Navivest

Market Power, Asset Allocation and Oil Price

There used to be a time when OPEC. or more specifically Saudi Arabia, was highly concerned about perception. That is, while like any normal purveyor of a product or service they wanted the highest price they could command, they also worried about disturbing that delicate balance between maximum pricing and upsetting customers. Now they've seen that we'll basically pay anything so they're emboldened to the point where they can actually look our president in the eye and say no they won't increase production, even though they could.

It is imperative that we increase US output as well as get serious about alternative energy. Unfortunately as is so often the case in this country, wherever there are politicians there are lobbyist so that now we have a very powerful farm lobby that refuses to let us use alternate feedstock for ethanol besides corn. This has resulted in everyone knocking ethanol. Lest we forget, Brazil is efficiently producing ethanol and powering their vehicles with it.

Thankfully, there is a limit that Americans will reach. Ford actually announced they will delay releasing their new F150 truck. The delay is supposedly for just two months, but to the extent that this is their bread and butter, what does that mean for the company? As it is, Explorer sales have fallen from over 450k units at their peak, to just about 150k a year! Something needs to be done ASAP.