Home / Markets
Monday, August 04, 2008
Cavuto: Drilling on the Wrong Side of the Oil Issue
Neil Cavuto, Anchor and Managing Editor
FOXBusiness
Missed tonight's Cavuto? Catch "The Deal" right here on FOXBusiness.com
If you argue we're all energy junkies, is giving us a quick energy fix any way to break the addiction?
Here's the deal.
Barack Obama is now for tapping the strategic petroleum reserve.
Specifically, he wants Uncle Sam to sell 70 million barrels of oil from the stockpile to bring down gas prices.
Never mind the reserve is meant for national emergencies.
And never mind the good senator has argued we're addicted to this stuff.
Nothing "fuels" a political about-face like, well, fuel.
Obama shrewdly realizes that.
And today manifested a remarkable 180-degree change to prove that.
Not only is Obama now open to tapping the reserve, he's also open to tapping for more oil, period.
Drilling is ok now.
Tapping oil companies' profits to help us afford that oil, more than OK now.
Leaving aside the inherent inconsistencies in all this...What to make of this?
Well, here's what I make of it.
One. Obama realizes this is a big issue. And he was drilling the wrong side of it.
Two. Congressional Democrats have left him stranded by beating a line out of Washington without doing anything about it.
So...He changes. They don't.
He moves. They won't.
He's got a plan he says we should move on now.
They've got a vacation they say they should take now.
You can't make this stuff up.
Far from resolving the energy mess today, Democrats might have only succeeded complicating the issue today.
For themselves...And, as our congressional leaders, for someone else.
Us.
FOX Translator
No data currently available.
No data currently available.
No, it's not a dance craze. Contago is a condition of supply and demand, essentially a fancy word to say that prices for items, typically commodities, are cheaper now than they would be at some point down the line.
Anything that¿s sold in the futures market can be in a case of contango. Futures are exactly that: a contract to buy an item or asset at a price in the future. This is the case with oil, with traders buying and selling contracts to acquire a barrel of oil in months down the line. When a market is in contango, spot prices, or the price of a commodity if you were to buy it right now, are lower than forward prices.
Why is that important? Well, it usually tells you the supply of a given commodity is plentiful (since, according to Economics 101, a large supply usually leads to cheap prices).
Incidentally, if you think contango is a mouthful, its opposite condition is known by the equally tongue-tying term backwardation.
