The Energy Report for Friday, November 21, 2008

Oil got caught up in a massive power struggle but not just the usual battle between the bulls and the bears but the power struggle that has broken out on Capitol Hill. The Democrats seem to be eating their own as they try to  position themselves for a  power grab of the power positions on the Hill.  Things are getting so testy that instead of having red and blue states in this country I think we have red, navy blue and powder blue states.

Yesterday the market seemed to get caught up in the drama of the show as far left liberal Democrats undercutting the more moderate liberal Democrats. First it was Democrat  Representative John Dingell from Michigan who  got ousted from his chairmanship of the House Energy and Commerce Committee and was replaced by Congressman and far left liberal Henry Waxman. The power is being consolidated with the far left of the party in the house and maybe in the Senate and the moderates in the party will have to take a back seat. And yesterday that was not more apparent than when Senator Carl Levin said that he had a bi-partisan plan to give immediate help to the auto industry only to be rebuffed by Senator Harry Reid. I am sure the labor unions are loving Harry as he seems to undermine the lifeline and may create a backlash from President Elect Barrack Obama's favorite special interest group, the labor unions.  It is high stakes politics where the risks are high and the rewards usually come out of the taxpayer's pocket. Yet for the new Democratic leadership this is the issue that may make or break the Obama administration and its cozy relationship with organized labor.  Oil  had been  getting smashed because of a bad news day for  Citi-group, seemed to get a bounce after it was announced that Senators on Capitol Hill led by Michigan Senator Carl Levin was going to make an announcement that they had  reached an agreement  to provide emergency funding  for Detroit's major automakers.

Oh Joy! Now we might have Detroit making some of the cars we put our gas in or at least the labor unions will have extra money to buy gas for their Toyotas. Yet not so fast. Before they could make the announcement senator Harry Reid decided to have a  news conference of his own under-cutting Senator Carl Levin from Mo-town. The far left wants more. They want more fuel efficiency, new CAFÉ standards and most of all they want the power. Not the power in the vehicles minds you but the power in their  hands. Senate Majority Leader Harry Reid wants a new plan and said that  the car companies had failed to convince the American people or Congress that the proposed bailout would be their last.  In this massive democratic power struggle in the House and the Senate, I get the impression that guys like Senator Reid, Senator Frank, House Speaker Pelosi, think because of President elect Obama's impressive victory and his huge coattails that they are more popular than they think with the American people. Well they are not. In fact they are less popular than President George W. Bush. They are just lucky that president elect Obama is popular as is his message of change. This move by Reid and his minions could come back to haunt them with the Democrats labor union base if this delay for political purposes seems to hurt union members and their families or causes Detroit to fold up shop. Senator Carl Levin says that his constituents would be affected by an industry downfall and that the Senate should approve the bailout without delay. He pleaded for the Senate to allow the issue of already appropriated funds so they can be used for the essential purpose of preventing this economy from sliding into a depression.

So it will be fun watching the Democrats try to figure out how to save Detroit and save their backsides at the same time. And just how long will Obama's popularity last.

It is more fun to watch me every day on  the Fox Business Network. And sign up for your free trial of Alaronenergies! Just call me at 800-935-6487 or email me at  pflynn@alaron.com to open your account!

We're short January crude from apprx  5760  - stop  5800.

Buy December heating oil at 16700 -  stop 16300.

Sell December RBOB at 13600 - stop 14400.

Buy December natural gas at 615 -  stop 470.

Have a GREAT day!