Yesterday it was reported that President Biden was looking to replenish our Strategic Petroleum Reserve (SPR) if West Texas Intermediate (WTI) crude gets below $80. Currently, the October futures contract stands at $89.48.
What is interesting is in 2020, President Trump called for replenishing the SPR when oil crashed in April 2020 leaving crude around $25.00. The Democratic response to this proposal was a swift rebuke as Senate Majority Leader Chuck Schumer called it, “A bailout for big oil”. Hmm.
Trump was often criticized for treating many policy decisions as transactional and his call for replenishing the SPR was definitely one of those times. Trump was pretty clear that buying oil in the mid-20s was a trading position, ie he would sell it when prices rebounded to their equilibrium price of about $50. Everyone, including me at the time laughed about the “selling it” part because the SPR really isn’t there to trade around but still, it was a good call. However, because Trump said it, it was dismissed out of hand as both childish and corrupt by the opposition.
Here’s Trump talking about it in 2020. He is speaking about the events on April 20th when WTI crude actually broke through ZERO and closed at a negative $37.63. His description of a squeeze is pretty hilarious however, but his idea was not.
Well said. And you admitted an error. This is one of the reasons why your substack is such a good follow.
Maybe. We clearly need more objective thinkers. Anyway, I don’t think it’s beyond reasonable to view a 50% premium as a form of a bail out. Trump was right to want to top off reserves at historically low prices, but was he right to do it at a 50% premium? Why couldn’t it be done for two billion?