Publications: Notes at the Margin

No Confidence; Trump's Conundrum; The Faux Pied Piper of California Gasoline Prices (September 9, 2024)

 

The six-percent drop in crude prices last week startled numerous market observers, among them consulting and financial firm forecasters. Many cited uncertainties regarding demand in China and elsewhere as the cause.

 

However, those with exposure to foreign exchange markets understand exactly what is happening. Oil market participants no longer believe OPEC or OPEC+ can maintain a stable supply and demand balance. Inventories are too high, and those who buy oil have paused their purchases. We begin this week’s report with a discussion of the market’s crisis of confidence.

 

In the second section, we address a conundrum created by Donald Trump. The former president seeks to lower US energy costs, according to The Wall Street Journal. However, Trump admires and has invested in Saudi Arabia, which clearly does not want reduced oil prices.

 

We focus last on Gavin Newsom assuming the role of what we label a “faux Pied Piper.” Like the flute player who was anathema to rats in the Middle Ages, Newsom wants to rid California of high fuel prices. The measures he proposes seem more likely to do the opposite.

 

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