and Pony Show
Research for Online Investors
by John Dalt
Crude oil sold off yesterday,
dropping almost 4%. This happened because the U.S. inventory report showed a large build. Gasoline inventories increased when the market expected a drawdown in
supply. A funny thing happened overnight. Crude oil rose in Asian markets.
Why? Because, the use of crude oil is not an American
Asian markets are using more oil
this year than last, and want even more next year. On average, Asia has
increased crude oil usage over 500,000 barrels per day for the last ten years. The next time you read that soccer moms changing driving habits are causing oil
prices to fall remember economies all over the world depend on crude oil to continue
The simple fact is that the U.S.
must buy crude oil in a world-wide market. Tankers will take the black
gooey stuff wherever the market will pay the most. Crude oil is
primarily a transportation fuel for the U.S. market. Crude oil is not
used in the U.S. to generate electricity, it is too expensive.
Crude oil gapped lower this morning
when U.S. markets opened, but quickly moved to gain back the negative territory.
The Senate Finance Committee held
their scheduled hearings on high oil prices this morning. It was grand
theatre. The Senators called in executives of the five largest oil
companies to testify about the tax deductions they receive for exploration and production.
Oil executives were last ‘called on
the carpet’ back in May of 2008, when crude oil was at $138 per barrel and gasoline cost $3.80 a
gallon. That hearing focused on how much the oil companies were
making. John Hofmeister, then president of Shell Oil Co., told the
Senators three years ago that “The fundamental laws of supply and demand are at work.” According to MSNBC, the executives told the senators that “Restrictions on U.S. oil and gas development is
adding to the tight supplies…”
The senators must have forgotten the
hearings from three years ago. There was no mention this morning about
increasing production. Instead, this hearing was intended to shame the
cutives for making money for their shareholders. President Obama thinks
he can make political points by proposing that the largest five oil companies in America should pay higher taxes
than other companies.
ConocoPhillips CEO Jim Mulva was
attacked by democrat senators Schumer and Menendez for a company press release that headlined the company’s
description of the “Un-American Tax Proposals” in conjunction with the annual meeting yesterday. Mulva said the idea of taxing five companies at a higher rate than others was
Sen. Jay Rockefeller told the
executives that they were “deeply, profoundly out of touch.” CNN reports that Sen. Rockefeller said it didn’t seem that the companies wanted to contribute
anything by way of shared sacrifice. Chevron’s CEO John Watson told
Rockefeller “I don’t think the American people want shared sacrifice.
I think they want shared prosperity.” Rockefeller retorted “Oh, a
lovely statement, but do you understand how out of touch that is?”
Rex Tillerson, CEO of Exxon answered, “Senator, I want to assure you, I am not out of touch. At
Jay Rockefeller is the great
grandson of John D. Rockefeller (Standard Oil). This is a case of the
nut falling from the tree, then rolling downhill…into a creek…washing downstream…drowning from the silver spoon
keeping him from closing his mouth.
Charity is injurious unless it helps the recipient to become independent of it.—John D. Rockefeller
Note: 51% of American citizens pay
no federal income taxes. 40 million receive food
The information presented in this newsletter is based on generally available news releases, corporate filings,
current events, interviews and the editor’s opinions. It may contain
errors and you should not make investment decisions based solely on what you believe you have read
here. Do your own research, it is your money. If you lose it, it is your responsibility, not ours or your
grandmothers! The editor may or may not have a position in any
securities discussed. The editor may have held a position in a
security earlier, or in the future.
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