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Monday, February 9, 2015

More Low Oil Price Fear Mongering from the Investor Class

We've said before and repeat often than dramatically low oil prices which translates to low prices at the gas pump is the Best thing to happen to the US economy since the official recession began in 2007 (The unofficial recession keeps going n' going..)

So it amazes us, though perhaps it shouldn't how determined mainstream media is to portray this bit of good news as a negative that we should fret about

The most glum and sanguine reporting of course comes from the financial media; those soulless bastards who profit financially and via TV ratings when there are commodity spikes that drive up the costs for everyone while enriching their pockets.
We came across an article last week so typical of the negative slant they present to readership from a site called Investopedia.com entitled 'Falling Oil Prices Could Bankrupt These Countries'

Now at first glance one may think, 'Oh that isn't so good'..

But then here's some of the countries mentioned that we the American people are supposed to give a damn about..
Libya -- "Oil production has been prone to disruption since the fall of Colonel Muammar Ghadhafi in 2011. Since then, infighting between rival militias and extremist groups has kept the cost of production excessively high. 

Libya needs oil prices to rise to $184 per barrel to break even in 2015, and the current fall in the price of oil has cost its economy a full 23 points in GDP."

Tough shit..

First of all, if Obama and that pretend 'coalition' had not assassinated Ghadafi, the nation of Libya would still be economically stable and you wouldn't have all the infighting and political instability.
Think what you wish of Ghadafi but he was very charitable toward his people and he ruled Libya with an iron fist which the Libyan people Wanted and Desired.

This is Very Important and most Westerners reading this will not understand or accept, but not everyone around the world wants or desires American Democracy. (same goes for Iraq, Egypt and pretty much the rest of the Middle East except for Israel, the ally we treat like shit)

This is a big reason the US is so hated.. We want our form of government and our perverse brand of secular economic capitalism to be in every nation, regardless of what the native populaces want.

Arabic people want to know who their leader is, that he keeps strict order to their nation (democracy is messy and leads to corruption) and there is governmental stability.
Libya was one of only 4 nations on earth that didn't need crippling loans from the US-controlled International Monetary Fund (Iran, Cuba and N. Korea being the others) and the bankers used Obama and the US military to wipe him out.

Iran -- "Iran has been hurt by economic sanctions from the West for decades, limiting its scope as an oil exporter. As a result, Iran’s actual daily production is much smaller than its capacity – making it expensive to maintain idle infrastructure and under utilized capability. 

In order to balance its budget, Iran needs oil to fetch $131 per barrel. The decline in oil has cost Iran’s economy approximately $27.13 billion."

Good..  Fuck Iran..
If not mistaken, this is the nation that took a couple dozen Americans hostage back in 1979 and we have done absolutely nothing to avenge it 36 years later, yes?

The same nation that is working on an nuclear enrichment program so to create their own weapons to use on Israel and Saudi Arabia to shift the balance of power in the Middle East while the US plays appeasement, right?

OK then.. as we said.. Fuck them and their economy,,
Algeria & Nigeria --  "Algeria has also faced slowing production and needs oil to sell for just over $130 per barrel. 

The North African nation has joined Iran as a vocal proponent of higher oil prices during OPEC meetings. Algeria has lost over $28 billion due to the drop in oil.

Nigeria is Africa's largest economy, but it suffers from rampant corruption and regular theft of domestically-produced oil. Currently, Nigeria needs oil to trade at just under $123 per barrel to balance its budget, and its economy has lost a whopping $42.5 billion in economic output."

Let's stop for a minute and do some simple math...
There are 42 gallons of gasoline that make up one barrel of oil..

Now let us say oil was trading at $130 instead of $53 which is was as of Friday afternoon..

$130 divided by 42 = $3.09 per gallon before all the government taxes and extra fees which allow the middle men and the gas stations themselves to profit from selling the fuel..

Last February, oil was trading at around $102/barrel and people were generally paying $4.09/gal for regular and $4.39/gal for premium

So figure if gas went back up to $130/barrel so Algeria could break even, you're looking at $4.50/gal for regular and $4.89/gal for premium
If someone fills up once a week 15 gallons for a full year at that Algeria price:

15 x $4.50 = $67.50 x 52 weeks = $3,510 to fill your tank which is more than double what drivers would be paying now if prices stayed the same a full calendar year..

And remember at the beginning, Investopedia.com said Libya needs $184/barrel to break even..  So let's do the math

$184 divided by 42 equals $4.38..  Add all the fees and US drivers would be looking at regular gas at over $5.50/gal and premium at $5.80/gal.

So back to the list of nations that are suffering..
Saudi Arabia -- "Saudi Arabia needs oil to sell for $106 per barrel in 2015.. The low price has cost the economy $178 billion"

Iraq -- "Iraq needs oil to be at $100.50 per barrel, but the high expense is mainly due to geopolitical conflict that still plagues the region."

Venezuela --  "Venezuela’s break-even price is $117.50, and its economy has lost over $35 billion due to the decline in oil prices"

Russia --  "Russia needs the price of oil to be $98 or higher in order to produce it at a profit, and its economy, along with the value of the ruble, have been hit hard as a result. 

Over $150 billion has been lost in GDP to the low price of oil, and many fear that Russia may yet again default"

We don't see too many political allies in this bunch..
Beyond all the negative spin and fear-mongering is a simple fact..

Based on gasoline prices staying at or close to the level it is at today, the average American will save at minimum over $1,700 in gas expense vs what they spent a full calendar year ago..

 And even if one is filthy rich, $1,700 is nothing to sneeze at.

So we at A&G are not sobbing over these low oil prices and how its impacted both the US oil interests and foreign economies around the world because it is truly the Only economic benefit everyday people in the US and abroad have received in close to a decade!