What’s Next for Oil: Whiplash

roller coaster

This is the closest we could come to a chart showing what is next for ojl and gas prices, and how it’s going to feel. (Photo by Patrick McGarvey)

A savvy investor once told me that if you read something in the news, it is no longer true, if it ever was. I keep this in mind as I read over and over that the world is awash in 3 billion barrels of surplus oil. This glut — always and everywhere specified as 3 billion barrels — is present, the conventional wisdom (oxymoron alert) goes, because the crafty Saudis refused to cut production when the price of oil tanked (metaphor alert). They did this, it is said, to run the pesky American oil frackers out of business before they took over the world. This reminds me of the engraved plaque found in many Irish bars: “The Lord invented whiskey to keep the Irish from ruling the world.” An endearing sentiment, but probably not true. Continue reading

Iran, etc: When the Gas Bills Come Due

Iran Protest

What Ahmadinejad dreams, now that he cannot afford to buy the acquiesence of his people with 38-cent gasoline, as he could when the Green Revolution wilted a year ago,

Governments that buy the affection of their people, like people who submit to extortion, find that the deal is not sustainable because the demand for money just keeps going up while the supply dwindles. This is the lesson being learned right now by every state government in America, and that will be driven home shortly to the federal government: you cannot buy people off — in this case by refusing to tax them — forever. For one thing, the cost prevents you from doing the things that government is supposed to do. And for another, the cost just keeps on going up until it breaks you. For a crystal clear illustration of where this road leads, consider the plight of Iran. (For the audio version click here: 0106 Iran etc: When the Gas Bills Come Due) Continue reading