US OIL RESERVES NO LONGER OVER A BARREL
LET’S start today with something that the government got right – almost.
It took Washington a long time to stop oil from flowing into the Strategic Petroleum Reserve (SPR) last spring. Even with barrel prices being driven up into the $140s by speculators, the government just couldn’t get enough.
Finally in June the tap was turned off by an act of Congress with the SPR – the government’s emergency crude supply – at around 97 percent of capacity.
A couple weeks ago, when the law barring purchases lapsed, the government continued topping off the SPR using $600 million it got from emergency oil sales after the Katrina and Rita hurricanes in 2005.
Only now, instead of $140 a barrel, the government paid around $51 a barrel. Delivery of those 10.7 million barrels of oil will start this week and continue into April.
That, of course, would be excellent news if the price of crude hadn’t since dropped into the low $40s.
Still, it beats $140 – by a lot – so why quibble over a few bucks?
After those contracts are filled the reserve will keep receiving oil because some companies will be repaying borrowed barrels to the SPR and because others will pay for offshore oil leases in crude.
The SPR will be virtually full by the end of 2009.
And that can’t happen soon enough since speculators like Goldman Sachs and T. Broke Pickens seem intent on talking the price of oil up again, despite the increasing rise in inventories and the low demand due to the recession.
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Barack Obama claims his administration is going to be more transparent than the last guy’s.
With that in mind I’ve refiled my Freedom of Information Act (FOIA) request for details of meetings held the past few years by The President’s Working Group on Financial Markets.
The group is also known – affectionately, to some of us – as the Plunge Protection Team and is made up of regulators as well as Federal Reserve Chairman Ben Bernanke and whoever heads the US Treasury.
Specifically, I am requesting meeting minutes of the Working Group, even when those chats were done by telephone.
Former Treasury Secretary Hank Paulson has publicly said meetings took place frequently during the financial crisis.
Even more to the point, I’d like to know what was discussed by the Working Group at the time two years ago when the Fed was considering the first in what has become a long series of interest-rate cuts.
Paulson was proud of the fact that while heading Treasury he kept in touch with “market participants.”
I’d like to know just what Paulson knew from these Working Group meetings and what he shared with his friends who worked on Wall Street.
My previous FOIA requests have been ignored. Let’s see if President Obama really wants a government that has fewer secrets.
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Friday’s a big day for Wall Street.
The January payroll figures, which are expected to show a loss of 500,000 jobs, and the monthly unemployment rate will be announced, and I think the financial markets are going to be surprised.
The experts expect the jobless rate to climb to 7.4 percent from 7.2 percent.
That’s all I’m going to say now because I don’t want to spoil the suspense. But on Thursday I’ll tell you exactly what I think will be Wall Street’s next hurdle.
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I suggested in a column last week that tax- cheat Tim Geithner should shut his yap about the Chinese.
Even before he was confirmed as Treasury Secretary, Geithner picked a fight over whether China was manipulating its currency.
Soon afterward Chinese Premier Wen Jiabao came out fighting, blaming the US for the worldwide economic slump.
Wall Street, of course, did create many of the problems. So the premier’s criticism isn’t too far off. But it really doesn’t matter who is right and who isn’t. Repeat after me: The Chinese are our creditors. If we want them to continue lending us money so our interest rates stay low, we must not piss them off.
So, in that spirit, let me say to Mr. Wen: please excuse Tim Geithner. He’s out of his mind.
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OK, now anyone who had been laid off at Target, or Morgan Stanley or Citigroup or AIG please raise your hand if you’d like one of the “shovel ready” jobs that President Obama thinks will be created by the massive government spending announced last week.
Want to fill a pothole? Build a bridge? Maybe work on the new railway tunnel under the Hudson?
I didn’t think so.
What about any of the United Auto Workers being let go by the car makers? Anyone in good enough shape to dig a ditch, much less pour concrete?
The real question is: how many undocumented workers will we need to fill those jobs?