Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
“Big Green”, the green energy lobby, has many politicians willing to spend your tax money and line their pockets and at the same time, reduce our energy independence. They tell you that green energy is cheaper yet if that is the case, why does it have to be subsidized? The Green Energy lobby wants to hype events like the tragedy in Texas and try to cover up the fact that the highly subsidized wind and solar part of the Texas energy grid failed and left Texans in the dark. The green energy lobby, “Big Green”, wants you more dependent on solar panels made in China and they tell you that it is ok to scar the land with wind turbines that clutter the landscape, kill birds and in a matter of years will end up in a waste dump because they cannot be recycled.
They want to sell you electric cars with batteries with a limited usage range and with a toxic battery that will have to be disposed. It will create a surge in demand for rare earth minerals that will leave us more dependent on China and slave labor. Yet if you try to question whether this is the best path of the country and the world, you are branded a climate denier. The Green Energy lobby tries to cover up the fact that it was oil, coal, and natural gas that saw production increases during the crisis while wind and solar dropped significantly. Because Texas reduced the ability and capacity of natural gas and coal, it was unable to overcome the drop in energy production from wind and solar.
Because of the Texas failure and more good news on covid vaccines, energy demand is exceeding production. Massive cutbacks in oil and gas investment and shale oil producers lacking capital to respond, will see that oil is undersupplied versus recovering global oil demand. Oil futures are pricing that in and we are seeing prices soar, gasoline prices are rising as well not to mention your heating bills. I am sure the Green Energy lobby is loving that because the more expensive they can make oil and gas, then the massive subsidies that it will take to support the so-called energy transition might not look as bad.
Oil prices are also getting support from a newly emboldened Iran. Iran is sensing an opportunity to make demands as the Biden administration grovels to them to rejoin the Iranian nuclear accord. Instead of being thankful for Biden’s overtures, they are instead making threats. Ian’s Supreme Leader Ayatollah Ali Khamenei announced on Monday that the country would not abide by limits to uranium enrichment as outlined in the 2015 Iran nuclear deal. He also said he was going to up uranium enrichment and boasted that no one could stop Iran from getting a nuclear weapon. That boast caused Israel to warn that they may have to launch a preemptive military strike against Iran if that were to happen. So it looks like the Biden administration is relaxing maximum pressure on the Iranian regime and is making the Middle East less safe and is increasing the risk of war.
Iran also wants the U.S. to pay them a trillion dollars for the privilege of talking with them and lifting oil sanctions. The National Review reported that, “Iran’s Foreign Minister Javad Zarif said that any follow-up negotiations to salvage the 2015 nuclear deal must include “compensation” for such lasting economic damage. “When we meet, we will raise compensation,” he told state-run PressTV in an interview. Zarif explained: “Whether those compensations will take the form of reparation, or whether they take the form of investment, or whether they take the form of measures to prevent a repeat of what Trump did.” He described that in total some 800 sanctions on all levels of the economy led to a loss of $1 trillion and that any further sanctions would result in Tehran’s final exit from the JCPOA. “This is not a threat. We are simply exercising the remedial measures foreseen in the JCPOA,” Zarif stressed. The Biden administration will likely cave to Iran and send your taxpayer dollars to the Iranian regime. Now the question is will we get Covid Relief passed before Iran gets U.S. taxpayer money.
Remember that if the Biden administration lifts sanctions on Iran, there will be a flood of Iranian oil on the global oil market and less U.S. oil. The Biden administration is proving to be tougher on the oil and gas industry than they are on Iran.
Oil prices will see some major product draws this week. Reuters reports that, “Occidental Petroleum Corp, Diamondback Energy Inc, and a host of smaller Permian-focused U.S. shale producers on Monday forecast lower oil output in the first quarter, giving the first indications of the hit to the industry caused by last week’s winter storm. Areas of Texas not accustomed to the cold were hit by sub-zero temperatures and record snowfalls last week. While natural gas producers benefited from cold weather forcing the closure of wells, shale oil drillers stood on the losing side of the trade as frozen pipes and power supply interruptions were expected to slow an output recovery, operators said. Shale oil producers could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output lost during the cold snap and some production may never return because of the cost of restarting marginal wells, analysts said.
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