Those Mnuchin Fracker Loans Look More Like Equity

Someone should tell Treasury Secretary Steven Mnuchin about the United States Oil Fund LP. This is the ETF making all the headlines for all the wrong reasons of late. A nominally cheap and easy way to speculate on oil, its use of rolling futures positions made for dreadful returns and, most recently, almost certainly contributed to oil’s plunge into negative pricing. It seems likely more than one retail wannabe wildcatter is mystified as to why they ended up effectively paying others to take their “barrels.”

Knowing what you’re actually getting is important with any investment, of course. Which brings us to Mnuchin’s musings about extending government loans to struggling oil and gas producers, as reported by Bloomberg News on Thursday evening. Like USO owners, the lenders here — hello taxpayers — may find their collateral somewhat slippery. Also like the USO, their mere presence could make things worse.