The Redneck Economist is awake after a long, nearly four year sleep. The Redneck was lulled into silence by the US stock market reaching value highs never before predicted, employment at lows not experienced in a half a century, the US Dollar the preferred World currency, and inflation and GDP growth seemly under control. The Redneck was critical ten years ago of the Federal Open Market Committee (FOMC) for wrecking the US economy multiple times during the 80\u2019s, 90\u2019s, and early 2000\u2019s. The FOMC weathered the economy through what is now called the Great Recession. Then, January, 2020, rolled into our lives and brought two forces upon us no one expected or predicted. China\u2019s unleashing an uncontrolled virus on the world and a sharp decline in the price of oil caused by a reported price war between Russia and Saudi Arabia.<\/p>\n\n\n\n
Neither of the two events could be or can be controlled by the FOMC. The FOMC has taken extreme measures to support the US economy and in turn the economy of the free world in the last two months. The US Congress has passed and the President signed into law major financial support packages to help all of us, including our largest employers, through what will be marked as a major financial crisis, if not a financial depression.<\/p>\n\n\n\n
This rant will focus on the sharp decline in the world oil markets. The information used here comes from data collected and reported by the US Energy Information Agency, an agency of the United States government. The report summarizes weekly petroleum activity in the US. The information below should make us proud as a nation, but on the other hand helps explain why other nations who have depended on the US for so long are concerned. The US is not energy independent as least as the Redneck sees it, but we are having an impact on the world oil markets. The link to the US Energy Information Agency website has been added to the resource list at the right.<\/p>\n\n\n\n
It is interesting to find that in March, 2016, the WTI oil price was $39.47 per barrel on March 18, 2016. More historical data will show oil had bottomed at around $30.00 a barrel late in 2015 and modulated in the $30\u2019s in early 2016. Crude oil to refineries was 15,895 thousands of barrels. We produced 9,038 thousands and imported 8,384 thousands. <\/p>\n\n\n\n
Let\u2019s look at the current conditions. On March 20, 2020, the WTI crude oil price was $19.48 per barrel. Crude oil to refineries was 15,764 thousands barrels. We produced 13,000 thousands and imported 6,117 thousands barrels. Petroleum Stock on March 18, 2016, was 532.5 million, and March 20, 2020 the Stock was 455.4 million.<\/p>\n\n\n\n
So what has changed? You tell me. 2016 crude oil to refineries was 15,895, 2020 \u2013 15,764. (about the same) Oil Imports 2016 – 8,384 thousands; 2020 \u2013 6,117 thousands. (DOWN 2 Million barrels). Petroleum Stocks (oil) in 2016 \u2013 532.5 million, 2020 – 455.4 million (DOWN). The price of gasoline in 2016 was $2.004; 2020 \u2013 $2.12. BIG! Today, we export 3,850 thousand barrels compared to only 387 thousand in 2016.<\/p>\n\n\n\n
Doesn\u2019t this tell us the US in importing 2 million barrels less and exporting 3.5 million barrels more than in 2016. Just 4 years ago. This is a 5.5 million barrel positive impact to the US, but the same impact to the world oil markets. The question is \u201cis the US oil industry shooting itself in the foot, or are we becoming an impact player in the world oil market?\u201d I the last four years the US has asserted itself into the world oil markets and the original players don\u2019t take kindly to this fact.<\/p>\n\n\n\n
The interesting phenomena here is Communist Russia and the Kingdom of Saudi Arabia both reject the freedom of capitalism. Yet, both nation\u2019s financial success depends on capitalism in the oil markets.<\/p>\n\n\n\n
The following charts are extracted from the www.eia.gov<\/a> website.<\/p>\n\n\n\n https:\/\/www.eia.gov\/petroleum\/supply\/weekly\/archive\/2016\/2016_03_23\/pdf\/table1.pdf<\/a><\/p>\n\n\n\n https:\/\/www.eia.gov\/petroleum\/supply\/weekly\/pdf\/table1.pdf<\/a><\/p>\n\n\n\n What would the Redneck do? Well, a good question. Seems the issue is the world oil supply. The US is contributing nearly 4 million barrels a day to the glut. Why not either put that oil in the Strategy Oil Reserve or buy 4 million barrels a day off the world market and put it in the Strategy Oil Reserve. Either action would hopefully help the price of oil on the world market, help reduce the oil glut, and make the US stronger with a larger oil reserve. Seems the US, Russia and Saudi Arabia could solve this problem as we all work to find a cure for Covid-19.<\/p>\n\n\n\n Remember, the Redneck does not assemble or collect financial data. Published data is collected by governments, mainly the US government, is used to form any opinions expressed in these rants. The site does not promote or voice any political view. You should read and form your own opinions. Figures don\u2019t lie, but liars figure.<\/p>\n\n\n\n The Redneck Economist<\/p>\n\n\n\n April 6, 2020<\/p>\n","protected":false},"excerpt":{"rendered":" The Redneck Economist is awake after a long, nearly four year sleep. The Redneck was lulled into silence by the US stock market reaching value highs never before predicted, employment at lows not experienced in a half a century, the US Dollar the preferred World currency, and inflation and GDP … Continue reading