More pathetic headlines: $20/barrel oil predictions and other non-accidental disinformation

Goldman Sachs spends a lot of time and money dithering about oil prices (and other things, like how to quietly rule the world) and periodically sends out research notes, analyst reports,lunatic manifestos or whatever to help unconfuse their bewildered clients or further the general cause of global financial domination. For the average bewildered capitalist, it gives great comfort to have grandfatherly document in hand to help guide through the rough waters of business, that big frightening logo adding the seriousness of a funeral director or komodo dragon.

Recently at a conference one of their infantrymen mentioned that oil prices might fall to $20 per barrel because production continues to grow despite a glaringly obvious global oil glut (in the same sense that the need to not annoy trolls is glaringly obvious to an Icelander). The comment itself wasn’t particularly stupid when taken in context, but the impact certainly indicated that stupidity wasn’t far away: the number was picked up by news organizations everywhere, and all the chatter on the street was about how oil was going to $20. A google search of $20 per barrel oil yields 1.8 million results, so Goldman was pretty effective at getting that message out. Not only was the $20 number the season’s hottest, but the message got distorted even further as in the Bloomberg story linked above, where the apocalyptic, grim-reaperish headline wails that “$20 oil looms” (it’s not looming, no one said it was) and that silly low number was tied to Goldman’s pointed musing that oil prices would stay low for 15 years. So at a glance, because why would the media ever lie to you, the clear indication is that very low prices for a very long time are the new reality and to think otherwise is to foolishly doubt a venerable news institution with lots of money and very smart people and who the hell do you think you are to try that…

Back to the story, the wily agent from Goldman never said oil was going to $20. The quote from the GS representative speaking at a conference, was that there’s less than a 50% chance that prices will drop to $20 a barrel, and if prices fell to that level it would be for a very short time. Which hardly anyone could argue with given volatility in commodity prices; to say that there is a less than even chance that a large, downward but very temporary swing in oil prices could happen is actually uninteresting and boring. Everyone knows that’s true. But it’s a lot more fun to rearrange the words and drop a few to boot and come up with something far more interesting. The media was typically obtuse and sensationalistic to pick up on that singular reference.

Goldman Sachs is well aware of what happens when one of these reports becomes public. The process is far more targeted than simply going public. There is always a reason these slips happen, and get into the news so effectively. We’ll find out eventually, but you can be certain that Goldman Sachs is not disinterested in the direction of oil prices, and in the ratholes and opium dens of Wall Street a number of plans are surely in place to take advantage of such an event. Maybe their trading groups have large bets that prices will fall. Maybe another arm is looking to buy cheap energy assets. Or maybe they were just bored.

Some organizations are just way better at using the media than others.