In the last three months crude oil has soared 18.6%, while the S&P 500 and the 10-year bond are flat.
But why is that the case? Please don’t give me the old “summer-driving season”.
The United States is fast becoming the largest producer of crude oil in the world, ahead of Saudi Arabia and Russia, according to the newest EIA report.
Yet the difference between European Brent Crude and West Texas Intermediate crude is only $3 a barrel. Surely that spread needs to be much wider given the Iranian sanctions.
While the White House is pressuring Saudi Arabia to make up the shortfall of Iranian production, it needs to get a handle on domestic production to curtail rampant price hikes, which amount to gouging for US suppliers, since they are not selling large quantities on the international market.
If the 1970’s and 1980’s were about OPEC dictating price and supply, the 21st century should be about our energy independence and a domestic price suiting that situation.
If American crude producers can survive on $50 a barrel, then why let crude trade here for $70 a barrel?
The higher price only emboldens countries that despise us to gather more profits in order to fund operations against us, while wiping out any monetary gains Americans might realize from slowly rising wages.