Another inappropriate knee jerk political reactionAs usual, the politicians almost always get it wrong.
High gasoline prices have always been the cause of a strong pushback against the reigning poobah in the USA. Now It's Biden's turn to feel the wrath.
So what does Biden do?
First, he blames the oil companies. Good luck with that. The left wing branch of the Dems that mobilized under the lame duck to rid the country of its pre-existing political menace are completely responsible for America's current gas price problems. When Biden reached out to OPEC+ with moral suasion without the threat of a heavy hand, he expected to get a response similar to what Trump got. We all know how that turned out.
When the Dems legislated against the oil industry and then denied financing to the industry, what did they think was going to happen? I know, they didn't think at all because they are politicians. They just knew they their popular mantra was politically savvy.
Second, now that the Dems have realized that they are the cause of the problem and that OPEC+ isn't going to bail them out, suddenly leaks appear in the press about a pending sale of the SPR to reduce the price of oil with the intent of reducing gasoline prices. Then we see additional leaks in the press about other countries also considering SPR sales.
So how is that working out? The Wall St. investment banks have driven down the price of oil by $8 per barrel in the last 10 ten days. The Wall St. gang make a living out of deciphering the implications of the political rhetoric. As such, the impact of US or even multi-country drawdowns of SPR's is already priced into the market. Now, if we don't see SPR drawdowns, the price of oil is going to pop right back up.
The political short sightedness gets worse. While the threat of SPR drawdowns has achieved its goal of pushing oil prices down, the effect will likely only be felt for a very short period of time.
What are the longer term implications of the threat of SPR drawdowns? The oil industry in America is already timid from the fact that drilling is now pretty much considered a crime and they can't get financing. Now we have the politicos once again trying to meddle in the free market. How do you think the battered oil producers will respond? Yup, they are going to just sit back and collect higher prices for their reserves and wait until the Republicans get back in charge in 3 years. Why would any E&P company risk any capital to help out the Dems when they have and continues to stab the industry in the back.
You might think that 3 years is a long time to wait and it is. However, don't for one second think that the E&P guys are sitting in the pub telling war stories and crying in their beer. You can count on the business guys being waaaayyyy ahead of the politicians because planning and execution is how you run a successful business. Chess vs checkers!
All we can hope for is that Experienced is right about the Dems understanding that they have to sacrifice the lame duck and the next election for the greater good by pushing through their social agenda that can never be clawed back. That will leave the GOP to figure out how to pay the bill. The strategy is actually quite brilliant as the bill will never get paid, which will leave Americans unhappy with the GOP. The 45% of Americans that don't and never will pay taxes and the millions of grateful and newly franchised immigrants will be forever be in debt to the Dems and presto, the USA suddenly is basically a one-party nation. The script is right out of Trudeau's playbook.