The Oil and the Glory
Osama bump? Dead schmed, say oil traders. Long live Ben Bernanke
Osama bin Ladin is dead. So why haven’t oil and gasoline prices moderated? We are paying $4.25 a gallon for regular gasoline here in Washington, D.C., much less than the $8 and more a gallon that Europeans face, but still a lot for us. At first, prices tried to go down after the slaying Sunday ...
Osama bin Ladin is dead. So why haven’t oil and gasoline prices moderated? We are paying $4.25 a gallon for regular gasoline here in Washington, D.C., much less than the $8 and more a gallon that Europeans face, but still a lot for us. At first, prices tried to go down after the slaying Sunday — oil prices dropped overnight and into yesterday morning as traders (the folks whose casino behavior helps to determine prices) saw Osama’s death as a reason for optimism. But then their opinion abruptly turned: Traders callously recalculated and decided that Bin Ladin and the group he fathered — al Qaeda — now rarely if ever threaten oil supplies, and sent prices back up.
During this irresolution, the price swung below $111 a barrel and as high as $114.83 before settling at $113.52 a barrel, the final dip resulting from the intrusion of a larger, new personality — Ben Bernanke and the organization he runs, the U.S. Federal Reserve. Specifically, the ultra-weak dollar showed some spark and pushed the oil price down a bit.
Some traders and analysts think that Bernanke and the dollar are even bigger right now than Libya’s Moammar Qaddafi or any other single Arab leader. Among them is hedge fund adviser Peter Beutel, president of Cameron Hanover, whose overnight note to clients said Bernanke looms larger:
As days pile upon days, the Fed almost certainly has its arms around more of them, with Bernanke’s words ringing in the ears of more traders than the ramblings of Moammar Khadafi. Khadafi is the better quote. [But] Bernanke almost certainly gets more traders to reach for their wallets.
In a strange and perhaps dubious way, Bernanke emerges from Bin Ladin’s death a clear winner — it’s settled now who is king when it comes to influence over oil prices. Who are some other winners and losers? A list follows in the jump, but please feel free to add your own in the comments box below.
Barack Obama – After two years of pummeling by opponents alleging him weak, his stars are sparkling.
Mullah Omar – With bin Ladin dead, the U.S. is likelier than at any time since 9/11 to leave Afghanistan and open the way for the Taliban leader to return to Kabul in a power-sharing deal. On the other hand, Italy’s foreign minister says Omar should be next in the cross-hairs.
Oil traders – Regardless, the speculators will end up on top. Eventually, they always do.
King Abdullah and the rest of the Saud family – For much of the last two decades, Bin Ladin has been a tireless campaigner to oust the ruling family of Saudi Arabia. Now, they can breathe easier.
The residents of FATA – If the remaining members of al Qaeda give it a rest, there is a chance that the U.S. will seriously curtail drone strikes in Pakistan’s tribal areas bordering Afghanistan.
Gen. Ashfaq Parvez Kayani and Lt. Gen. Ahmad Shuja Pasha – Pakistan’s Army and Intelligence chiefs, respectively, look either flat-footed or duplicitous after long denials of Bin Ladin’s presence on Pakistani soil.
Hamid Karzai – The Afghan president wears a game face, but must know his days on top are numbered now that U.S. attention is no longer diverted by the Bin Ladin hunt. The U.S. could wind down, and leave him at the mercy of his many enemies.
Sarah Palin – The bespectacled and opinionated Alaskan diva will no doubt find a new gripe against Obama, but one edge is lost now that Osama is dead.
Motorists, central bank chiefs – Oil and gasoline prices will remain relatively high for awhile.
Doug Edelman, aka the Burger Flipper – The ex-owner of a Bishkek greasy spoon, he won $3 billion in often no-bid fuel contracts to serve U.S. troops. If the U.S. draws down, will it be back to burgers?