Mover Mike http://www.movermike.com/ Mover Mike has his own particular take on todays political and economic news. In addition he has many other interests, geology, literature, poetry, writing, eminent domain, etc. en-us 2006-05-13T16:05+00:00 Again with the $40 Oil! http://www.movermike.com/posts/1146945630.shtml However, I would point out last year at this time, we had about 333 million barrels of oil stockpiled and those stocks moved lower until October. Meanwhile oil prices... movermike 2006-05-06T20:05+00:00 ...the U.S. government admits that crude oil inventories are at 7 year record high – with 343 million barrels of oil stockpiled in the U.S. alone! The Energy Information Administration (EIA) has a chart based on official statistics gathered from the U.S. government showing, indeed, we do have 343 million barrels of oil stockpiled:

However, I would point out last year at this time, we had about 333 million barrels of oil stockpiled and those stocks moved lower until October. Meanwhile oil prices moved from $57 to $70 in September and back to $56 in November, intuitively opposite expectations based on stockpiles. I am not impressed with that analysis from NewsMax.

I really have to question that statistics. How is it possible that we have been able to build our inventories when so much of our oil production capacity was damaged or destroyed by Hurricanes Katrina and Rita and is still not back on line. Has our government been buying oil on the open market, over and above our lowered production, raising the price of oil and causing gasoline prices to go up?

I don't buy it. How can we have higher oil stockpiles? Didn't we tap into the strategic reserve recently? No, I suspect that the numbers may be wrong. Like so many of the statistics that come from the government anymore, they lie, they spin, they revise later. Why would the government overstate the stockpile? If we knew the real numbers we might conclude that oil prices are going to go to $100, that could filter through the economy, giving us higher inflation numbers, causing long bond rates to rise and force the FED to keep raising short term rates, killing housing and consumer spending.

The EIA's report This Week in Petroleum says three factors influence the price of oil

Demand -

After averaging annual growth of just under 1 million barrels per day between 1991 and 2002 (under 0.9 million barrels per day for 2000-2002), world oil demand grew by 1.5 million barrels per day in 2003, 2.6 million barrels per day in 2004, and at least 1.1 million barrels per day in 2005. This greater-than-historical growth came even as oil prices more than doubled. In fact, some analysts argue that strong growth in the world economy, and particularly in China and the United States, has fueled the need for more oil, thus putting upward pressure on prices. That is, strong global oil demand is one of the factors causing oil prices to rise in recent years.
Surplus Production Capacity -
While some productive capacity has been brought online, it has been insufficient relative to demand growth. As a result, surplus capacity is extremely limited, dramatically reducing the ability to respond to any sudden surges in demand or disruptions in supply.
Weather and Geopolitical Risks - We are about to enter the Hurricane season and the world gets so much oil from unstable areas; Nigeria, Iran, Iraq, Venezuela. The danger is rising not falling.

I said it before when I saw the NewsMax advertisement. We will never see $40 oil again! I hope I'm wrong.

Update:

]]> The Miscalculation! http://www.movermike.com/posts/1144427649.shtml Reading Victor Davis Hanson, this morning, the following comment got me thinking again about Abu Jandal.... movermike 2006-04-07T16:04+00:00 Abu Jandal, the former body guard of Osama bin Laden was interviewed. One of Jandal's most striking comments, as near as I can recall, was his hope that his infant son could follow in his footsteps and be a martyr for the Islamic cause. Bob Simon, who has a daughter, implied he would not want that for his child. Jandal said that is the difference between us, you would not want to sacrifice your child for America! That filled me with a certain amount of dread.

Reading Victor Davis Hanson, this morning, the following comment got me thinking again about Abu Jandal.

Ever since September 11, the subtext of this war could be summed up as something like, “Suburban Jason, with his iPod, godlessness, and earring, loves to live too much to die, while Ali, raised as the 11th son of an impoverished but devout street-sweeper in Damascus, loves death too much to live.” The Iranians, like bin Laden, promulgate this mythical antithesis, which, like all caricatures, has elements of truth in it.
Hanson's article is Has Ahmadinejad Miscalculated? The answer is yes and so has Jandal. American kids are going to Iraq and Afghanistan, and will go to Iran, Syria or North Korea if asked. Many will even volunteer! And many will re-up for another tour, and those injured will be itching to get back with their soldier buddies. There are a few "Cindy Sheehans", sure, but most mothers and fathers, are scared but proud of the sacrifices their kids are making.

Hanson makes a good point about Israel.

...no responsible Israeli can take the chance that he presided over a second holocaust and the destruction of half the world’s surviving Jewry residing in what the radical Islamic world calls a “one-bomb state.”
And Hanson makes this point about President Bush
...no American president wants to leave a nuclear Iran for his successor to deal with — especially when Mahmoud Ahmadinejad, the one in control of the nukes and promising a jihad if confronted, is probably a former American hostage taker and terrorist.
President Bush will not be restrained by the polls to do what he believes is right with respect to Iran's nuclear ambitions. And when he strikes, and really that is the only option,
a humiliated Iran is defanged; the Arab world sighs relief, albeit in private; the Europeans chide us publicly but pat us on the back privately; and Iranian dissidents are energized, while theocratic militarists, like the Argentine dictators who were crushed in the Falklands War, lose face.

[...]

So far the Iranian president has posed as someone 90-percent crazy and 10-percent sane, hoping we would fear his overt madness and delicately appeal to his small reservoirs of reason. But he should understand that if his Western enemies appear 90-percent children of the Enlightenment, they are still effused with vestigial traces of the emotional and unpredictable. And military history shows that the irrational 10 percent of the Western mind is a lot scarier than anything Islamic fanaticism has to offer.

Indeed! We don't spend more on defense than the next 10 nations combined for nothing.

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