You posted yesterday morning that you dumped your long oil position on Tuesday. That may look good now (especially considering oil's 12% drop yesterday), but don't you think Obama's weakness on terrorism as indicated by his appointment of Leon Panetta to the CIA will lead to another attack on the U.S. and therefore higher oil prices? Just listen to what O'Reilly said about Panetta.
There's a lot to sort out in there. I'll go through it point by point.
Yes, we did sell our long oil position on Tuesday because we thought the short-term pressures sending oil higher were about played out. Those were (A) its oversold condition after a relentless plunge from July's high; (B) the Israel/Hamas conflict; and, (C) the Russia/Ukraine dispute over natural gas prices.
However, the price picture for oil is complex and requires looking at multiple time frames. I examined precisely that picture with subscribers last Sunday. While immediate-term pressures were for higher prices, short-term were for lower because of the continued economic doldrums keeping demand in check. The outlook from there I'll reserve for subscribers.
It's not much of a mystery, though. The world population is increasing. Most of the world has yet to adopt the oil-dependent lifestyle of the West, but wants to do so and is determined to do so. As that segment of the global population acquires cars and hits the road, demand for oil will increase. Unfortunately, oil is getter harder to come by and some say it's on its way out altogether. Any Economics 101 class will tell you that rising demand meeting falling supply produces higher prices.
That -- not Obama's stance on terrorism -- is what will drive oil prices for the long term. I have an eye on that long term and intend to own oil for it, but believed that we'd have a chance to book a quick profit by selling recent strength in the commodity and then waiting for the economy to knock the price back down for re-entry.
While Jenna's quip about Obama's stance on terrorism appears to me irrelevant to a discussion of oil prices, I'll respond to it anyway. She suggested that I "listen to what O'Reilly said about Panetta." I think she meant his "The War on Terror takes a turn for the worse" talking point memo aired Tuesday. Here's an excerpt:
...on the security front, big problems are rolling in. Obama will nominate seventy-year-old Leon Panetta to run the Central Intelligence Agency. An honest and smart guy, Mr. Panetta is Bill Clinton's former chief of staff and a man of great patriotism, but he has no intel experience, opposes coerced interrogation and many other anti-terror methods that have kept us safe more than seven years. It's not that Mr. Panetta couldn't learn on the job -- he could -- but with terrorism raging worldwide, is this the right time for on-the-job training? Fox's analyst Charles Krauthammer nailed it when he said the far left pressured Obama to select someone like Panetta.
[Krauthammer:] "The reason that this happened is because Obama has caved to his left. The left will not accept anybody who served in any way in the last eight years under the Bush Administration, because of the enhanced interrogation, the secret prisons, and the eavesdropping programs."
So that leaves people like...Panetta. If the CIA does away with effective intelligence-gathering tools, well, I believe the risk of America being attacked rises dramatically. Certainly terrorists everywhere are rooting for fewer overseas taps and no unpleasant treatment upon capture. Those things will make their mission -- the terrorist mission, to kill Americans -- much easier. As the most CIA hands agree with me, people like Michael Scheuer who once headed up the Bin Laden unit.
[Scheuer:] "I think that the only way to change policy is, is sadly, another attack on the United States, and I'm afraid that's coming."
[O'Reilly:] "Are you going to predict that?"
[Scheuer:] "Oh, I think so, sir. I think that within the next year we'll be attacked again. The opportunity is just too good of one. Taking down a lot of the rendition program and that kind of stuff makes things easier for the enemy."
But some Americans don't care. In fact, some Americans even are supporting the enemy. In San Francisco, ground zero for anti-American displays, supporters of Hamas openly demonstrate against Israel and the USA. These people believe America is evil. And so do many in the media. Bottom line on this: Barack Obama's taking a major risk by handcuffing U.S. intelligence in its vital task of disrupting and defeating terror. If we get hit, the president elect will have some huge problems.
As for Leon Panetta: good man, wrong mission.
A couple of things come to mind.
First, I don't recall any CIA appointment that has not raised these kinds of objections. It seems that the new guy coming in is never considered experienced enough to handle all the security threats facing the nation, and that bad guys the world over are licking their chops just waiting for the new cream puff to take control. I don't know enough about Mr. Panetta's qualifications to make a call, but the basic talking point that he's too soft is familiar.
Second, not everybody is as disappointed as Mr. O'Reilly in Mr. Panetta's appointment. "Ishmael Jones" is a former deep-cover officer with the Central Intelligence Agency and author of a book critical of agency failures. He is not one of the anti-American types that Mr. O'Reilly referred to above. Here's what Mr. Jones said in an interview with National Review:
[Leon Panetta] is an excellent choice [for CIA director] because he will be loyal to the president first, not to the CIA. Mr. Obama needs someone who can be trusted, a person who will support him when the going gets tough. A "safe" choice, viewed as inoffensive by the CIA's top bureaucrats, would have been dangerous. . . . The superbly run Obama campaign showed that the Obama people know how to manage an effective organization. Reform of the CIA can begin simply by requiring the CIA to obey existing laws and directives:
- The CIA must get its clandestine-service officers out of the United States and spying in and on foreign countries. The great majority of CIA employees now live and work within the U.S.
- Its clandestine operations should move away from embassies because, unlike the old Soviet targets, terrorists and nuclear proliferators do not attend diplomatic cocktail parties. Congress has already funded this move, but the CIA has not complied.
- Ruthlessly streamline the bloat. Terrorists have flat chains of command and no bureaucratic turfs. The CIA has dozens of byzantine management layers which, octopus-like, loop back upon themselves. Human-source intelligence collection has been effectively strangled.
- The CIA must strictly account for the handling of taxpayers' money, as the law already requires. Post-9/11, the CIA has become a place to get rich for contractors and former managers.