We don't have to sit on our hands while crude goes up. We can work to see that the price of crude goes down. and here's how:
Here's one possibility:
The US Strategic Petroleum Reserve (SPR), which the US government started filling in Oct 1977 with 2,646,000 barrels, and which stands at 700,372,000 barrels as of March 2008.
Let's see 700,372,000 bbls x $138/bbl = $96,651,336,000
The USA actually has a HUGE (unrealized long term capital gain) PROFIT on the crude in the SPR.
This is what I've recommended to several US Senators: Sell some of the crude from the SPR, maybe up to 200 million barrels, specifically for use in the USA. The USA has several military bases that are mothballed or on standby with little to no use. Look at where those bases overlap electric grid shortfalls, like California, and New YorK, and build new Nuclear electricity plants. It's green, good for the planet, energy. Run the USA bases off the electricity they produce and sell the surplus electricity to the power companies, as a wholesaler. The USA government would have a steady stream of income, to replenish the SPR, to reduce taxes, to repair and maintain roads, bridges and other infrastrucure that's long been neglected. The construction industry has been hit hard, You'll be putting Americans to work. The crude in the SPR produces no income. WE PAID for it.
Also, read the US EIA reports of the Bakken crude right here in the USA. Every effort should be made to put more wells into production now. That would be a great location for a brand new refinery. It also wouldn't hurt to look for a dis-used base to put a new refinery for the heavy crude nobody has the refinery capability to process. Another benefit of refining heavy crude ... there's a worldwide shortfall of sulfur supply. Sulfur is needed for a lot of things including agriculture fertilizers.
Here's another benefit: For all these years we've built nothing, no new nuclear power plants, no new refineres, we've been sending a message to OPEC: YOU have NO Competition, charge us what you want! Tell your Senator, tell your Representative we want it yesterday. You'll be sending a message to OPEC: YoU've GOT COMPETITION! Watch the price of crude drop! [more]
Many people are showing concern about an Isreali strike against Iran's Nuclear facilities. [more]
The FOMC will render their opinion Wednesday afternoon. I expect the interest rate to hold steady with stronger wording about inflation. But, the US Energy Information Administration will be releasing the crude stats at 10:30 AM Wednesday morning, and I expect the US EIA to report the 6th weekly decline in crude supply. ... Wednesday is going to be a rough day in the market.
Even if you don't own stock in Microsoft (MFST), Apple Inc (AAPL), Hewlett Packard (HPQ), or Intel (INTC) you probably own a mutual fund that does. When the European Union fined Microsoft, where did that money come from ... Retained Earnings, Holders Equity, ... it's money that certainly came out of the stock price, If you look further, the money coming out of Microsoft also had a detrimental effect on the market, the Tech sector, the industry, By the time you calculate the ripple effect, American stockholders, probably lost 50x the amount of the EU fine. [more]
The European Union (EU) has fined Microsoft (MSFT) for anti-competitive behavior and for excessive royalty rates throughout the world. I certainly understand The EU rights to question royalty rates within the EU borders, within reason. I'm sure the EU, and the countries that comprise the EU have laws regarding extortion, just as does the United States. I contend the EU, in endeavoring to enforce it's competitive point of view, not only within the EU boundaries, but to impose its view globally, beyond the EU's legal borders ... is guilty under United States Laws of Extortion. [more]
Like I wrote in my post: "Do a search, read the articles, ..." It's not inside information. It's public, reported information.
Per the US Energy Information Administration (EIA) the crude supply has declined 5 weeks in a row. Now, let's look at the Baltic Dirty Tanker Index (BDTI) which tracks spot market crude tanker route day rates:
( Date ... Index ... Percent Change)
6/9/2008 ... 1793 ... 0.73
6/10/2008 ... 1792 ... (0.06)
6/11/2008 ... 1849 ... 3.18
6/12/2008 ... 1977 ... 6.92
6/13/2008 ... 2010 ... 1.67
6/15/2008 ... 2026 ... 0.80
6/16/2008 ... 2037 ... 0.54
6/17/2008 ... 2058 ... 1.03
6/18/2008 ... 2084 ... 1.26
So, the USA crude supply is declining but the BDTI is increasing? The importance of this is: many shipping companies trade on the spot market and many have time charter contracts that provide for profit sharing when the spot rate exceeds the time charter rate. So, knowing what the Baltic Indicies (a product of the Baltic Exchange) are doing will give you an insight as to whether crude shipping companies (like DHT, SFL. FRO, VLCCF, etc) are going to report better earnings. When shipping co's report better earnings ... the stock price goes up. But, here's another important item: Analyst UPgrades. The shipping sector analysts are watching the BDTI go up. Pretty soon, analysts will Upgrade individual shipping co's on the EXPECTATION the earnings are going to increase. Those upgrades will also drive individual co's prices up! Look at DHT's recent stock price action and look to see if there were any upgrades. Pay attention to the market, the sector info, your company's info ... and you can beat the analysts EVERY time. . [more]
After the Russian tanker single hull (SH)tanker broke apart in a storm 11/11/2007 and the Heidi Spirit (SH) tanker was damaged by a barge 12/7/2007 the double hull (DH) spot market day rates went to $150,000 per day. There is nothing so far to indicate that South Korea has dropped the criminal charges against the Heidi Spirit captain, crew, etc. Do a search, read the articles, single hull tanker shipping is real cheap, 'cuz no one wants to hire them. Every tanker company would require a shipping manifest. If the Iranian crude is stuff nobody wants right now why not rent cheap SH tankers to store it? Why use DH ships that you're paying $150-200,000 per day for? Could it be that Iran knows the world's crude oil supply it dependant on less than 700 DH tankers. Every tanker Iran takes out of the market is one less tanker to transport Saudi, Venezuelan, Nigerian crude, etc. That's your weak link.
We know Iranian government is aggravated wih the US and the EU over Iran's uranium enrichment efforts. Less known is Iran's desire to re-establish the Persian Empire. Could it be Iran's already attacking the U.S., the EU, and the rest of the world? We know Iran repeatedly threatens to destroy Isreal. We know Iran is arming disident Iraquis, Iraqi insurgents, Hezbola, and Hamas. It was just reported that a fast attack boat attacked a deep water rig/ship off Nigeria. Iran's navy uses these fast attack boats. Has anyone bothered to determine where the Nigerian rebels are getting their weapons? The Nigerian rebels made it clear they didn't accomplish their goals so they intend to attack again. I think it'd be a good time to capture some of these rebels and get some answers. I'm highly confident, if you capture some of these rebels, you'll see the price of crude drop $50 per barrel. [more]