The Price Of Oil To The U.S. Economy: “Look Out Below”

Monday, December 7, 2015
By Paul Martin

By Dave Kranzler
ActivistPost.com
DECEMBER 7, 2015

The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary. – HL Mencken, 20th century American writer

Kinder Morgan stock is perhaps the reigning poster child for the message being conveyed by the collapsing price of oil as it pertains to the U.S. economy:

It’s too late to recommend shorting this stock, although I do believe it will hit $10 before it hits $25. KMI has been a darling of financial advisors and Wall Street pimps. It sports a big dividend and was billed as a “must own” stock. Of course, the moronic “wealth” advisors can’t analyze their way out of a paper bag and thus were ignoring KMI’s monstrous debt load, which exceeds the Company’s book valued by a significant amount now. If your trusty Schwab or AG Edwards broker calls you up to recommend this stock, hang up the phone. This one’s a goner unless the price of oil does a spectacular U-turn back up. Highly unlikely.

But take a look at that graph. In all probability that is likely the path that the real inflation-adjusted U.S. GDP is about to follow. The price of oil is collapsing, not because supply is flooding the market but because, at the margin, demand for the quantity supplied is falling. It’s falling because basic, grassroots-level economic activity is collapsing. Trucking and rail – freight volume – in the U.S. is collapsing at a shocking rate – Heavy Truck Orders Plunge 59% in November; US Freight Shipments In North America Plunge. Freight shipping, both truck and rail, are heavy users of diesel fuel. You can figure out the rest of the narrative from there as it pertains to the demand for oil…

The Rest…HERE

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