Saturday, March 19, 2016

US Exporting Oil So You Can Pay More......

President George W Bush said the United States needed to be energy independent.  

President Barack Obama also said the United States needed to be energy independent.

For 40 years the United States was not allowed to export US oil out of the country.  It was a national security issue.  You can't be energy independent if you are not keeping your own energy.  

After the United States started finding oil all over the place (because of fracking) Saudi Arabia freaked out.  The Saudi response was to flood the market with their cheap oil and drive the US frackers out of business.  

Their plan was working great and the price of oil plummeted.  You benefited.  

The United States found it could not compete with cheap Saudi oil and the US oil producers were forced to stored their  oil in storage facilities across the United States.  There is currently more oil sitting in US storage than at anytime in the last 80 years.

The more oil sitting in storage forced the price of oil to sink even further.  

To solve this oil industry problem President Obama lifted the oil export ban.  On December 31st the United States began exporting its oil.  To heck with energy independence.  

You can see the results of this decision at your local gas station.  The price of oil is going up.  

As the oil sitting in US Storage is shifted around the world the price will continue to go up.  This is good for US oil producers.  (Like you care) It is also good for President Obama as the US trade deficit will begin to appear better.  Also when Obama leaves office he will go make 6 figure speeches to the oil and gas industry who now loves him.  

The only real loser in this whole thing is you.  You will (in the short term) pay more.  The problem you have is nobody cares about you at all. 

In the long term the world is still producing way more oil then it needs to produce.  No oil producing countries are willing to cut production and lose market share.  But as long as they can hide the excess oil (in storage facilities around the world) they will try and artificially keep prices high.  Try to contain your enthusiasm.

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