Kelli Ann Cook, Publisher, The Golden Hammer
How queer can the world economy get, when government messes with free markets?
Yesterday, the world saw a tangible impact of how poorly government manages an economy. The price of oil for a May contract for West Texas Intermedia Crude at the close of the commodities markets in the United States was $-37.63! That’s not a typographical error. Oil was selling for negative $37.63.
In other words, in order to conduct a sale transaction of “black gold” also known as “Texas Tea,” the seller would have to pay the buyer $37.63 to take the product off of his or her hands. Fortunately, on international markets oil inched back up into the positive range overnight.
Markets don’t get more bizarre than when a valuable commodity, crude oil, has a negative value.
Why did it happen? Government intervention in the American and world free market, which clearly is destroying the world economy. As Nobel laureate economist Milton Friedman once said, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.”
Epidemiologists have made clear that government lockdowns or shutdowns are not just bad to stop the spread of Chinese Coronavirus; they’re the worst decision governments could possibly make. Nevertheless, weak politicians across the globe decided that they didn’t want to appear even weaker in front of the voting public, so they chose the easy course: command-and-control. In the United States, governors, county officials, and city officials trampled on the United States and state constitutions.
In truth, they didn’t do much to stop the spread of Chinese Coronavirus, but they did a masterful job destroying the American and world economies.
Why was crude oil selling for a negative price? Government had artificially created a massive labor shortage for crude oil shortage facilities, which were already full due to the glut of oil on the world economy thanks to the Organization of Petroleum Exporting Countries’ government dictates to produce way more oil than the world demanded. With labor shortages, equipment shortages, and storage facility shortages, the cost of crude oil storage has skyrocketed to a degree that it artificially exceeds the value of the crude oil per barrel itself.
That’s how queer it can get when government intervenes in free markets. Hopefully, it’s a lesson the voting public will remember. Government needs to leave markets alone and allow them to be free. Free markets are the engines which made American the world leader it is.