RUSH: The oil price right now is down 75%.
In the short version of this story, before this, we had become independent of world supplies of oil. We became the world’s number-one producer because of fracking. Sadly, folks, the oil price needs to be at $30 to $40 a barrel to make it profitable to produce in America. If it goes below that… If this keeps up and, if this doesn’t change, a bunch of the domestic oil business will shut down.
The Saudis are not gonna shut down. This is horrible… It may result in 75-cent-per-gallon gasoline for you, which, of course, is fine. But that’s way below what it ought to be, way below what the happy medium would be is. Oil is crashing. Before the program started, it was selling at $10 to $12 a barrel. This is why the stock market is down.
Let me check and see what the stock market is at the moment. I didn’t check. The stock market… Well, it’s come back a little. It was down in the 400s, and is now down 286. But it’s the primary reason the market is down today. If you go back to the 1970s when there were these contrived shortages… The shortages were never real.
There was never a shortage of oil. There never has been a shortage of oil. Back in the 1970s oil was priced just over $20 per barrel before the embargo days, and the reason for the embargo days was to get the oil price up. (interruption) We’re not running out of oil! Who says we’re running out of oil?
Where in the world are you seeing that we’re running out of oil? (interruption) Oh, that is an absolute crock. It used to be we only had a 200-year supply. Oil is still being made. Oil is not the result of a bunch of dead tyrannosaurus rex fossils out there that we’re just now finding, and there’s a finite number of T-Rex fossils. That’s the biggest misnomer!
Oil is still being made. You can call it a fossil fuel if you want. We’re not gonna run out of oil anytime soon. If we’re gonna run out of oil, they would stop making the things that use it — and so far, they haven’t stopped making airplanes and they haven’t stopped designing new ones. They haven’t stopped designing gasoline-powered anything yet.
Now, let me walk you through this, because this is crucial. This is another sector of the American economy that’s being hit by this. Now, this is not so much coronavirus, but it has an impact. This results largely from the argument going on between the Saudis and the Russians over oil.
“U.S. Oil Prices on Track for Their Worst Day Ever — The May contract of U.S. West Texas Intermediate (WTI) futures fell to $10.87 a barrel…” This is before the program started. The curves are saying we have a big problem with the storage. We’ve got so much… Mr. Snerdley, you say “run out of oil.” We don’t have any place to put the oil!
The oil tankers are stuck on the water in various ports because there’s no place to put the oil. The strategic reserves are filled up. The refineries are filled. We’ve got no place to put the crude. We’re not using it! In case you hadn’t noticed, there’s a government shutdown going on. There’s an economic shutdown.
People are not driving anywhere ’cause they’re not allowed to. By the way, on that, it’s academic. To start talking about whether or not this shutdown was necessary misses the point. You know, I could come to you and say, “I’m looking back and I don’t think…” The point now is get it back open.
The point now is reopen and get it back up and running. Whether we should have shut down or not is an academic point that we can deal with later. Based on the data that we are collecting, it’s time to get this thing up and running. It just is. Now, having oil at 10 to 12 bucks a barrel and less, does mean that you have cheaper home heating oil if that’s how you heat your home.
It does mean that you have cheaper gasoline at the pump. But it also means that American producers are running the risk of going out of business — and, with that, the loss of thousands of jobs. The United States became a net exporter of energy within the last two years. That is such a big deal! We used to import half of our oil.
We were prisoners to OPEC and the oil-producing nations around the world like Venezuela, the Saudis, any number of others. We were prisoners to them. It was fracking that secured our independence — fracking, shale oil. The ability to dig sideways, not straight down, to extract oil from places we knew it was, but we couldn’t get it.
Because, A, we didn’t have the technology, or, B, the technology was so expensive to use that we couldn’t bring it out and sell it for a profit so it stayed where it was. There has never been a shortage of oil. The discoveries… There was just a gigantic discovery next to the Trans-Alaska Pipeline in Alaska.
There is so much oil in American territories and in the states that we’ve become a net exporter of oil — crude oil, natural gas. We have become a huge exporter of natural gas because wherever there is oil, there’s natural gas. The two go hand in hand. Now, the domestic production of oil is not profitable once you dip below $30 a barrel.
At that point, it makes no sense for domestic suppliers to bring it out of the ground. And if this keeps up… You know, I remember back in the seventies and eighties where the Texas oil industry was wrecked by falling prices. It was great news for consumers because the price of gasoline starting in the late sixties, early seventies, jumped from 25 cents a gallon to 75 cents a gallon.
That was a shock. That was a shock to every American’s disposable income, that percentage increase. Then had hit a buck after gallon. There used to be gas wars just months before that, where gas stations across the street from each other would be selling 25 cents a gallon, 23 cents.
And overnight, it’s up to a buck. It put a big crimp in the average family’s budget because they couldn’t drive less. And this kept on through the oil embargoes — which were contrived, fake shortages all to continue to get the price up.
There was just a gigantic discovery next to the Trans-Alaska Pipeline in Canada. There is so much oil in American territories and in the states that we’ve become a net exporter of oil, crude oil, natural gas. We have become a huge exporter of natural gas because wherever there is oil, there’s natural gas. The two go hand in hand.
Now, the domestic production of oil is not profitable once you dip below $30 a barrel. At that point it makes no sense for domestic suppliers to bring it out of the ground. And if this keeps up — you know, I remember back in the seventies and eighties where the Texas oil industry was wrecked by falling prices. It was great news for consumers because the price of gasoline, starting in the late sixties, early seventies, jumped from 25 cents a gallon to 75 cents a gallon.
That was a shock. That was a shock to every American’s disposable income. That percentage increase, then it hit a buck after gallon. There used to be gas wars just months before that where gas stations across the street from each other would be selling 25 cents a gallon, 23. And overnight it’s up to a buck. And it put a big crimp in the average family’s budget because they couldn’t drive less.
And this kept on through the oil embargoes, which were contrived, fake shortages all to continue to get the price up. But then the price came down from where it was, the domestic oil producers had to cap well after well after well, basically went out of business. With them went their jobs. Those wells in Texas did not come back with our resurgence of oil. Our resurgence in oil happened with fracking and in other areas. The Dakotas. I mean, Texas, still has its ample supply. But once you cap a well, once you shut it down, that’s it for the most part.
Now, you Red Adairs out there might want to tell me I’m not quite accurate about this, but the point is this plummeting oil price is something that has the potential to eliminate our energy independence. It turns us back to possibly depending on Saudi Arabia or Russia. They can pump at those prices and remain viable. I mean, they’ll lose money, but they can continue to pump. If this keeps up, we’ll lose our dominance as a world exporter.
All of this of, all of this economic damage in a matter of months because of a virus. It’s just hard to stomach, folks. It’s just hard to swallow and calculate. I don’t want to go back to the days where you have import most of our oil, prices jacked up by unfriendly nations taking advantage. So go ahead and enjoy your 99-cent-a-gallon gasoline or your 75 cents, whatever it becomes.
I’ll tell you something else. For those of you who are happy this is happening to oil, you better think again. Oil prices this cheaply destroy solar and wind and electrical vehicles. None of them can compete, either. And where do you think you’re gonna get the power to charge your electric car? And solar and wind are not adequate replacements for fossil fuels anyway for anything no matter what, when, where, why.
Now, it’s not just the oil market that is collapsing and changing. You know, there’s all kinds of amazing change happening out there. Two other segments of our society, and they’re both at the low edge of the spectrum and the high edge of the spectrum. One, do you know what’s happened to college attendance? Plummeting. Colleges are not open. Do you realize what also is happening? Do you realize kids are having a different opportunity, different options of learning different things because their classrooms are shut down.
College attendance is way, way down for next semester and semesters after that and a lot of colleges, “We’re not gonna be opening anytime soon.” May not even open the rest of the year, some of them are saying. So students are, you know, thank goodness. I didn’t want to go to college anyway, can’t afford it, didn’t want to get a student loan, so good. Private college municipal bond prices are collapsing. College administrations’ understanding of possible lawsuits.
And still, you know, Harvard with an endowment of $40 billion is taking federal bailout money. There’s a lot of stuff here that’s just irritating people. College football, college basketball. You know, this is not official, but I saw somebody the other day say that the college football season will happen next spring, that this year’s college football season will happen between February and May next year? If that thinking’s on the board, it means there are people who have come up with a contingency to write off this year’s college football schedule.
And the more talk there is of sports, both college and professional, without fans, how in the world do you have college football with no universities open? If there aren’t any classes, if the universities aren’t open, doesn’t it kind of mean that there are not student athletes? If you can play the college football season without opening a single college, stop and think of that and what opportunities present themselves to various critics to say.
So we hope that this oil price plummets is a one day thing. We hope that the ground is made up. But I just wanted to try to put — what is it now? It’s plunged 70% in a day. Let me click on this link here and get what that actual number is. I had 10 to 12 bucks a barrel before the program started. Holy smokes, $4.31 a barrel for west Texas intermediate crude for May delivery, down 76% to $4.31 — folks, they can’t stay in business at that.
It’s amazing all these coincidences that happened here in just the last six weeks. It’s just amazing how the world’s number-one roaring economy isn’t. Just amazing. And then we have an entire political party who seem happy with that and want to maintain this status quo.
RUSH: Now, before getting back to the phones, I want to give you some other oil prices. There’s other kinds of crude not nearly as bad as the price for west Texas intermediate crude. These are futures contracts. This is for May delivery. That is the oil that is selling at $4.31 a barrel. That’s the lowest level on record for West Texas Intermediate. International, the benchmark — this is the benchmark for the worldwide oil prices. Brent crude, which is already selling now in June, is at $26.49 a barrel. That’s 5.6% lower than the open today. And the June West Texas Intermediate contract is at $22.54 per barrel. So it’s coming back once we get into June and July. But still, these oil prices represent crash territory today.
RUSH: So when I mentioned the price of West Texas Intermediate crude about $4.31 a barrel, Mr. Snerdley said, “Well, wouldn’t this just cause a bunch of investors to buy it up at this price and hold it ’til it goes up?” And I said, “There’s nowhere to put it.” So that led me to think. These are futures contracts, and these prices are in May.
I wonder what is July, what are the August…? When you get into the fall? What are the futures prices for oil once you get into, say, December? You can find this out. I did this during the break, and these really low prices are for next month delivery because nobody’s got any capacity to store it. And the reason nobody has any capacity to store it is that we’re not using it because nobody’s driving.
The airplane, the airline industry. We’re not burning jet fuel. We’re not nearly in the numbers that we do every day. So gasoline’s not being purchased, it’s not being used, it’s not being burned — and so the supplies are not dwindling. There are literally oil tankers all over this country — out on the East Coast, they’re in the Gulf — waiting to go into port to unload.
There’s no place to put the stuff.
But if you go deeper into the futures market, you go out to December this year (you can even buy oil in December 2022), you’ll find that the prices for Brent Crude (which is the benchmark) are above 30 bucks a barrel right now if you buy for this December, ’cause it’s just assumed that by then, all this is gonna have ended and the economy is gonna resume and people will start driving and gasoline and other oil products that come from refining will end up being utilized.
I want to throw something on that because the environmental wackos are paying special attention to this. They are already making the case that this is exactly what they’ve been advocating to save planet — stop use of fossil fuels — and they’re deliriously happy over this. They’re ecstatic that oil isn’t being used. They’re already got charts that they’ve made showing pollution in places like New York is way, way down.
We’ve even got stories — you knew this is gonna happen — that when the beaches were shut down, that the sea turtle hatchlings, many more of them were succeeding in getting to the ocean because there wasn’t any human activity on the beach to confuse ’em. But now? Now that the beaches have reopened, the turtles face additional peril in surviving.
So I guarantee you the environmentalist wackos are already preparing new regulations to limit the usage of beaches because of what has been learned during this shutdown. I’m not a natural pessimist, and I’m not even an alarmist, but some of this stuff has me concerned over how it’s gonna be used to further advance the Democrat Party’s agenda, and the fact that they know that because they don’t want anything to change.
It’s Democrats standing in the way of the economy reopening. It’s Democrats who urge everybody, “Don’t do it! We’re not ready yet!” If you hear somebody say, “We need to wait for a vaccine,” I guarantee you they’re largely gonna be a health expert or a Democrat. We may never get a vaccine.