Episode 31: Oil Turmoil

But the one thing that we've realized in all of this and all this international turmoil is the problem with oil prices.

So you look at what is going on with oil.

And I want to talk about what Chevron is doing specifically down in Venezuela.

A couple of things.

Just like I said with MP, the stock ticker MP, when the government invests in a company, invest alongside with them.

full stop because the government is going to make sure they get contracts.

Government's going to make sure that they're, uh, what they put into that company make money because they're using taxpayer money.

But more importantly, they have the ability to control the outcome.

It's one of the reasons that you don't want government investing in private companies, which, uh, most free market people, which I'm one of, uh, is against understand when it's a matter of national security, that is tends to be somewhat of a different issue.

And you can debate whether this is or not with the, rare earths, and it's certainly a very good debate.

What's going on with oil prices right now is we're talking a lot about what Venezuela has, 65 billion barrels of recoverable oil.

Now, the problem with that is you want to refill the Strategic Petroleum Reserve.

The Strategic Petroleum Reserve is used for times of crisis, a hurricane, a war, things like that.

There's 712 million barrels in the SPR, as they call it, in salt caverns around the Gulf.

Now, the problem with that is we've already gone down to about 290 million barrels.

We've withdrawn oil out of the Strategic Petroleum Reserve based upon what's going on in Iran with the Strait of Hormuz.

So the capacity that's coming offline because of the Strait of Hormuz has been shut down.

We've replaced with the Strategic Petroleum Reserve.

The problem is that doesn't give us a shock absorber in our system any longer.

So if there's a systemic problem, it's kind of like when Greenspan had low interest rates for a very long time.

If you had any systemic issue, you can't lower rates.

It was already low.

So you know shopping is over.

You're going to have a systemic issue.

You could have a crisis that is global because of this.