Alaron Energy Comment

CHICAGO - May 16/08 - SNS -- Following is the energy futures comment from Alaron Trading Corp.

Clowns to the left of me, jokers to the right, here I am. Stuck in the middle with you. Or is it the clowns moving to the left while we are lacking political courage on the right? You may not like to face the fact but the way this nation is playing politics with our nation's energy security it seems we are moving too far to the almost socialist left at a time when more than ever we have to allow market based solutions address our nations critical energy needs.

You think I am overstating the case? Ok then, why, at this critical point in our  energy history, is our Congress running for cheap political cover when it comes to are nation's oil security? I mean  let's get serious, why is Congress passing a bill forcing the president to stop filling our Strategic Petroleum Reserve at a time when the difference between adequate supply and shortage of supply has never been thinner. Why is Senator Hillary Clinton proposing a windfall profit tax on the big oil companies? I thought our dear Senator liked windfall profits. Why do I say that? Well she did not seem to have a problem with windfall profits when she was trading cattle. (That's why I have a small soft spot in my heart for her. Either that or its indigestion.)

Yet the way our Congress is  striking out at high energy prices I worry about the damage they may do to the average American they are purporting to help.  Maybe our Congress take a lesson from Prime Minister Vladimir Putin in Russia who seems to be learning a thing or to on how to lower oil prices.

Now I know what you are thinking, the way our Congress is acting they are already trying to emulate the Former Russian President. We all remember how the Russian President moved to kind of nationalize the Russian oil industry. He took over YUKOS, one of the crown jewels of the post Soviet Russian oil industry,  because he said they were not paying enough money in taxes and also because the mastermind behind YUKOS, Russian billionaire Mikhail Khodorkovsky, was trying to challenge Mr. Putin politically. That was not a good idea but it gave Putin an idea to start taxing the hell out of the oil companies until they would do his bidding or if not, he would just go in and take them over. If the former owners of the companies kept their months shut they could keep their billions and live comfortably in Putin's Russia. Things are good if you stay dumb and keep your mouth shut while Mr. Putin undermines democracy by instituting politically motivated taxes.

And why not? This of course was the golden age of the Russian oil industry. The Russian oligarchs that raised the Russian oil industry out from under the dust heap had plenty of money so why not tax them to death? They could afford it! And with the prospects of future Russian oil production looking bright the money train would never end.

And tax them Putin did. Not to mention throwing  into prisons some of the greatest minds in the Russian oil industry or sending them off to their billion dollar exile. It was now Putin and the government's oil show and you better not get in the way.

Putin had a field day with his new oil industry toy. He flexed his political energy muscle by cutting off gas supply to the Ukraine. He played hardball politics with foreign oil companies and raised their taxes and took over parts of offshore oil fields.

Yet one thing Mr. Putin forgot is  that you need smart and talented  people, not government and politics, to pump more oil.

Mr. Putin was shocked in recent weeks that Russian oil production had peaked. Those reports made him understandably upset not to mention the value of the companies he took over started to go in the dumper. Russia's oil future, that was so darned bright just a few years ago, now some how seems to be slipping away. Russia was supposed to be the great hope! The alternative to Middle Eastern oil.  Mr. Putin should know that a man does not make the times but the times make the man. Mr. Putin has been a popular guy because oil prices have soared throughout his presidency right into his prime minister-ship. Or is it king-ship? I keep forgetting. If Mr. Putin's oil industry falters well so too does his popularity and maybe his grip on power? What is a prime minister for life to do? This is a dilemma.

Well let me tell you! Putin may be an enemy of freedom of the press and democracy but the man is no dummy. When faced with the problem of peak oil he quickly figured out how to solve that. That is right. Lower taxes.                              

Mr. Putin gave the Russian oil stocks a huge lift by saying he was going to push through an oil extraction tax cut. Wow what a concept. Lower taxes to get more oil. Mr. Putin knows that Russia's oil production hasn't peaked, it's just that his excessive taxes have. If he doesn't move soon Russia will lose all the prestige that comes with being an oil power these days. Will Congress learn something from Mr. Putin?

Let me ask you a question. If you are a trader, you know that feeling that something is just kind of missing! Well, I think I know what it is! You haven't had your Clamen Fix! Well I can fix that! See me today with Liz Clamen and my buddy David Asmen each day on the Fox Business Network!   Now that's the only way to get a weekend started! Obviously this cannot be done if you don't get the Fox Business Network and that would be a bad way to start the weekend. Don't let that happen to you! Call your cable operator today and scream,  "I want my Fox Business Network! Now!" Well on second thought, don't scream just be emphatic. Emphatic is good. You don't have to scream to open your account with me! Just call me at 800-935-6487 or email me at pflynn@alaron.com. Get your day-trade and option recommendations.  

We're long  June crude  from apprx  12100 - stop 11950.

Buy June heating oil at 345 -  stop 340.

Stopped on short June RBOB from  apprx 32000 at apprx  32300.  

Buy June natural gas at 1100 - stop 1070.

Have a GREAT day!

Phil Flynn

Alaron Research Team

800.563.9510

pflynn@alaron.com

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