The oil headache

"Meanwhile, the average folks in the United States are also dazed and confused about what is going on here. We know how to do 'shock and awe'. We have already crippled Iran. They have nothing to stop us. Time for the bad guys to pack it in. Time for us to get back to a normal summer." 

Last evening, there was a presentation on YouTube which explained how the price of oil is determined. We all know the constipation at the Strait of Hormuz is causing a real problem with supply getting to consumers (in some parts of the world). But here in America, we are drilling like crazy, and have more oil than anybody else in the world. In fact, only 2% of our imported oil comes through the Strait. If that is the case, why in the Sam Hill are we paying Euro type prices for our oil? The show finished, and I sat in my chair dazed and confused.

One of the things from the show last night which did stick however, was the number $50/barrel. If the price of oil (worldwide) goes below $50/barrel, many oil investors (like here for example), will not drill any new wells. Not worth it. But with the price of oil hovering around $100/barrel, the oil companies are doing what the President hoped they would do - DRILL, BABY, DRILL!

As far as energy is concerned, we now have an embarrassment of riches. If not for world market oil pricing, we would be in great shape. And we will be in great shape once the Strait of Hormuz is finally opened. But right now, with vacation season upon us, paying anywhere from $4.50/gal to $5.00/gal is becoming a sad reality. 

General Keane (whom I respect) has a strong opinion what to do now. And I agree with him. Finish the job with Iran. Accept the fact that we are being played by Iran. They are playing for time, that is it. They want to keep the enriched uranium. We say no. Israel says no. Meanwhile, hundreds of ships just sit in the Persian Gulf, doing nothing. Much of our fleet is in the area, doing nothing. Finish the job Mr. President. Our troops are rearmed and rested after this "pause". Let's do it!

Meanwhile, the average folks in the United States are also dazed and confused about what is going on here. We know how to do "shock and awe". We have already crippled Iran. They have nothing to stop us. Time for the bad guys to pack it in. Time for us to get back to a normal summer.