Choked by these unnatural oil prices
Without a stronger natural gas lobby, Brent will stay where it is and only the Middle East sheiks will win.
Here we go with the commodities and China again. You come in every morning, morning after morning, and you read about how zinc and iron ore and copper and lead are down 1.2% because of weak China data. You think to yourself, "How hard will oil be hit today? How low will it go?"
Of course, though, you see that Brent crude is higher. While all of these other industrial commodities fall and fall some more on whatever data may come out of China, Brent just either stays the same or goes higher.
That's because, as my friend Joe Terranova tweets, oil is controlled by Middle East producers, and the price just will not respond to the real markets.
The spare capacity is all still in the Middle East, and we all have to pay the Middle Eastern piper.
We all know that we've seen remarkable advances in rediscovering oil in the U.S. We are producing about 8 million barrels a day, and are importing about 7.5 million barrels now. That 8-million-barrels figure is an incredible comeback to mid-1990s levels, and an increase of about 3 millions barrels a day in a very short time, courtesy the Bakken, the Eagle Ford the Permian and some lesser fields. That's on top of a doubling in Iraq oil production, from 1.6 million to 3.2 million barrels a day.
Further, despite the fact that China's commodity use has declined across the board, Brent still trades at a ridiculously inflated price. The rest of the world is either helpless to do something about this, or it actually wants higher prices in order to make expensive renewables more economic.
Right now there is only one country on Earth that can do anything about this Middle Eastern price fixing: the U.S. If we had the political will, we could harness our competitive advantage that is natural gas and actually make an energy market in North America that is separate from OPEC. We could make oil into another commodity that's not unlike the pathetic commodities of iron, steel, copper, nickel and lead. We could actually impact price if we felt it were something worth doing. We could simply institute a policy in Washington that says it would be good value judgment to lower the price of fossil fuels, even if it does, for now, make alternative energy less economic.
Last week I had Daniel Oh from Renewable Energy Group (REGI) on "Mad Money," and he talked about how the U.S. government has created mandates that we use renewables like biodiesel as part of our refining feedstock. I have to laugh, because this is the kind of mandate that causes fuel prices to go up in order to make farmers richer.
The Renewable Energy company is an outlier. It actually uses waste that would otherwise be thrown away -- inedible oils and fats. It's a real feel-good story. But we all just accept, cynically accept, the notion that the ethanol portion of the mandate is just a giveaway to farmers. No one thinks there is anything economic about it. Nobody thinks it's about competitive advantage. All it's done is jack up the price of what we eat in return for making gasoline no one likes, to use on a scale that really only benefits mostly wealthy agribusiness.
It's just total late-stage capitalism, wherein we all surrender our dollars to a rich minority in return for something that wrecks our engines but does nothing to stop the Middle Eastern producers from choking us and making our economies stagnant.
I used to think this would change when Washington recognized the U.S. had enough natural gas to switch to a more nat-gas-based system and defang OPEC. It just seemed so natural, so right, so positive for jobs and domestic security. I now know otherwise. Until the nat gas producers spend hundreds of millions of dollars to get their people elected, we're going nowhere. That's what has to happen. I just wish they were cynical enough or, maybe less cheap, so they could make it happen just like the farmers did. Without the lobby money, though, Brent will stay where it is and only the Middle East sheiks will win.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.
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Why are gas prices remaining so high?
Greed, filthy, unbridled greed and all the ugly fat that goes with it.
End of article.
Even through all this explanation, I simply remember the day about four years ago that gas was less than $2.00 per gallon. When everyone woke up the next day, it was $4.00 per gallon overnight.
It has not let up since, maybe .50 cents lower at times just to get us used to the new norm.
We are just being held hostage, by the Oil Barons(no matter where they are at) and the Governments that are taxing the hell out of any sales...
This Administration has allowed or auctioned off more permits, then just about any before it..
It's a big business..
New finds as stated above and more productive ways of retrieving the oil that is still in the ground, certainly isn't bringing prices down; So we have to assume there is manipulation at many levels.
The mandates should be cancelled temporarily and concentration on burning fuel cleaner otherways.
Coupled along with cleaner coal applications, to boost power generation on our most abundant commodity...
And persue other alternative energy for homes and vechicles, and not giving up or sh!tcanning the progress we have made with solar,wind and EVs..Maybe we can have enough grit and guts to finish some projects finally, that will leave a legacy to our children and grandchildren....
Good Article Jim, puts some proof and truths into the "dirty little oil business."
Dave can't or don't disagree with some of the rest of your comment...But we are doing nothing about it.
But instead stymie any growth or more fruitful usage of what we have available.
The State of Nebraska and enviromentalists....Hold Up Keystone pipeline..
Nobody wants a "new refinery" in their backyard...
EPA cracks down on coal usage, with maybe un-meetable demands.?
Up in arms over "fracking" and other ways to retrieve more Oil and nGas.
Other pipelines and refineries take years to develop,permit and build..About 10 ??
In many ways we are our own "worst enemy."
One of the reasons for higher prices, seems the Retailers( whom we give a free ride) have realized over the last 10-15 years of very easy ways to manipulate pump prices and get away with it...
There is no blame to put on present and or past Administrations; Because we are the ones going along with what the retailers are doing...
I haven't boycotted a Station....Have you ?
I haven't written my Rep,Sen, or President...Have you ?
I haven't contacted my Govenor's office to get State relief....Have you ??
In past years Presidents or Governors have frozen some prices temporarily or offered tax relief..
When was the last time we have seen that?? Except maybe Obama's temporary SS relief to go towards rising energy purchases...Didn't help any, if you were already retired and not working.
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