11 Comments

Agree with liquids, but natural gas is a different story. It's a smaller molecule and at US4/MMBtu there is an enormous amount of US gas that can be produced.

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Us has partially "outsourced" oil consumption through the trade deficit, that in the seventies was non-existent; they are not really energy indipendent due to a mismatch beetwen the types of oil extracted and the refinery capacity (so far in 2024 daily gross oil imports are 6.5 millions of barrels); and, last but not least, there are early signs of a second peak in Us oil and gas production.

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Tech stocks crashed in 2000-2002 (along with S&P 500) with oil prices that were at mid-1980s nominal (!) levels.

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In 2000 we had the Enron induced spike in natural gas prices in the US. It was harbinger of much tighter commodity markets.

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In early '00 US ran a budget surplus: this is indeed supportive of your thesis.

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There is a 3rd option: that the US government (fed+treasury) have learnt to target and implicitly cap oil prices, through such things as tacit quid-pro-quo agreements with the Saudis, allowing Iranian oil to flow freely despite sanctions, or aggressive use of the US SPR to increase supply.

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Helps when you are energy self sufficient. US can now credibly threaten oil exporting nations, and could place export taxes on energy exports if it so wished to protect the domestic market

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The Chinese gov has been reluctant to devalue the CNY, but if the economic situation there worsens, that may be their best option, especially if they want to export their way out of the hole. That dynamic would be bullish for gold (CNY hedge) and bearish for oil (more expensive for Chinese purchasers = lower demand). Do you have any thoughts on what a weaker CNY would mean for the Trump Trade?

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The problem with devaluation these days is that it will be met with higher tariffs. So, it would be a policy that weakens the Chinese government, but without boosting industry

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The first and biggest mistake that JoeBama Knucklehead made when he took office in 2021 was cutting off the oil supply and putting people out of work. Making the United States energy-dependent destroys the Petro Dollar and raises the cost and transportation of goods! An eight-grader knows the economics of oil!

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This made me think - particularly on the importance of China setting the demand for oil. Good stuff.

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