DumpDC Editor’s Note: We were also stunned when Barry (The One) dipped into the Strategic Oil Reserve for no apparent reason, at a time when world oil prices were dropping. Clearly, the US President has no clue whatsoever what supply and demand means. But he is certainly a Marxist, since he believes in government intrusion into the market. God help the USA when idiots are in the highest offices.
Oil has recovered the entire dip that came after Obama’s decision was announced and is now a penny higher than before his announcement. Unlike 2008 when most oil futures contract holders were hedge funds using leverage in an attempt to make short-term profits, today most oil investors are much stronger hands who bought with cash, because the world is now flooded with dollars thanks to Federal Reserve Chairman Ben Bernanke.
It certainly wasn’t worth jeopardizing the homeland security of this country by reducing our emergency oil reserve by 4.1%, just to see a $4 reduction in oil prices that lasted for only 3 days.
The emergency will be here when the U.S. can no longer import oil from foreigners at any price due to hyperinflation, and we are forced to live with only the oil produced in this country.
At any time that they choose, China has the power to set off in our country the economic equivalent of a nuclear bomb. China can at any time announce that they are no longer going to buy U.S. treasuries, but they are going to take their $2 trillion in U.S. dollar reserves and use them to buy gold. The price of gold would double overnight, with the U.S. dollar immediately losing half of its purchasing power. The yuan would then skyrocket in purchasing power, automatically giving China the world’s largest economy with the Chinese GDP soaring past U.S. GDP. There would be a massive rush out of the U.S. dollar with our trading partners unwilling to export any oil to us.
Without an emergency oil reserve, in the event of a major oil shortage due to hyperinflation, after a period of just 39 days, farmers won’t have enough oil to produce food, manufacturing plants won’t have enough oil to process and package food, and logistics companies won’t have enough oil to get finished food products into our supermarkets. This is why we have an emergency oil reserve, to prevent store shelves from becoming empty in our supermarkets due to a fuel shortage.
From the comments:
NIA is usually on the money, but I’m from Texas and have known a lot of oil people all my life. The consensus has always been that we will be fortunate to recover a quarter of what was pumped into salt domes near Houston. Obama’s grandstanding was pure politics and will accomplish nothing useful. In the best case scenario throwing away 4% of the reserves would be foolish. If Texas oilmen are right, Obama may have hazarded 16% of the “emergency” reserves.
http://dumpdc.wordpress.com/2011/07/05/americas-oil-price-inflation-crisis-is-yet-to-come/
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