What happened to the oil market? Must be those "manipulators" again!
On April 21, 2011, President Barack Obama announced a task force to investigate "manipulation" of the oil market.
Well, Mr. President, and with apologies to comic strip character Pogo: You have met the manipulator, and he is you!
This week's release of 30 million barrels of oil from the Strategic Petroleum Reserve is a blatant manipulation of the oil market. And it worked. Oil prices plunged. Speculators on the wrong side of this market manipulation lost a fortune -- because they didn't have the inside information that you were going to dump supply into the already declining market.
Clearly the oil release was meant to stimulate the economy -- something that all the money creation by the Fed and all the programs enacted by your Congress have been unable to do so far.
The markets figured out who would win and who would lose. Stocks of retailers rose more than 3 percent on average, amid hopes that the "extra" money in consumers pockets from lower gas prices will send people on a spending spree. Meanwhile, shares of oil companies and associated drilling and service companies plunged -- helping to discourage more drilling.
After all, oil prices have been on the decline. The national average price of regular gasoline this week is $3.65 -- lower than the $3.83 per gallon when you announced your task force.
Does today's move have something to do with the latest political polls? Or, is it OK for the government to manipulate markets, but not the real users of the commodity and those who provide liquidity in global markets? Remember, the American economy is based on free and fair markets. And that's the Savage Truth.
Terry Savage is a nationally known expert on personal finance and a regular television commentator on CNN, CNBC, PBS, and NBC on issues related to investing and financial markets.
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