The big news on Monday was that oil prices, for the first time, plunged into negative territory.  That means that oil-producers, rather than getting money for their product, are theoretically paying other people to unload the product.  There are significant ramifications to this collapse (although overnight trading may make the long-term picture less grim).  While the execrable Alexandria Ocasio-Cortez celebrated the crash, President Trump immediately took steps both to strengthen America and to shore up the industry.

The beauty of the free market is that nothing has a fixed value.  A commodity's value always reflects the amount a willing seller and a willing buyer can negotiate in an arm's-length transaction.  If an entrepreneur sees that buyers will pay well for a rare product, he will move into that market.

As more entrepreneurs move into a market, the balance of power between buyers and sellers shifts, allowing buyers to negotiate lower prices for a more commonly available good.  That's why we can buy Fuji apples and flash drives, both of which were prohibitively expensive when they first appeared.

Problems begin, though, when there are no buyers for a commodity that powers the world's engines.  That's what's happening with oil.  Thanks to virus lockdowns, factories are stilled, cars are parked in garages, airplanes are on the ground, and farm equipment is idle.  The oil that American producers had already removed from the ground now has a market value of zero — or less than zero, because the producers still have costs.

According to the Bureau of Labor Statistics, in March 2020, the oil and gas sector employed 156,500 people.  If that sector collapses, 156,000 jobs go with it.  If the industry cannot recover, we're again dependent on oil and gas from places such as the Middle East, Russia, or Venezuela, where the oil and gas industries survive because the governments prop them up.  Those collapsing oil prices will affect them too, which should clip Putin's wings, at least for a while.

Another downstream problem is that an oil and gas collapse will drive inflation.  Because everything we do has petroleum underlying it in one form or another (e.g., transportation, farming, heating and cooling, manufacturing, etc.), losing domestic production means increased costs per barrel, driving up consumer prices.

In Washington, D.C., the news about oil prices resulted in two different responses.  The one that got the most press was Alexandria Ocasio-Cortez's celebratory "green gloat" tweet:

Donkey Chompers, as Ace calls her, subsequently deleted that tweet, probably when Nancy Pelosi (the Marie Antoinette of gourmet ice cream and $10,000 refrigerators) pointed out that celebrating lost jobs and the potential destruction of the American economy is not a good look.

President Trump, thankfully, had a different response.  He's hoping to take advantage of low oil prices to restock the nation's Strategic Petroleum Reserve, a move that will also send cash to struggling oil-producers:

President Donald Trump said Monday the U.S. is "looking" to add as many as 75 million barrels of oil to the Strategic Petroleum Reserve, after an historic day for markets that saw crude prices turn negative.

The soon-to-expire May contract CL.1, -103.40% CLK20, -103.59% for West Texas Intermediate crude on the New York Mercantile Exchange traded, and closed, in negative territory, as MarketWatch reported.

Trump said he was considering the move "based on the record low price of oil," and that the action would "top [the SPR] out."

Speaking at a White House press briefing, Trump said, "we'd get it for the right price."

Perhaps because of Trump's plan to purchase oil or perhaps because more states are opening up from their lockdown, by Monday's end, things started looking a little brighter:

West Texas Intermediate crude futures for May delivery turned positive in overnight trading, after plunging below zero for the first time in history on Monday. The contract in question is set to expire on Tuesday, fueling Monday's 100% wipeout. 

The May contract traded at $1.17 per barrel, after earlier trading at negative $14.04 per barrel, meaning traders would effectively pay to have the oil taken off their hands. As the contract approaches expiration, trading volume is typically thin, so longer-term contracts can be more indicative of how Wall Street views the price of oil. The most active contract, for June delivery, traded 7.29% higher at $21.92 per barrel. The July and August contracts were also firmly above the $20 level.

Whew!

Leftists see the Wuhan virus as an opportunity to push their socialist green agenda.  They don't seem to realize that most Americans, seeing in this pandemic a preview of what socialism and the green agenda look like, are not enthused.  One can only hope they remember this lack of enthusiasm in November.