[Posted by WLS]
June 20, 2008 — USA Today:
Democrat Barack Obama’s campaign released remarks he plans to make at the start of a news conference in Jacksonville, Fla. in just a few minutes. The lead: Unlike Republican John McCain, he will preserve the federal ban on off-shore oil drilling.
In the advance remarks, Obama tweaks McCain. “In what is becoming a bit of a regular occurrence in this campaign, Senator McCain once had a different position on offshore drilling,” Obama says. “And it’s clear why he did –- it would have long-term consequences for our coastlines but no short-term benefits since it would take ten years to get any oil.”
Obama says that “offshore drilling would not lower gas prices today. It would not lower gas prices this summer. It would not lower gas prices this year. In fact, President Bush’s own Energy Department says that we won’t see a drop of oil from this proposal until 2017. It will take a generation to reach full production. And even then, the effect on gas prices will be minimal at best.
July 15, 2008: President Bush rescinds Executive Order banning offshore drilling.
Price of oil at close on July 14 — $145.18.
Price of oil at close on July 16 — $134.60.
“Crude-oil futures tumbled $4.14 to $134.60 a barrel on the New York Mercantile Exchange, bringing the contract’s loss to $10.58 over the past two sessions – the biggest two-day drop in crude prices since January 1991. Crude has lost $10.58 over the last two sessions, the biggest two-day price drop since January, 1991. It’s now 8.6% lower than the $147.27 record high hit last Thursday. Earlier in the session, futures slumped $6.74 to an intraday low of $132, the lowest for a front-month contract since June 12.”
Yes, I understand there was an unexpected rise in oil and gas inventories reported today, and that spooked traders into thinking that a significant decrease in demand may be beginning to make itself known. But, there is not mistaking the fact that commodities markets price NEWS into their trading, not just the number of barrels that come out of the ground on any given day.
So much for Obama’s understanding of futures trading in commodities.