Oil's plunge shows it's been speculative gouging all along

I made a simple observation this morning, and I guess a lot of people found it relevant.

So in 3 weeks, oil has gone from $91, up to $125, and now is back down to $96 today.

This is not a supply crunch. This is Wall Street speculation. It’s not #Inflation, folks. It’s profiteering.#wiunion

— JakeEdwards (@JakeMadtown) March 15, 2022

So what's the excuse being given for this reversion to prior levels?

Brent futures plummeted $6.99, or 6.5%, to settle at $99.91 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $6.57, or 6.4%, to settle at $96.44 a barrel. Both contracts settled below $100 per barrel for the first time since late February.....​

Both contracts moved the closest to oversold territory since December. They had been in overbought conditions as recently as early March, when the benchmarks reached 14-year highs after Russia's invasion of Ukraine. Since then, Brent has lost nearly $40 and WTI has fallen by more than $30. The steep decline on Tuesday came as Russia said that it has received written guarantees it can carry out its work as a party to the Iran nuclear deal, suggesting that Moscow would allow a revival of the tattered 2015 pact to go forward.

Throw in a new COVID lockdown in China, and it led a lot of traders to bail out of the Bubbly bets they made a couple of weeks ago. And it reiterates that the only supply and demand that have caused these price spikes are paper needs between people in suits.

As I’ve noted before, the number of days’ supply of gasoline in the US is no different than it has been for the past few years. And this has held through the first week of March, after the Russians rolled their tanks across the Ukranian border.

And a main reason why is that gasoline consumption continues to be lower than it was before COVID hit. The first week of March 2020 was right before much of the nation shut down and COVID was declared a pandemic, so it’s a good comp to make. 2 years later, consumption is down more than 5% for the same week, and you have to go back 7 years to find a lower amount of gas usage for the start of March.

It makes sense, as many of us work from home a lot more than we did before COVID, and there are a lot of people DEAD and/or retired in the 2 years since then.

Now maybe we see things get tighter in April as the lack of Russian oil hits import markets around the globe. But America is less susceptible to that pain than many other countries (we only get 3% of our imports from Putin-land), and we could replace that in a handful of days if we merely pumped as much oil in this country as we were pumping 3 years ago.

So this runup is clearly oil and gasoline companies taking advantage of the belief that supplies will get tight in the future, which encourages them to bid up the price now. But there is no shortage today, and there wasn’t that high an increase in inputs the last couple of months when that product was brought in and refined into gasoline.

Now that oil is back at levels of 3 weeks ago, let’s see if the price at the pump comes down as fast as we saw it go up in that time. If not, you’ll know it’s bullshit, and Wisconsin Senator with a Clue is already getting a step ahead of that.

The Big Oil Windfall Profits Tax legislation I am supporting would protect consumers from giant oil companies taking advantage of world events to jack up prices for you, and pump up profits for themselves. https://t.co/geTNNRX0oc

— Sen. Tammy Baldwin (@SenatorBaldwin) March 14, 2022

Gimmicky? Probably. But the actions of oil traders and the companies that benefit from these jacked up prices are worthy of the microscope such a bill would bring. And let's see if turning the spotlight on these greedheads magically stops some of the gouging, in the gas pump version of March Madness.