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
Still, traders are worried about a new surge in Iranian output if U.S. sanctions on them are lifted. Iran continues to talk about progress in talks and the U.S. is willing to lift some sanctions so most believe that it will only be a matter of time before Iran is free to flood the market with oil while U.S. shale producers remain sanctioned on federal land from the Biden administration. Hey Joe Biden, lift the sanctions on U.S. oil producers and make it a fair game!
The Biden administration’s anti-oil policies are not sitting well with our Canadian neighbors. Canada is still angry with the unjustified canceling of the Keystone pipelines, which will have no material effect on climate change and now is seemingly supporting Michigan Governors Gretchen Whitmer’s plan to kill another Canadian Pipeline that has operated safely for 60 years. The governor gave an order demanding that Enbridge shut the pipeline down by May 12. Enbridge will ignore the order as they claim that the governor does not have the authority to tell them to shut it down. But why does the law matter when the climate is concerned?
There is more talk of labor shortages and inflation as a risk to oil prices. A widely reported piece on a shortage of certified gas tank truck drivers is a risk to gasoline prices. Labor shortages are a sign that inflation may not be as transitory as the Fed thinks. Joe Biden’s massive spending proposal that does not focus on work but incentives people not to work is a growing risk to the overall health of the US economy. High taxes on the wealthy and a higher corporate tax will not increase revenue, and it will slow the economy. That will make Biden’s massive spending proposals unsustainable because without the incentive for profit and growth, we will see the economy go from record growth into a major contraction. That will cause pain for many Americans that are going to be forced to become more dependent on the government for their paycheck. Just remember a dollar invested in the private sector returns five dollars. A dollar invested in the government returns 50 cents. You do the math.
Still, in the next few years, the risk for oil is on the upside. The demand surge is most likely coming and Biden’s green policies will only make oil and gas more expensive. Biden’s oil policies are a major tax hike on all Americans and will disproportionally hit the middle class and poor. Maybe they should have thought about that and bought electric cars! Oh, wait, yea too bad, they can’t afford them.
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