Much of this you may have read here before, but it is worth repeating because the dramatic distortion in oil prices over the past weeks and their potential impact on the economy is becoming acute, and nothing is being done about it.
Some two weeks ago the Federal Trade Commission announced that it will open a probe on suspected oil price-fixing. We wish them God speed. In the past fortnight the price of oil has spiked some 10 percent in spite of the countervailing realities that would ordinarily militate against the precipitous rise in price that has taken place, realities such as:
- A vast commodity sell-off in the markets ranging from gold, to industrial metals, iron ore, extending to grains, natural gas and on.
- Strengthening of the dollar, forever cited by 'energy experts' to explain FALLING oil prices.
- Dimming demand for oil in China. Exactly opposite to the 'oiligopoly' forever citing growth in China's oil demand as an explanation for the spiking of oil prices.
- Reduced consumption of oil in the United States. Americans are driving less and less, not more and more, as oil price movements would have you believe.
- Record jump in U.S. oil production. Growth in America's oil production has grown by over one million barrels/day over the last year, the most in decades.
- Record levels of oil inventories moderated only slightly this past week by a significant decrease in oil imports reflecting good management in reducing carrying costs of unneeded inventory and recognition that domestic oil production significantly enhances the 'national security dividend' inherent in today's inventory management.