The Crude Oil Market Will Be THE Story to Watch in 2023

Andy Snyder|December 21, 2022

“Why are you selling?” we asked the chubby, middle-aged farmer.

“They’re selling the place out from under me,” he said as he climbed onto the hay wagon. “I’ve got to be out of here by Thursday.”

He sounded depressed, so we didn’t ask much more. We just wanted some extra hay for our sheep.

That didn’t stop him…

“They bought the place six years ago for $700,000,” he said. “They just sold it for $1.6 million. I can’t compete with that. I just lease it, and the new owners don’t want me on it.”

He kept going…

“It’s like the government doesn’t want the small farmer around. With the subsidies… the government programs… the price controls… if ya ain’t big, you’re broke.”

We nodded and strapped down our load. We didn’t want to lose any of it as we headed back to our small flock.

“I guess I’ll just drive a truck now,” he said as he fanned out the cash we’d laid in his hand.

We didn’t have the heart to tell him that he’ll be waltzing from the poorhouse right into the ghetto.

From The Wall Street Journal…

Over the course of seven auctions since April, the Energy Department sold barrels to U.S. refiners, foreign trading houses and major oil producers. Pumping fresh water into dozens of salt caverns that house oil across Texas and Louisiana, the agency pushed crude out of storage and through a pipeline network that connects to refineries and marine terminals.

This is how it starts, folks. Washington meddles once… then twice… and the next thing you know, it’s setting prices and propping everything up.

Crude Plans

Just as it has with the dairy market and, more recently, the corn market, Washington is toying with the crude market. This time, it unloaded crude from the nation’s backup supply… and shipped much of it overseas.

Supply was falling, prices were rising… and an election season was underway.

The Biden administration unloaded 180 million barrels’ worth of crude. With an average price of $96.25 per barrel, the oil was worth more than $17 billion.

But Washington isn’t just manipulating prices and toying with the market’s natural forces… it’s working to profit from it all.

The folks in charge (the same folks who want to levy a windfall tax on Big Oil) are high-fiving each other as they brag about their ability to buy low and sell high. They sold for nearly $100 a barrel… and now, largely because of their intervention, prices are down to just $75 a barrel.

It’s good for the American people, right? Biden saved us all by lowering prices!

Not so fast.

Washington also once “saved” us all by filling warehouses with government cheese. Just ask a dairy farmer how that’s worked out… if you can find one.

Now it’s saving farmers – and the planet! – by paying to turn our food into fuel. That system already buckled once and is about to do it again.

The pain in that sector has been acute. But just wait until these shenanigans spread across a sector as ubiquitous as crude.

It’ll be trouble… hellish trouble.

The nation’s oil drillers know what we mean. They had all sorts of reasons to fire up their operations, ramping up hiring and spending as they went.

But when Washington turned on its spigot, their equation went bust.

The government is meddling with our cars, the way we heat our homes and the fuel that drives our nation.

History tells us it will have disastrous results. It won’t be just farmers who suffer.

It’ll be all of us.

This is the story to watch next year. The energy market will be extremely volatile.

Savvy investors would be wise to keep an eye on it all.

We’ll check back with our truck-driving farmer in a year. Maybe he’ll be moving into the healthcare sector by then.

Oy…