Oil at Risk of Going Much Higher
Which Would Mean Further Weakening of the Dollar
I mentioned earlier that $80 per barrel was the next stop for oil, not $60, once that initial floating tranche of oil from the Strait cleared the market. The U.S. has drawn down the SPR to levels last seen in 1983 when the U.S. population was 234 million people, 32% less than today’s 345 million people.
The U.S. can only play the SPR draw down game so much longer before that buffer is gone and the price of oil and gas at the pump spike. Iran knows this. The U.S. has zero leverage, so I am not sure why we pretend we do. “Pretend and extend” works in commercial real estate, not in the oil game when demand persists and supply is low.
The risk we run with this pretend game is that Iran will use its obvious leverage, the SPR will be drawn down to a level where we may not draw any further, then Trump would likely want to subsidize the price of oil and gasoline at the pump because he is a big spending politician at heart.
Spending money the U.S. does not have to subsidize the price of oil will lead to more price inflation / a devalued Dollar, and gasoline shortages at the pump. That of course would be Socialist policy not unlike New York City Mayor Mamdani.
Socialism of course does not work. Washington D.C. should read a history book. Better yet, look at how our Socialist policies - Social Security, Medicare, Medicaid, income assistance, a bloated Dept of Education, etc. have destroyed the value of the Dollar.
But then again, there is so much graft involved in these fiscal outflows that benefit members of both parties (my guess is that all members of Congress benefit, especially the Senate, to say nothing of the unelected officials in DoD, State Dept., CIA, IRS, that grow their portfolio every year) that we can’t expect Washington D.C. to police itself. Especially when the U.S. population is doom scrolling rather than paying attention to our fiscal situation.
Time for Americans to throw party politics out the door and to put the Federal Government on a radical starvation diet. It is the only way to make the Dollar and the U.S. standard of living healthy again.
