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June 15, 2017


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I find it incredible that oil continues to be such a mystery to the markets and pundits. Oil is a commodity and the price is in the control of the lowest cost producers. The Saudi’s are always the low cost producer at virtually zero. West Texas is now at around $30. The idea that the world’s underdeveloped countries who are cash starved will actually adhere to a production control agreement is ridiculous. Even with war raging in Syria and Iraq the price remains unaffected. The price will hover somewhere around the cost of production for the next marginal field plus a slight profit. Producers will only limit the supply to avoid storage costs. Not raise prices. I figure Exxon, Chevron, etc have billions of barrels dripping from wells that are, like the Saudi’s, cost free. They played the game with the Saudi’s for 50 years of restricting production. That game is over with the US onslaught of production and exports.

Last night the Democrats proved the folly of their attempt to buy an election with attack ads on the President. The white guys have it and the President is making CNN look like a foolish tool of the Democratic party. The media is the bad guy. Smart like a fox the President and VP are solidifying their new hold on Wisconsin, Michigan, Ohio, Pennsylvania and the white male voters. They visit every week. They issue statements every time they issue a deregulation, someone hires again, a company doesn’t go to China and when an overseas company comes to the US. They use Wilbur Ross on CNBC to give credibility to their trade policies with his extremely understandable explanations. Even union leaders are silent; a sure sign they know their members are watching Trump.

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