Wednesday, January 14, 2015
A Strategic Suggestion
The falling oil prices are causing problems for the shale oil industry players in the United States ... postponing many new wells and putting a crimp on their payback of existing capital-spending borrowings. This is a seeming result of Saudi Arabia's refusal to cut oil production despite a world-wide glut of oil ... apparently as an opening salvo in its economic war on most of the other world's oil producers ... including America. It apparently believes that it can use this strategy to protect its long-term market share.
However, the United States does have one way to counter this aggression (if we would take some time out from our golfing). We could take a cue from our old railroad baron, Jay Gould (see: Pricing for Profit), and begin buying enormous quantities of Saudi oil and storing it in our strategic petroleum reserves (or creating new ones). This would be a win-win-win in that it would allow us to help out our shale-oil producers, prepare these oil reserves for any future oil shortages, and also top-off these reserves at rock-bottom prices.
That does, of course, presuppose that our current government could think strategically ...
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