• 4 minutes Pompeo: Aramco Attacks Are An "Act Of War" By Iran
  • 7 minutes Who Really Benefits From The "Iran Attacked Saudi Arabia" Narrative?
  • 11 minutes Trump Will Win In 2020
  • 15 minutes Experts review Saudi damage photos. Say Said is need to do a lot of explaining.
  • 12 hours Iran Vows Major War Even If US Conducts "Limited Strikes"
  • 10 hours Europe: The Cracks Are Beginning To Show
  • 11 hours Memorize date 05/15/2018 cause Huawei ban is the most important single event in world history after 9/11/2001.
  • 55 mins Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 16 mins Hong Kong protesters appeal to Trump for support.
  • 1 hour Millennials: A boil on the butt of the work ethic
  • 37 mins A little something for all you Offshore swabbies
  • 7 hours Ban Fracking? What in the World Are Democrats Thinking?
  • 12 hours LA Times: Vote Trump out in 2020 to Prevent Climate Apocalypse
  • 9 hours When Trying To Be Objective About Ethanol, Don't Include Big Oil Lies To Balance The Argument
  • 2 hours Saudi State-of-Art Defense System looking the wrong way. MBS must fire Defense Minister. Oh, MBS is Defense Minister. Forget about it.
  • 2 hours Shale profitability
  • 10 hours US and China are already in a full economic war and this battle for global hegemony is a little bit frightening
  • 20 hours Yawn... Parliament Poised to Force Brexit Delay Until Jan. 31
  • 7 hours Let's shut down dissent like The Conversation in Australia
Leonard Brecken

Leonard Brecken

Leonard is a former portfolio manager and principal at Brecken Capital LLC, a hedge fund focused on domestic equities. You can reach Leonard on Twitter.

More Info

Premium Content

A Bit Of Perspective On Gasoline Prices

To me, commodity pricing today is so distorted that it is almost startling. The media continues its post Goldman Sachs’ bearish calls to pound away on OPEC supply with little attention paid to rising demand. Admittedly, as we end the summer driving season, such demand will wane, adding pressure for supplies to draw down as we head into the fall. Even the EIA seems to think this trend will likely begin in July.

The focus this week in the media is Saudi supply, as it negotiates with India for more supply without mentioning a reason: demand is up. This, even after reiteration upon reiteration from the Saudis that demand is exceeding expectations. Even the EIA has finally admitted it, although as expected, they upped their U.S. supply estimates to over 700,000 barrels per day in 2015 to offset the euphoria. I have my doubts on this call of higher supply as I’ve written before. Related: Oil Prices Responding Positively To Bad News, But Why?

I have emphasized the point of waning supply, tied to depletion, for months now, which, like demand has gone unspoken in the media with the overriding narrative focused on efficiency gains or well productivity instead. The bias is very clear at this point and so is the media agenda.

In the near term, shorting in highly leveraged names ahead of the fall credit redetermination has caused equities to decouple from oil prices. Energy prices are at or near highs and even natural gas has recovered some while E&P equity prices for leveraged names are at lows. Look for a substantial pick up in M&A soon which, more than prices, will act as a catalyst on equity prices in my view. Related: New Silk Road Could Open Up Massive Investment Opportunities

On that note, with egg prices nearing $3 a dozen and milk at over $4 a gallon, one has to wonder if the outcry from media will shift there instead of oil. And milk prices are subsidized by the government while gasoline is taxed substantially, no less. After all, unleaded gasoline, which is refined and transported after being explored, drilled for and transported again, is selling less than either of those two other commodities. This is pure absurdity especially given that both eggs and milk have ready substitutes while gasoline doesn’t. Consumers can always eat other things. So when one hears the cries that oil should go even lower, you as the consumer should note the relative value of things and ask yourself if any of this makes sense. Maybe oil producers should use their land for cows and chickens instead to see better prices? Then what will the media do?

By Leonard Brecken of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment
  • David Hrivnak on June 12 2015 said:
    There is an alternative. Buy an electric vehicle and not only get off of gasoline but save a lot of money as well.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play