It’s there that the heavies of American oil will be dragged in front of the Senate Judiciary Committee to discuss interesting subjects such as reforms to US anti-monopoly (they call it anti-trust) laws, and a radical plan to cut use petrol prices (which they call gasoline).
Whatever names are given the central objective is to put Big Oil on trial, with the charge being “ripping off US consumers”.
The Slug reckons the event will be interesting though he suspects the jury (sorry, the Judiciary Committee) has already placed an order for a noose, and is now looking for a tall tree to hang the guilty (sorry, the witnesses).
More about The House later because as that sideshow gets underway with appearances from the new chief executive of ExxonMobil, Rex Tillerson, and Shell Oil president, John Hofmeister, there is something even more interesting happening on the oil market that might actually deliver what Congress wants – lower petrol prices.
As The Slug was reading the witness list for the Senate hearing, his eye caught this little gem from the oil market. Stockpiles of crude in the US have climbed to their highest level in seven years, including a gain of 6.8 million barrels last week alone.
Close followers of The Slug’s rambles through the energy market will remember that it is only three weeks since a big hint was dropped here that oil prices might have peaked. The reasoning then was a forecast of lower prices from the outgoing ExxonMobil boss, Lee Raymond, and the fact that oil companies were walking away from high-cost, high-risk oil/gas projects because they could read the writing on the wall.
Late last week that writing was along the lines of “$US59 a barrel and heading south”. Petrol futures had dropped to $US1.69 a gallon, and some of the smart boys on Wall Street were tipping a fall in the barrel price for oil of up to $US4 this week.
Compounding this view that the best of the oil price curve might be over was news from the Organisation of Petroleum Exporting Countries (OPEC) that it would hold production at 28 million barrels a day.
Kuwait’s oil boss, Sheikh Ahmad al-Fahd al Sabah, took a decidedly western-friendly line when he said the aim was to drive the price below $US60 a barrel, and keep it there because it was hurting global growth.
Meanwhile, as these real life events are taking place the heavies of US oil will have their day in front of the judiciary committee, fielding questions about whether there should be a “super tax” on windfall oil profits, and whether there should be a formal Trade Commission inquiry into whether any of the oil companies have artificially limited petrol production to force prices higher.
The Slug thinks the inquiry should make for good theatre because the law makers will be playing their “friend of the voter” card as strongly as they can, while the oil companies will be saying, “take a look at the price of gas, it’s falling”.
In a bizarre way, the political process and the market process have arrived at the same point at roughly the same time – which might even give the genuine nut cases out there even more fuel for their global conspiracy theories.
Meanwhile, The Slug says settle down folks, this looks like being a fun week – but not necessarily for investors in oil stocks who might have a rocky ride if the oil price really does drop $US4, or more.
