Admonish the thought (out, damned spot!) that there is no political element in the day-to-day changes in the value of crude oil or its refined derivatives. To compensate, add the thought that I am convinced U.S. President Donald Trump and other political leaders base their daily high school level pep rally rants on fairy tales that would leave even Aesop jaw struck and wide-eyed in wonderment.
Maybe I’m wrong, but the recent radical swings in the prices of crude, gasoline and diesel make no sense, with increases one day only to be completely reversed the very next day. The only logical reason I can see is that there is no logical reason.
The moves are being influenced to the point of being directed by the president’s foraging in the nesting grounds of supply and demand.
With the U.S., thanks to its shale oil production, being the largest crude oil and refined product producer in the world, and China being the globe’s second-largest energy consumer, something has to give – and it is giving, but in a see-saw manner.
The ongoing trade dispute with China has Trump reading his own fairy tale: “Goldilocks and the Three Stairs.” No, not the too hot, too cold porridge story line, but his version when it comes to sanctions on China.
One day the sanctions are too high so demand for crude, gasoline and diesel is forecast to decrease due to lessened demand for China-based manufactured goods. Presto! The next day, crude fell $2.50/bbl and pump prices dropped by five cents a liter.
So, the top stair was too high.
Then he tried the one on the bottom. He reversed his field and lowered sanctions, which increased both crude and refined product prices overnight – wiping out the five cent drop at the pump. Increases at the pump are not popular at the best of times, but never at any time with an election year looming.
The only answer is to go to the middle stair, and compromise on the levels that are neither aggressive nor submissive.
So, the consumer/voter is pacified, and the Chinese save face.
Meanwhile, the commodity traders have been seen playing rock-paper-scissors in order to come to a consensus on what is driving or about to drive energy prices in the near term, or any term for that matter. In their minds, these are the dog days of summer in a summer that’s going to the dogs.
Even our very own prime minister will agree with that one. If he’s honest.
~ The Grouch
Have your say
We won't publish or share your data