Oil & Tonight’s Debate
David R. Kotok
October 22, 2012



The presidential debate tonight on foreign policy will quickly return to domestic economics if, as and when each of the antagonists can wiggle it in.

In two more weeks we will quickly go from speculative uncertainty to new forecasts. The Senate composition will be known and committee chairs known or surmised. The president-elect will be decided. The lame-duck session will commence. About the only thing known now is that the House will remain in Republican control with fewer tea partiers in place.

Markets like predictability whether the news is good or bad. Uncertainty is the heaviest weight on the market. It will soon be lifted. By yearend the US stock market will make new recovery highs. We remain fully invested.

Will the oil price and energy independence make it into the debate? These should be the premier item. Imagine if the US were truly energy independent. We would not run a large trade deficit or a current account deficit of any magnitude. We would not send our dollars into the hands of despots. The entire foreign-policy balance of the world would change.

Despots know this. And they try to manipulate our political system. We just saw an example with a report in the New York Times.

Here is the analysis of the report from Night Watch, published early this morning:

“Both Iran and the US have denied the accuracy of a report in the New York Times that Iran had agreed to bilateral talks with the US. The New York Times report saying Iran had agreed to one-on-one talks with the United States is inaccurate, and Iran has no plans in place for such a discussion, Iranian Foreign Minister Ali Akbar Salehi said on 21 October. He said, however, UN Security Council Permanent Five plus Iran (P5+1) talks on Iran’s nuclear program could resume in late November, that is, after the US elections.

“Comment: Iran has no incentive to talk with the US administration before the elections. The US has no incentive to engage in bilateral talks with Iran because that would invest Iran with international stature it does not deserve and undermine the international effort to restrain Iran.”

The debate tonight is supposed to focus on foreign policy. That really means energy. We shall soon see if either candidate will level with us on this issue.


David R. Kotok, Chairman and Chief Investment Officer, Cumberland Advisors

Category: Energy, Politics, Think Tank

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

4 Responses to “Oil & Tonight’s Debate”

  1. ilsm says:

    Romney has no more intention for US energy independence than Reagan.

    US energy companies sell refined product.

    Persian Gulf oil production costs to the tanker are small fractions of market price.

    The Saudis need to replace all those aging weapons they bought with the Reagan divergence from Carter energy conservation. That is tens of billions of dollars for US weapons.

    Then their are the arms budgets of the rest of the Gulf royals.

  2. Frilton Miedman says:

    Iranian rial is collapsing dramatically.

  3. bmz says:

    “Imagine if the US were truly energy independent. We would not run a large trade deficit or a current account deficit of any magnitude. We would not send our dollars into the hands of despots. The entire foreign-policy balance of the world would change.”

    That simply requires defeating enough Republicans so as to make the Senate filibuster proof.

  4. YouthInAsia says:

    I don’t get it. Why would producers of oil on our soil (and waters) NOT sell it on the same world market that everyone else does for the highest price possible? Just what exactly is meant by energy independence? Are we going to suggest Congress pass a law only allowing energy use in this country to come from home grown energy sources? Furthermore, that doesn’t say squat about the actual price we pay at the pump. If Congress-critters were so foolish as to pass such a law, producers would still only produce oil to the extent that there aren’t more profitable opportunities somewhere else on the globe…leaving us paying likely the exact same price at the pump we are now.

    The only thing I can see coming from complete laissez-faire oil/gas exploration on our soils/waters is the marginal difference it makes in jobs and the economy in the areas of the country fortunate enough to have plentiful reserves. This is before considering how lovely the landscape will be raped when the energy producers are done.