Oil and Politics ALWAYS mix

Oil prices are acting funny.

 

Why?

 

Well, have you noticed the drop in oil prices? They have plunged from $77 per barrel to about $63 in a matter of weeks.

Have Americans suddenly given up their SUVs? Are all the airlines grounded? Is China saying “no thanks” to the modern age?

 

Nope.

 

In reality, only one thing has changed.  The mid-term elections are approaching......and the Republicans don’t want to blow it.

The Republicans? What am I talking about? For sure, George W. Bush is an old-time oil guy, but the Republicans don’t really control the world’s oil supply, do they?

Not exactly, but they do have lots of influential friends.

 

If you think the world’s power elite play fair......then you’ll certainly dismiss what I’m saying.

You believe that everything’s on the up and up. See all the cards on the table. And take everything at its face value.

If — on the other hand — you have a sneaking suspicion that people sometimes play loose with the truth, then I suggest you read on.

 

What you'll learn today can help you in the months ahead.

 

Protecting common interests

I’m sure you’ve heard talk of the “new world order.”  A shadowy cabal of power brokers, who pull all the most-important strings from Washington to Beijing.

Does this secret society really exist? I don’t think so — not quite in the way that novelists and really out-there conspiracy theorists would tell it.

But — and this is critically important — you’d be naïve to think that life’s fair; and that powerful figures and groups never “get together” to protect their common interests.

Of course they do. Manipulation is key to those in power staying in power.

 

One small example: The Federal Reserve usually assumes a more accommodative stance on interest rates around election time. (Like now, as the Fed has “paused” its hikes.)

Simply put, that benefits the party in power. And while the Fed is supposed to be an independent body, when it comes to power helping power, it’s not. That’s how the world works.

And today, power is helping power to keep the Democrats from gaining control of Congress.

 

Watch gasoline prices

They’re down a bunch in recent weeks and headed still lower in the weeks to come.  The average guy on the street knows little about politics, the inner workings of government or the role of the power elite.

Most of them are just pissed off.  About the mess in Iraq, for sure. But Joe Smith from Sunnydale really mutters when he pulls up to the pump, and gas prices are sitting at $3.35 per gallon. And angry voters take it out on the guys in charge.  The entities that want to keep the Republicans in power — or gain some sort of gridlock, at worst — know that.  They also know that none of the big issues, like Iraq, are going away overnight. But it’s funny how fast oil and gas prices can fall when “they” put their minds to it.

 

Friends in the Middle East

Well, not quite friends, but people with common interests.  It’s a story of two Middle Easts, in truth.  One — the world of stone-age tribal mayhem — gets all the press. The other — as personified by capitalistic boom times in Dubai — gets little.  There are many rich power brokers in the Arab world who fear the terrorist scum as much as we do. And they believe the Republicans, led by George Bush, are better terror fighters than the Democrats.  Saudi Arabia, in particular, is nervous about any change.  Oil and gasoline prices are down, because supplies are up. Saudi Arabia is the world’s biggest producer of crude. To me, it looks like powerful people taking care of common interests.

 

What a coincidence

You’ve probably heard about the “enormous” new oil find in the Gulf of Mexico.  Chevron’s deep field — nearly six miles beneath the ocean — may hold up to 15 million barrels of oil.

Interesting timing on this announcement — pre-election. And another reason why oil and gas prices are — temporarily — down.  Of course, that’s just a coincidence, right? After all, the Republican party and Big Oil hold no common interests. No, of course not — and I taught Tiger Woods everything he knows.  (What they’re not telling you — it’d spoil the pre-election buzz: This find is a drop in the bucket — like a few months supply at today’s global consumption rate.)

 

So what does this mean to you?

First off, don’t take anything at face value.  Oil traders are using this pre-election oil dip as a trading opportunity to take some profits off the table. Long-term, most are still energy bulls.

Secondly, this pre-election “rub my back and I’ll rub yours” power trip is creating new risks and new opportunities in today’s stock market.

 

As a very accomplished political hack (and a former governor of Minnesota) once put it, “Follow the Money.”

 

MPO