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March 22, 2018

Oil Prices Are Going Down: The Wickenburg Indicator

Only a fool would predict commodity prices, so I’ll do that. I’ve been to Wickenburg and I know oil prices are headed down

Wickenburg’s in Arizona, a little more than an hour northwest of Phoenix. It’s on the Hassayampa River. Most of the time you can drive on the river bed, but the cottonwood still flourishes on the banks because the river runs under the sand. Wickenburg was a mining town: gold, copper, and a few other metals.

WickenburgRight now Wickenburg is full of horse trailers and the cowboys who own them. These aren’t just any cowboys; they specialize in steer roping. The headers rope the horns and the footers rope the hindfeet. Winners get buckles and saddles. Although there are a few professional ropers in Wickenburg, a large percentage of these “cowboys” actually make their living in the Bakkan oil fields far to the north. They frack; they sell sand for fracking; they sell water for fracking; they produce the oil that’s driving OPEC and Russia crazy and that has helped spur the American economy.

For the last couple of years American abundance drove world oil prices down. The frackers fracked less wells and roped more steers. OPEC and Russia blinked and cut back their own production. The price of oil almost doubled. The horse trailers turned north early this year; the frackers are going home to get back to work. Sorry Putin: you can steal Crimea; you can steal a Russian election; you can hack at America’s politics; but you can’t set the price of oil. That’s done in Wickenburg.

If you’re not convinced yet, let me tell you about the gold mine guy. We met him on the road and asked directions; he invited us to see his goldmine. Bought it a couple of years ago because oil prices were low and gold prices high. He’s selling it and going back to North Dakota to frack some more. Don’t know if that means gold prices are going up but do know that oil prices are going down.

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