Cramer: See Through the Oil Lies
No wonder there is so much disinformation about the oil markets, which are now, universally, supposed to go down. We have the trifecta of lies on display today in an article from The Wall Street Journal titled "Saudis May Pump More Oil, Discount It to Refineries."
I am going to quote the whole chimerical paragraph so there are no illusions about what I think is the world-class dissembling of the Saudis that has been picked up and magnified by the media endlessly:
One thing that nearly all sides agree on: the market isn't hankering for additional oil. Saudi officials have insisted loudly for months, most recently on Friday, that more oil wasn't the answer. Instead they have blamed soaring prices on the falling dollar, U.S. interest-rate policy and the increasing involvement of big investment funds in the commodities markets.
OK, let's take these lies one at a time. "One thing that nearly all sides agree on -no hankering?" Here we go with another Saturday Night Live line. In fact, the one thing all can agree on is we need more oil to offset and bring down the spot price and the futures price. If there were more oil that could easily be brought to market, the speculators -- including the institutions, because they are not users -- would be smashed. This market is too big to be cornered. The reason it is so high is that if there were any excess supply, you can bet the Chinese and the Indians would take it.
The falling dollar? The dollar has actually stabilized and risen simultaneously with the biggest spike we have ever seen in oil. Also, the dollar has minimal correlation with oil. I have not seen a study that shows more than a 6% relation to the boost.
How about U.S. interest-rate policies? We are probably the country that has most ratcheted-back energy use year over year. And for those who think that the interest-rate policy of this country is sole reason the dollar is weak, all I can say is, "You have to be kidding me." Have you seen the budget deficit? Who the heck wants to keep buying our debt? Our land, yes, but our debt? That's a sucker's game to buy. We have a terrible currency because we print it at will and have no fiscal discipline. Does anyone really think that a move from 2%-3% would save the dollar? The history of countries that print money as we do is a history of taking rates ever higher to try to attract money and it has almost always failed. You need to be a growth country -- we are certainly not -- and you need to cure a nation's inflation, and the easiest way to do that is to cut spending and raise taxes so there is a scarcity of bond issuance. You raise rates and you kill whatever anemic growth we have.
No matter, despite their total lack of forthrightness in anything they say as a country, including this oil thesis, the Saudis always have credibility. In fact, they are the only talker in this game that the press takes seriously. The press particularly despises the executives in the oil industry and thinks they lie like rugs, even though they tell the truth about the lack of new oil coming to the market. The politicians are no help either. In this country, we endlessly hear that it would take "10 years" to bring on ANWR. Of course, we have been hearing that for the past 20 years.
So, don't believe the lies -- believe the truth. The Saudis are all about and have always been about keeping prices down to stop the alternative-energy juggernaut they have always feared -- they love their hegemony over the world. They are, in many ways, the most powerful country on earth, free to export political venom and oil. They have tons of the former, but they are running out of the latter, just like everyone else.
And the lies must no longer be believed in. They are killing the reality: We need more oil drilled, and we need it now. Plus we have to accept carbon use, particularly coal, until the alternatives -- not the additional Saudi oil fields -- come on stream.
Random musings: there is an absolutely terrific series on the housing crisis being run in The Washington Post that shows that "everybody knew" about the mortgage crisis except the regulators. That is totally right, and I am glad someone bothered to point it out. They even mention the Implode-a-Meter site, which is what I used to see how bad things were the whole time. ... Thain gets $83 million -- for what? Moonves gets $67 million -- for what?
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