was the fifth reason listed for the decline in prices when it should have been the first.
Gas prices are falling — Here’s why it’s happening and whether it can continue
Lets review CNBC's chronology as to why gas prices are falling:
"In the commodity market there’s a common saying that “the cure for high prices is high prices.” And that’s proved true. In other words, high prices bring down demand, which brings down prices."
(Thats #1)
"Some states have also suspended their gas taxes, which artificially pushes prices lower."
(Thats #2)
"But the main reason for the fall is the decline in oil prices. Crude is the single largest factor influencing gas prices, accounting for more than 50% of what we pay at the pump.
(Thats #3 but a discerning mind would ask, "But why are oil prices declining?)
"Additionally, China demand has been soft as the country combats Covid cases."
(Thats #4)
"And the U.S. has taken unprecedented measures by releasing record amounts of oil from the Strategic Petroleum Reserve in an effort to put a lid on higher prices."
(Thats #5 and it's listed last, that's not an accident, it send a message subliminally that its the least important of the five when the fact of the matter is it had the largest influence of any of the five reasons listed.)
"The Administration is also announcing steps to repurchase oil for the SPR in future years, likely after FY2023, to help stabilize the market and encourage near-term supply."
(September of next year, "Each year, the Office of Management and Budget (OMB) prepares the President's proposed Federal Government budget for the upcoming Federal fiscal year, which runs from October 1 through September 30 of the following year.)
"Continuing Unprecedented SPR Releases
Since the President authorized the historic release of one million barrels per day from the SPR earlier this spring, the Department of Energy has already sold more than 125 million barrels into the market, including nearly 70 million barrels that have already been delivered to purchasers and additional barrels planned to be delivered to customers in the weeks and months to come."
"The President’s historic action is in addition to agreements with International Energy Agency member countries for collective action to address the market disruption caused by Russia’s invasion of Ukraine. The President and his team engaged in round-the-clock diplomacy resulting in the release of 240 million barrels from the United States as well as allies and partners globally to meet this moment."
(Member Countries)
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Japan
Lithuania
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Slovakia
South Korea
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
Chile
Colombia
Israel
Argentina
Brazil
China
India
Indonesia
Morocco
Singapore
South Africa
Thailand
Ukraine
Like I have been asking, what do you think is going to happen when all these countries go to replenish the strategic reserves with no increase in refining capacity come next September?
Back to the White Hose Press Release Dated July 26th
"With these releases, the President has executed a drawdown of unprecedented size and scope to respond to the energy market disruptions posed by Russia’s invasion, and his actions are having an impact. It is, as one leading analyst noted at the time of announcement, “hard to overstate the scale of this intervention.” And the Department of Energy is delivering."
(Delivering us right into Russia and Chinas trap that is)
"There is no precedent for this level of drawdown, and one major bank estimated in March that the maximum drawdown capacity of the SPR was only 500,000 barrels per day. Nonetheless, the SPR is executing at a speed that is about twice that level."
Now the what nobody else is telling you part of the equation:
"Using Repurchases to Promote Stability and Encourage Supply
The Administration is also moving forward with a proposal to allow fixed-price forward purchases of crude oil to replenish the SPR and encourage short-term production. Relative to conventional purchase contracts that expose producers to volatile crude prices, the fixed-price contracts can give producers the assurance to make investments today, knowing that the price they receive when they sell to the SPR will be locked in place, providing them with some protection against downward movements in the market. This proposal, if finalized as proposed, would encourage near-term production, promote market stability, and put the federal government in a better position to respond to future market volatility.
The Department of Energy is proposing rulemaking this week that would allow for these purchases. The new rule, if finalized as proposed, would enable the Department to enter into purchase contracts for future delivery at a fixed price. Under current regulations, the Department can enter into contracts for future delivery, but the price paid reflects prices at the time that product is delivered. By instead allowing for the price to be fixed at the time the transaction is executed between the parties, this regulatory change would provide greater certainty to producers regarding the revenues they could expect to generate if they produce more crude oil in the short-term, knowing that the Department has contracted to purchase these barrels at a previously agreed-upon price to replenish reserves."
Translation:
Right when Prices are going to go through the roof?
When all the countries involved (not necessarily all those listed) start replenishing their reserves?
Oil companies are gonna be paid the lower price they agreed to the year before.
Yeah...right...good luck with that.
The Main point was this.
"the U.S. has taken unprecedented measures by releasing record amounts of oil from the Strategic Petroleum Reserve"
Thats the main reason prices are lower yet it was the last reason listed in the article. Mt question is simple, Why?
I'll let you come to your own conclusion.
I love you baby.
Lake Como? Monte Carlo?
Nice :-)
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