THE JACKALS ARE CIRCLING

I keep watching oil prices at both the wholesale and retail level as the real measurement of what the economy is doing. They seem to be the only numbers left that the government can't screw with. The absolute lack of demand tells the real story. If the economy is really coming back I would think that demand for energy would have to start going up. Of course, I'm just a carpenter trying to look at the world in the most basic of ways.

The price of crude has been going up as of late. If demand is so low, why?


"Oil prices rose Wednesday despite growing crude supplies and more signs of weakness in major sectors like retail and transportation.

But oil took a dive Wednesday after the Energy Department’s Energy Information Administration said crude inventories increased by nearly 2 million barrels. That means that in the past two weeks, about 7 million barrels of crude have been put into storage as consumers and businesses pull back.

Any economic recovery is going to rely heavily on consumers, and energy prices can dip when data suggests that people are tucking money away, rather than spending it.

On Wednesday the Institute for Supply Management reported that the services sector contracted more sharply than expected in July. The ISM showed that retailers, financial services, transportation and health care sectors experienced the 10th straight month of declines. Those businesses make up 80 percent of U.S. economic activity.

Still, retail gasoline prices continue to rise because refiners are cutting back on production.

Demand for petroleum products was about a million barrels a day greater last year than it is now, so refiners have been trying to prevent a collapse in prices by making less gas, jet fuel and diesel.

Refiners are now are operating at just over 84 percent of their capacity, which is about 9 percent below what is typical at this time of year."

MSNBC

Ok, so part of the reason for the increase in price at the pump is the fact that refineries are producing less fuel. This still doesn't explain the run up in crude prices.

So, is this market manipulation? Sure. Any company with any sense will produce less product if the market demands less. That's just good business. It also explains why the price at the pump cannot sustain any increases. At least around here, they raise the price when crude goes up but it starts coming back down almost immediately, due to lack of demand. If the market is allowed to function, somewhere along the line a sweet spot for the price will be decided. I'll be able to afford fuel and the producers will make a fair profit.


"Oil prices rose on Thursday, reaching 76 dollars a barrel in London and the highest level this year, but analysts said they expected a renewed move downwards owing to weak demand for crude.

New York's main contract, light sweet crude for September, gained 32 cents to 72.29 dollars a barrel.


Both contracts closed higher on Wednesday as investors returned to commodities including oil, drawn by the weakening US currency which makes crude futures an attractive investment option, traders said.

Crude futures are priced in the US currency and become cheaper when the dollar falls.

"The rally in oil prices is likely to falter," analysts from London-based Capital Economics consultancy said in a report.

"Many forecasts still seem to be overly influenced by the boom that started in 2004. But final demand is set to remain weak for years." Breitbart


The reason the price of crude is going up is that the dollar, the worlds reserve currency, is falling. I know this is going to sound like a circular argument but, the reason that our dollar has value is because it is the reserve currency. We are no longer connected to gold. Our dollar is valuable primarily because of its connection to oil and the strength and perceived safety of our economy. Our economy doesn't seem so safe anymore, does it?

"Faced with an unprecedented funding gap thanks to the worst credit collapse since the 1930s and plunging tax revenues, the United States is now issuing more debt than ever to finance its expenditures. About $2 trillion dollars is estimated to be auctioned this fiscal year.

And what it can’t finance, Treasury simply monetizes vis-à-vis the Federal Reserve, as we all already know, through the process of “quantitative easing.” Several other central banks are doing the same thing this year, including the Swiss National Bank and The Bank of England." Sovereign Society

If we are devaluing our dollar through debt and this insane Keynesian idea that we can print and spend our way out of economic collapse we are opening the door to the world deciding to change reserve currencies. This would be the perfect time for our enemies to take us down without firing a shot; especially, if our enemy has the additional incentive of needing oil prices to stay high to support their otherwise failing economy. If the dollar is no longer the worlds reserve currency and our economy is shot, what else do we have to support the value of our money? Certainly not our manufacturing base. We gave that to our enemy, China.

"The following rhetoric has become commonplace. From Bloomberg:

""Russian President Dmitry Medvedev has repeatedly called for creating a mix of regional reserve currencies as part of the drive to address the global financial crisis, while questioning the dollar’s future as a global reserve currency. Russia’s proposals for the Group of 20 major developed and developing nations summit in London in April included the creation of a supranational currency.""

China and now India have chimed in to support this call to move away from the dollar as the primary reserve currency. But the Russians have been the most vocal about it. Why? The can just as easily shift to the euro as the primary reserve currency. Why make a big stink out of it?

The answer is actually simple. The Russians are trying to accelerate dollar devaluation by creating an anti-dollar chorus (which is not necessarily unwarranted)." Seeking Alpha

The jackals can smell blood and they're circling. If only somehow they could find a way to force the price of crude up, raising the price of energy to a level that would drive the final stake through the heart of America.

"Earlier Monday, the Movement for the Emancipation of the Niger Delta said that it had struck at the Shell Forcados offshore platform in Delta state, the report said. Nigeria is a key exporter of crude.

The attack "seemed to have been the big underpinning for oil," said Kevin Kerr, president of Kerr Trading International.

"If the dollar fails to hold support here, it's likely crude will rally further," Kerr said." Market Watch