I live in a large, very nice apartment community in northeastern Colorado. Lots of my former neighbors were employed in the oil drilling business. I say former neighbors for a reason. Lately I’ve noticed that most, if not all, of the oil workers have vanished, as well as their work trucks. They’ve disappeared. And this all happened within a few short months.
In September of 2012, when I first moved into this little community, the place was literally crawling with oil drillers and their crews. Their trucks were everywhere in the parking lots. My former neighbor above our ground-level unit had fourteen rigs in operation. And he personally rented fourteen apartments for his employees. Now he’s gone. They’re all gone. What happened?
The head of property maintenance here, whose name is Sam, tells me that entire rows of apartments once occupied by northeastern Colorado oil field workers are now standing vacant. They’ve all been laid off and sent back to their hometowns, many of which are in Texas and Louisiana.
Then I had a brief conversation with one of the managers of the entire complex. She told me that the recent drop in oil prices precipitated those massive layoffs here in Colorado. She got her information from the drillers and employees who pulled out of here and left her with all the vacancies. The American drilling/fracking companies simply couldn’t compete with the low prices now available from the Middle East on the world commodities market. They’re being run out of the business.
So, what gives here? Well, a lot of empty apartments is what gives here.
Now, I know a little about how the commodities market works. I know just enough to not go near it with my hard-earned money. For one thing, while highly illegal in the stock market, it’s perfectly legal to buy and sell commodities based on “inside” information. Floor traders backed by huge moneyed interests can drive prices up and down by taking long or short positions. For every seller of an oil contract (at one-thousand barrels per contract), there is a buyer. Someone wins and someone loses.
Buyers (long positions) count on the price going up in order to profit. Short-sellers want the price to drop in order to profit.
However, if an immense long-term spate of short-sell orders comes in, which could easily be financed by OPEC-backed floor traders, oil prices will begin to drop precipitously. And they have dropped precipitously – over the cliff. Such a dramatic drop could have nothing to do with supply and demand. It is pure price manipulation by entities with big money. And the Saudis really have a lot of money to take the short-term losses as the prices have dropped. As the price of the oil futures crashes, more and more traders holding long positions (the buyers) panic and sell their positions in order to get out of the market and cut their losses. Prices drop even further.
Let’s cut to the chase.
When this recent crash in oil prices began several months ago, I was puzzled as to why it was diving. It surely couldn’t be because of a sudden worldwide decrease in demand. No. Planes are still flying in record numbers. People are buying and driving cars. So why would it happen? What could it have been?
Well, call me crazy if you wish, but I believe it’s our “friends”, the Saudis, again, who are behind this steep price drop, which in turn led to the collapse of Colorado’s oil drilling industry. The last thing the Saudis want is for us to become oil-independent. What better way to keep us from independence than to drive our own drilling industry out of business by dropping prices so low that our drillers can’t compete any more? Sound diabolical? I know it does.
Right now the oil market is totally focused on finding a bottom for oil prices. However, according to OPEC’s Secretary-General Abdulla al-Badri we’ve already hit bottom.
Not only that, but he sees a real possibility that oil prices could explode higher to upwards of $200 per barrel in the future. He’s far from the only one that sees a return of triple-digit oil prices.
Finding a bottom: According to recent comments by the Secretary-General when he was in London, the oil market doesn’t need to look for oil prices to bottom as the market has already bottomed. Instead, he offered quite bullish comments by saying, “Now the prices are around $45-$55, and I think maybe they [have] reached the bottom and we [will] see some rebound very soon.”
Normally that type of remark would be just another layer of noise, but this is coming from OPEC’s Secretary-General so it comes with a lot of weight behind it…
…Further, the rig count in the U.S. is plunging, which is usually a key to a bottom in oil prices. However, in the midst of cutting back as the industry works through the current oversupply the Secretary-General is now warning that the industry is putting future oil supplies at risk by under investing today.
Q: Now why is that rig count in the U.S. plunging?
A: Because the American drillers couldn’t produce the oil as cheaply as the manipulated price the Saudis are offering.
Q: And how in Hell does this OPEC honcho Abdullah know we’re at the bottom of the plunge in prices?
A: Because OPEC probably created the plunge in prices by massive short-selling, until it became apparent that the U.S. drillers were giving up and going out of business.
If the Saudis financed this immense crash in world oil prices (and it’s very possible, if not probable, they did finance it), having run America’s drillers out of business, they can now drive the price of oil back up to, yes, $200.00 a barrel – and recoup their temporary losses from the crash they engineered in the first place.
And it could be even worse. The U.S. government by and through the Treasury Department has been known to buy or sell stock and commodities futures to manipulate prices. If you think the Obama Administration is anxious for the U.S. to become independent of the Middle East for our oil supply, I have an ice cold can of Diet Pepsi that says you’re dead wrong. Place your bets.
Yes, America. We’ve been had again.
Think I’m wrong? Perhaps. We’ll see how this plays out. In the meantime, all those apartments around me are still standing vacant.