CNN White House correspondent Jim Acosta thinks he’s one of the sharpest pencils in the box but every he opens his mouth — in real life, or virtually on social media — he puts his foot in it.
He did so again Monday by becoming the first media guy to complain about oil that costs less than $0 a gallon.
That’s not a misprint. For a brief time on Monday, oil prices fell so low futures contracts were in the negative. Technically speaking, that means for a little while anyway, oil producers couldn’t pay people to take their product off their hands. But more on that later.
Upon hearing that prices were in the cellar, Acosta couldn’t help but go on Twitter to complain about free oil.
Just. Wow.
Because everything Orange Man does is bad and everything liberal media types think, do, and say is good, Acosta obviously couldn’t help himself.
I don’t expect Jim Acosta to know anything about futures markets or the oil industry because I don’t expect Jim Acosta to know much about anything, period. His existence is 24/7 Trump hate, because that, apparently, is a job requirement to work at CNN these days.
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In any event, the above commenter is correct: The oil industry isn’t tanking as bad as most people (cough, cough, Jim) think.
As CBNC reports, “the picture in the market is not as bleak” as it appears:
Futures contracts are tied to a specific delivery date. Toward the end of a contract’s expiration date, the price typically converges with the physical price of oil as the final buyers of these contracts are entities like refineries or airlines that are going to take actual physical delivery of the oil.
Futures contracts ultimately are contracts for physical delivery of the underlying commodity or security. While some people in the market speculate on the contracts, others are buying and selling because they have use for the commodity itself. Near the contract’s expiration, traders just start buying the next month’s futures contract. Those who stay in the position to the final day are typically buying the physical commodity, such as a refiner.
The contract that tanked more than 100 percent Monday is for May delivery; it expires on Tuesday. And due to market circumstances, after Tuesday oil will be back above $20 again.
Is that low? Sure. Is it too low? Probably, yes. Understand, unlike Acosta, that it costs money to drill, deliver, and refine oil — and to sustain the industry itself — oil prices about double or even triple the $20 mark are necessary for survival. Once industry infrastructure is lost, it is difficult and time-consuming to get back online; during those times, there would be oil shortages and prices would skyrocket.
So we need balance in the industry, and right now, thanks to coronavirus-driven dips in demand, we don’t have oil industry balance.
We will again someday, soon hopefully, but that will depend largely on Acosta’s buddies: Democratic governors and mayors ‘allowing’ their states and cities to go back to work, so oil and energy demand rises enough to sustain an industry vital to powering our economy.
Of course, all of this rationality is too much for Acosta to tweet. And anyway, he wouldn’t; none of it is irrationally critical of the president.
