By Terry Scruton
Words are funny things. Unlike numbers, which have the same meaning no matter what the context – a 3 is a 3 is a 3 no matter what – words can change meanings faster than a politician changes accents on the campaign trail.
Look at the word “recovery.” When I think of recovery, I think of someone getting better after an illness. Someone lying in a hospital bed eating Jell-O after a surgery. Someone bouncing back after being down.
Recovery is a term used a lot by folks who talk about the oil markets. Given the definitions above, you wouldn’t think it would be used much these days. After all, at upwards of $125, $130 a barrel, what is there to recover from?
And yet, there it is. Day after day, I see reports on how the oil market “recovered” from its latest dip of 10 cents per barrel, or 20 cents, or, heaven forbid, sometimes even 30 cents per barrel. It’s as though we are supposed to breathe a sigh of relief now that it has bounced back.
Rally is another term they like to use.
When I think rally, I think of the Red Sox coming back from a three-run deficit to beat the Yankees. Or a group of truckers desperately trying to get the attention of lawmakers who supposedly work for them.
But to oil market analysts, the market can rally, much like it recovers, after a dip of a few cents per barrel. It rallies, like a come from behind victory, like the underdog coming from 10 points down and scoring the winning basket at the buzzer. Everybody stand up and cheer.
It’s time we introduced these oil market traders to another word I like to use – it’s called reality.
In reality, the recovery will come when truckers don’t have to take out a bank loan to fill up their tanks. The rally will come when they are able to make enough on a load to earn a decent living.
And reality will hit these folks in the oil market square in the face when they discover that their rallies and recoveries can’t go on forever. LL