Reply to $7/gallon gas is coming

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][twitter]https://twitter.com/SeanCasten/status/1510225216781357062[/twitter][/quote]

On April 30, 2020, a barrel of oil was $21. That 24% increase was really huge!  [/quote]
The mental gymnastics you must go through on an average day must be crazy. It’s okay that Donald was negotiating for higher prices (with a guy who murdered an American resident, no less!) so long as the prices weren’t high? What kind of pills are you taking for that to make sense? [/quote]

Or maybe you don’t understand the situation because you probably don’t understand this industry other than the times someone tells you want to think like the congressmen.

In the few years leading up to February of 2020 (before the pandemic hit!) the oil and gas companies and oil field services companies had filed for bankruptcy in record numbers. The industry was cratering in 2019 due to oversupply of oil and lost over 100,000 jobs in 2019.  With the industry already reeling by January of 2020, the COVID pandemic supercharged the industry’s problems. By April of 2020, oil prices for the first time went negative (meaning you could get paid to take delivery of oil!).   If you knew anything about this industry you would know it is extremely sensitive to supply imbalances.  The fundamental problem is that the world consumes approximately 100 million barrels of oil per day. And if you have an oversupply of oil today you’ve got another 100 million barrels tomorrow that you have to figure out what to do with and the price swings wildly on just a 1% oversupply.

So, in April of 2020 you have oil at historically low prices in real terms, an important domestic industry that is reeling from both structural problems and the pandemic, the commodity is at unsustainably low prices (meaning low prices are causing structural destruction of the domestic production base) and so Trump pressured KSA to choke back production in order to stabilize prices to protect the industry. FWIW, they was totally in KSA’s best interest as best estimates are that KSA balances it’s budget somewhere around $65/barrel.

For perspective, the price of oil after Trump negotiated the price increase was the same as it was in 1946 on an inflation adjusted basis.

I’m guessing your ignorant of the above. To you this is all about soundbites and simplicity rather than trying to understand nuance and context. There’s a reason why the congressman only refers to percentages in his tweet thread rather than the actual price and facts surrounding the situation at the time.   
 [/quote]

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