Rafe wrote: ↑Thu Oct 13, 2022 12:06 pm
And not that I'm a big Saudi royal family or even OPEC supporter, but the media coverage over the OPEC announcement has been...just...well, ignorant. And Brandon wants to threaten the Saudis with a decades-old arms sales agreement over it? Come on, man!
All the writing on the wall--worldwide--is that we're either on the precipice of a global recession or we're already stepping over the brink. The OPEC countries get the vast majority of their income from what? Oil. Simple economics: what drives the price and profitability of your commodity down? An overbalance of supply versus demand. As the march toward recession increases, people start spending less, and demand decreases.
Brandon's squandering, since he took office, of 26% of our nation's Strategic Petroleum Reserve (we're at its lowest level since 1984; pray we don't have an actual emergency need for it, because he can't replenish it any time soon without a massive amount of
more spending) didn't really move prices at the pump down; reduced demand did. Trucks gotta roll and ships gotta sail, but consumers reduced their amounts of non-essential travel. Couple that with China's vastly reduced demand due to continuing, intermittent COVID lockdowns, and you have the likelihood of a worldwide lessening of demand.
Specifically, what OPEC did was
not increase prices or immediately cut production. What they
did do was cutback the estimated oil demand forecast for 2023. In doing so, OPEC said that it sees a risk to demand for crude from a resurgence of COVID-19 cases in China, high global inflation, and significant economic trouble in Europe.
Say you have a business that manufactures widgets. You're reading the tea leaves and it sure looks to you like the global economy is inching into the proverbial handbasket. Demand for widgets still exists, and will continue to exist, but marketplace prices, due to lessening demand, have gone down 10% in recent weeks. If a full-blown global recession hits, demand for widgets is going to bottom out. After he publicly calls you and your company a pariah, a senile man comes to you, hat in hand, begging that you do nothing to position yourself for the recession. In fact, he asks that you
increase widget production in order to help him out by effectively driving down the cost of widgets. But if you want your company to weather the recession as well as possible, what you
need to be doing is concentrating on net revenues and banking cash, not lowering margins by manufacturing widgets at a faster pace. Sitting on warehouses full of widgets that are selling for lower prices than they could be due to lessened market demand is
not a winning plan to batten the hatches for a recession.
It's called free market capitalism.
RBC Capital Markets said yesterday that oil prices could tumble by 40% next year "if a deep recession leads to demand destruction." You'd be trying to do everything you could to protect your widget business if it looked like the selling price could drop 40%, and there likewise should be no expectation that OPEC would, out of sheer altruism and sympathy for a demented man who can't construct sentences or find his way off a stage, potentially harm its own partner nations' economies in order to help mitigate the numerous failures of the Biden administration. This White House has failed at every single turn, and it will reap what it sows. The country's only hope is that the dems lose both the House and Senate on November 8.
Biden having his puppet strings pulled by Green New Deal extremists got us into this situation, not OPEC. Three years ago the U.S. was energy independent. Not only that, we were able to be a major exporter of oil and gas while securely keeping the home fires burning, as it were, without being beholden to any other nation. This whole mess started its dumpster dive precisely on January 20, 2021.
BTW, the U.S. Strategic Petroleum Reserve currently sits at about 450 million barrels, and Biden announced the release of 10 million more barrels to market in November. Just before the midterm elections, naturally. We were already a bit below the SRP authorized storage capacity of 714 million barrels. So to bring us back up to normal emergency storage capacity, we would need to buy 274 million barrels of oil.
We meaning us, the U.S. taxpayers. Currently, oil (Brent) sits at $94.10 a barrel. Gasoline refinement aside, that means that, right now, it would cost us taxpayers
over $25.78 billion just to replace what will have been drawn down by November 8.
