No Fooling. The Energy Report 04/01/2024

Oil and commodities are on fire with gold hitting a new all-time high and copper soaring after China’s manufacturing data hit a six-month high. China’s purchasing managers index rose to 50.8 from 49.1 in February beating expectations and Fed Chair Jerome Powell said that the February personal-consumption expenditures data was “pretty much in line with expectations,” and that he didn’t see elevated inflation risks. Oil trade should stay solid as Russia plans to cut its diesel exports by sea in April to a five-month low in the daily flows of exports from Russian ports are down 21%. Bloomberg is showing the impact of the diesel flows as Ukrainian drones hit Russian refineries. Russia has responded by attacking Ukraine’s energy infrastructure as well and we saw reports of power outages in Odessa and Kharkiv over the weekend. That, along with expectations that OPEC and Russia will follow through with their production cuts, is adding to the likelihood of an oil supply deficit as we head into the summer driving season.

Yet despite the turmoil around the globe, it seems that the Biden Administration wants to give China another big win at the expense of the US taxpayer as it drives deep into its fool-hardy obsession with electric vehicles. No fooling. China is getting a big boost of economic stimulus in part courtesy of the Biden administration as it believes they try to force electric cars down the throats of US businesses that don’t want them with no discernible help to the environment or have any impact on climate change. No fooling.

Yes, we are seeing oil prices start firm and a new record high in gold and a surge in copper prices as Chinese manufacturing hits a six-month high. So, it is head scratching time to see the Biden administration foolishly double down and its foolhardy attempt to try to electrify automobiles and the US truck fleet. A task that doesn’t make sense from a scientific standpoint but if you believe some of the economic pain it will cause and the advantage it gives to China, somehow atones for what they see as environmental injustices.

The Hill writes that, “An estimated 72 million Americans, often people of color or people with lower incomes, live near freight truck routes,” EPA Administrator Michael Regan said. “These communities are disproportionately exposed to the pollution from heavy-duty vehicles, resulting in higher rates of respiratory and cardiovascular illnesses and even premature death,” he added. “Reducing emissions from our heavy-duty vehicles means cleaner air and less pollution.” The Biden administration is fooled into believing that they are saving the planet but foolishly what they are doing is costing the US jobs and adding to inflation.

For the sake of optics, they foolishly enrich China which will benefit from this foolish policy while it may add to carbon emissions. While the EPA tries to tell us that this plan will “avoid” one billion metric tons in CO2 emissions from 2027 through 2055.

The Wall Street Journal points out that emissions from China and India rose last year alone. The Wall Street Journal points out that the, “EPA says its big-rig quotas are feasible because the Inflation Reduction Act and 2021 infrastructure law include hundreds of billions of dollars in subsidies for EVs. This includes a 30% tax credit for charging stations, a $40,000 tax credit for commercial EVs, and a tax credit for battery manufacturing that can offset more than a third of the cost. IRA tax credits for electric trucks aren’t conditioned on the source of battery material, so expect most to come from China. China’s BYD was California’s top-selling electric truck maker in 2022. Biden officials say Chinese green-technology manufacturers are flooding the U.S. market, but their mandates and subsidies are the reason.” They foolishly don’t even consider the real cost and it’s the real impact on inflation. They are foolish enough to believe that somehow, it’s OK to destroy the middle class by increasing their costs in the name of what they call environmental justice, which is kind of like a religion, to them I guess. Of course, these are the same people who foolishly believe that calling Easter, the most holy day in the Christian calendar, Transgender Day of Visibility would not be deeply offensive to Christians all over the world. This administration seems to offend anybody who gets in the way of their agenda and gets offended by the truth.

The Biden administration had harsh words for the US oil and gas industry as well as mom-and-pop gas station owners whom they accused of being price gougers and war profiteers. This is an administration that then turned a blind eye to Iranian oil sanctions and allowed Iran to make billions of dollars while they spread their errors throughout the world by supporting terror groups like Hamas, Hezbollah and the Houthi rebels. The Biden administration also is now not going to enforce sanctions on Venezuela mainly because they’re concerned about rising gasoline prices and imperiling Biden’s reelection chances.

We saw an uptick in gasoline demand as spring break and Easter travel gave us a bounce. AAA says that, “Gas prices are at 3.536 a gallon slightly more than yesterday and more than a week ago an about 14 cents a gallon more than a week ago. Prices are in overbought territory but we don’t see a big correction coming anytime soon. More than likely there will be a little bit of consolidation as we start to move higher. Inventory this week is expected to be relatively flat but we could see a drop in products like gasoline and diesel. OPEC and Russia are showing unity.

Natural gas prices continue to struggle even as Chesapeake Energy plans to put 80 new natural gas wells into suspended animation by the end of this year other firms like QG are shutting in wells we’ll see if it gives the market a bit of support.

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