive this market in 30 years. (That’s how phony and manipulated this has been.)
But our recently discovered and exploited resources are really significant.
We don’t need OPEC. The U.S. is an oil-exporting nation and soon will be a natural gas exporting nation. This is wreaking havoc on OPEC and flooding the market with oil and gas. Natural gas has never been so low and oil will soon join it.
All commodities are going down; I think that we’ll see deflation, where everything will be on sale for those of us who will still have jobs. Oh yes, the stock market will probably crash and take the U.S. economy with it. Thank you, European sovereign debt and Wall Street.
One could say the Obama administration’s energy policy has been phenomenally successful. We have reduced our dependency on foreign oil and we are very quickly on the road of oil and gas independence. That is beyond huge.
He is reducing the price of heating oil, gasoline and other distillates. (You’ll see the price of these items drop for the rest of the year.) Considering how high they have climbed during his administration; that also is huge.
Then the President announced on April 17, 2012 that he had asked the Department of Justice to look into oil-price manipulation. That slowed the speculators down and the price started dropping.
Now two other steps need to be implemented.
First, this is the time for alternative energy to come into it’s own with a massive push from the government. We need cities and towns to own windmills, solar farms and tidal projects. These sources of energy need to stay in public hands not subject to the whims of investors or speculators. We need regional electric co-ops who will co-own these projects.
Second, we need to reinstate Glass-Steagall and get speculators out of the energy and commodities markets.
Meanwhile, enjoy your summer driving around with your Obama gas.
Hugh Magbie is the founder of The North Star, a civil rights and reform movement. Magbie lives in Warren.
I is all for lower fuel prices, that BO is a great guy.
Methinks this writer places too much ability to manipulate (lower, raise, whatever) on the President (“he is reducing the price …”).
I’ve got to take issue with, “The euro is collapsing because of the European debt crisis, a crisis created by Wall Street and European banks.” The debt crisis is caused by debt. Governments are making promises to provide services with money that they don’t have. Most people understand this but tend to ignore the truth. We are nearing the repeat of the Fall of the Roman Empire. Gibbons called it “panem et circenses.” If you give the people bread and circuses they won’t notice that the system is nearing collapse. Our money that is now worth less will soon be worthless if we don’t get a handle on our debt. Time to cut up the collective credit cards and get on a real budget. Austerity is the only answer
I’ve got to take issue with, “The euro is collapsing because of the European debt crisis, a crisis created by Wall Street and European banks.” The debt crisis is caused by debt. Governments are making promises to provide services with money that they don’t have. Most people understand this but tend to ignore the truth. We are nearing the repeat of the Fall of the Roman Empire. Gibbons called it “panem et circenses.” If you give the people bread and circuses they won’t notice that the system is nearing collapse. Our money that is now worth less will soon be worthless if we don’t get a handle on our debt. Time to cut up the collective credit cards and get on a real budget. Austerity is the only answer
dislike
Austerity for whom? It is a funny thing about the philosophy of “shared sacrifice” It is always “shared” by front-line workers alone.
I don’t notice congress, the President or the Federal Judiciary taking pay cuts. Their six figure incomes rise every two years like clockwork. Please tell me What Susan and Olympia do that earns them a place at the top 1% of Maine incomes. I don’t hear about bankers foregoing their obscene bonuses during time of crisis. I also do not see the Automakers (GMC and Mopar) giving consumers a break on the price of a new car. They should, working people bailed them out of debt.
What I do see is a Government and industrial leadership insulated from the troubles faced by most US workers. Until I see a truly shared sacrifice, I will protect what is mine… What I was promised. Greedy? maybe Self-centered? absolutely. Smart? You decide.
Where the spending cuts or tax increases are made is a political matter. From an economic standpoint, we can’t keep spending into the red. We’ve tried that for far too long. We’ve made promises that cannot be fulfilled. The tipping point is approaching quickly. We are about to crash our currency on the Keynesian iceburg.
It’s not a pleasant thought. I guess that is why economics is referred to as “the dismal science.”
NO ONE ever made any money betting against the USA.
As to “the tipping point’ no one has any idea where that is.
When the Federal Government cannot function without running huge deficits, and investors stop buying the debt, the only option left is the printing press. Increased taxes won’t work. That will further shrink the economy and actually reduce revenue to the Treasury. Printing more fiat money actually steals wealth by taking the value out of your wallet. Prices aren’t going up. The value of your money is going down.
The good ol USA can work our way of this if we reduce government dependence and over-regulation. Prosperity comes from profit. The free market will self correct if we reduce the government yolk.
That is one theory. There are others.
The price of a gallon of gas when B. Hussein Obama took office was $1.95. I paid $3.25 a gallon yesterday. Makes you long for the good ol days before I ever heard of Rev. Wright and community organizers.
Oh, good lord. Rev. Wright did this. Maybe George Soros too. Anyone with a funny name too, probably.
Harry:
There is a limited supply of oil on earth. There is an increased demand for oil (See China and India). Therefore, gas prices will rise. The sun is going to set today. Don’t panic. It will rise again in the morning.
What Tripe this article was. Obama responsible for gas price drop? If you can make the case for that then he must of been responsible for the near record “High” prices of the last 3-1/2 years, right? Where was the messiah then? Billions of dollars in higer case prices, higher food prices, higher heating oil the last three winters, all because of Barrak Obama didn’t care enough back then to lower the prices. But now an election is coming up, it’s a miracle, Thank You Lord Obama for throwing us a bone, no matter that when Bush was accused by you of sleeping with Big Oil the price was less than half of what is has been under your (ahem) leadership.
A Liberal mind works in strange and mysterious ways their wonders to behold! Amen.
Bush was accused of lying, but both the past Democratic President, Clinton and Obama are convicted liars. For a Mainer to vote for Obama would be like a Chicken voting for Col. Sanders. If you really want to be disarmed, you want a Communist Dictatorship by all means vote for the guy, but befoe you do, make sure you read his books first, if you don’t want those things.
Interesting how you avoided the Presidents first name–Barrak–which is Biblical. Amazing how many ofour first names are Biblical (with the exception ofyours, however).
More proof that gas prices are manipulated ..as gas was at an all time high (near $4 a gallon) a mere six months prior to President Obama’s swearing in.
And the World’s economy was in freefall, thus the low price of gas but alas Republican’s have selective short memories.
“The U.S. is an oil-exporting nation and soon will be a natural gas exporting nation.” Sadly, no. The US, due to the recession, some conveniently located refining capacity and higher prices overseas, has been exporting not crude oil but finished petroleum-based products such as gasoline and diesel to foreign markets. The US still imports over 40 percent of it’s petroleum needs from foreign countries (yes, Canada is a foreign country), having hit domestic peak production in the early 1970s (no, shale oil has not and likely will not change that).
Yes, we will be exporting natural gas soon because foreign markets will pay much more for it and the companies fracking for it desperately need a higher price to sell off the current glut. That’s the problem with shale gas – lots of drilling makes for a quick gusher and a rapid depletion, requiring a re-fracking of the well. That get’s expensive. Exporting natural gas will allow its price to rise closer to foreign market prices, raising our costs, as well. Estimates I’ve read from analysts in the industry indicate that a doubling or slightly more of our current prices would be needed.So, foreign demand and higher prices should make domestic shale-fracked natural gas production economic (which it is not, currently), setting off another drill-and-frack frenzy that will magically transform “100 years” of shale gas into about 22-30 years.
Dont ya just fracking hate it.
And it’s far more difficult and expensive to export natural gas (unless you’re on the same contintent).
You and hopperdredgebill should write a rebuttle.
Mr. Magbie needs to subscribe to some oil/marine industry newsletters. Vela, (the shipping unit of Saudi Aramco) shipped 10 VLCC’s of crude to the US in May. This was an unprecedented amount, normally 1 a month is the average. There is a definate push to keep fuel prices dropping in an attempt to keep the economy moving in a positive direction.
Mr. Magbie also needs to fully explain that the US is a “refined product exporter” not an oil exporter. In actuality the US has no vested interest in any oil/product capacity except the strategic reserves. You see unlike Norway (Statiol), Saudi (saudi aramco), Brazil (petrobras), Russia (Gazprom) etc, etc, We have no national oil companies (that would be Socialism! mother of all evils). The US has foriegn and domestic oil companies that operate here, the only benefit the US recieves is the tax revenue generated by these companies and there employees.
The one exception to this is the state of Alasksa, which distributes money to each citizen yearly from the royalties paid by oil companies for the privelege to extract mineral wealth (oil) from public land held by the commons. This too smacks of socialism, and I’m sure the just and upright oil companies would like to do away with this royalty business, and let the free market reign.
Thanks to you and Ed Marshall for cogent synopses of the oil industry.
Mr Magbie sounds like my liberal neighbor that speaks from the bleeding heart, not from facts from good sources.
The problem here is that non-professionals are attempting to “predict” where oil prices will go. The person or entity who ACTUALLY knows this information is in a position to make scads of cash, and my bet is they won’t be broadcasting this information for others. The down side is that many true students of the crude market have lost fortunes placing the wrong bets. For an instance, there is NO REASON that Diesel fuel should be selling 35 cents above the price of regular at this time of year.
BTW the price of Self Serve unleaded regular at my local station has INCREASED $.26 since July 2.
I am hoping Mr. Magbie’s predictions are correct…but do worry about any manipulating of this market in such an important election year. The Republicans have proved over and over they are capable of such tactics and Mr. Romney is backed by an obscene amount of monies. I am worried they will use it not only for the Super PACs but for any way to sink the economy further…whatever it takes.
Too silly to analyze. Obama has fought US petroleum production every step of the way and only his usual incompetence has kept it from going down.
The energy markets are artificially manipulated by large banks and trading firms. The interest rates market is artificially manipulated by Wall Street. Precious metals are manipulated. Food prices, same deal. Our currency itself is manipulated by these greedy interests.
We are witnessing the most organized and systematic attack on the worlds population in the history of the world. There are no efficient or fair or even, I dare say, capitalistic markets left. They are all rigged gaming devices that move money from the masses to the elite.
We will lose this war. It does not matter if we elect Obama, Romney or even green party candidates. We have sat idle while the pillars of fairness and economic justice have been dismantled. Our media is a messaging system for the elite. Our elections are a choice between corrupt options, some more corrupt than others.
There is a dark storm on the horizon and it will be evident to all within a year or two that the game is over and the masses, billions of people, are going to suffer at the hands of the greediest elite class the world has ever known. They will jail debtors (this has started already), they will continue to drive down wages. They will continue to gamble with the peoples money and steal what they lose back from us. This cycle has been growing more intense every passing year since the 1980s S&L crisis.
Do not think that who you vote for will change the direction, only the intensity and timing of the pending storm. This is not the product of liberalism or conservatism but unbridled greed and careful planning.
Deflation and depression are coming and the temporary joy of lower gas prices will not be enough to make a real difference.
Remember, even as we watch our neighbors starving, the more we learn to care for and about one another, the easier this will be on all of us. This is going to hurt and it is coming very soon. This is why the elites have been hoarding cash and hiring paramilitary guard services. They know what they are doing and they know once it becomes clear and the propaganda no longer works we will descend into chaos.
Love your neighbors. It is the best thing we can do.
Is this guy for real, gas is almost $2 more a gallon then when Obama was elected, heating oil is almost 4 times the cost of when he took office. This article does’nt even pass the straight face test and people lap it up like it’s the gospel.
So how F’n nuts are you morons in Maine! Mr. Magbie… you are nuts to think Obama had anything to do with the price of Oil.
The only thing he’s done is waltz around thinking he’s the Queen!