Crude oil fell to a record low price today — less than $1 per barrel. Indeed, for a brief time, the price fell to negative $37 a barrel!
A basic rule of investing is to buy low and sell high. The U.S. has the chance to do that now. Years ago, the government sold off much of the oil in its Strategic Petroleum Reserve for $85 a barrel. But today, April 20, oil fell below $1 per barrel, the lowest it has ever been in real terms. If the government buys crude oil today at $1 and sells it for $40 in the future, it will make a tidy profit of nearly $40 per barrel. Back in February, oil went for more than $40 per barrel, and $40 to $50 was regarded as a relatively low price.
So the U.S. should be refilling its Strategic Petroleum Reserve. Doing so would also help hard-hit oil producing states like Texas, Alaska, Oklahoma, New Mexico, and Louisiana. It would provide an additional place to store their oil — oil storage is running out as coronavirus reduces demand for oil — and increase a bit the price they receive for their oil.
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