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
President Biden said, “the fact is that “nothing is standing in the way up domestic oil production.” April fools! Does Joe Biden expect us to believe this malarkey? You have to be kidding right?
Maybe what he meant to say is that they were doing nothing to stand in the way of domestic oil production except for killing the Keystone Pipeline, putting on a drilling moratorium on Federal lands, and raising royalty rates. Or his climate change executive order requiring agencies to review and revoke Trump’s pro-American energy rules, issuing a moratorium on all oil and natural gas leasing activities in the Arctic National Wildlife Refuge, putting in a ‘monument designation’ that cut off the land for oil and gas drilling. Or reinstating and expanding the social cost of carbon that increases energy costs and discourages small producers from producing, rejoining the Paris Climate Accord that scares away oil investors. Or revoked Trump administration executive orders, including those related to WOTUS and the Antiquities Act. Those Trump-era actions decreased regulations on Federal land and expanded the ability to produce energy domestically.
Or how about Biden’s executive order that promoted “ending international financing of carbon-intensive fossil fuel-based energy while simultaneously advancing sustainable development and a green recovery.” Or sending U.S. Treasury Secretary Janet Yellen to pressure multilateral development banks to rein in their lending for fossil fuels, part of a global effort to make the financial system greener. Biden also issued an executive order that would go after oil and gas producers for what he calls “environmental justice”. He also called for taking so-called subsidies away from oil and gas producers and giving them to his favorite supporters, green energy companies. He slowed down the approval process for oil and gas projects by resending several Trump-era enforcement documents which provided clarity and streamlined regulations to increase oil and gas production. Used funds from the ‘American Rescue Plan Act’ to give money to so-called environmental justice groups so they can sue oil and gas producers. Biden turned the SEC into a climate police watchdog and force public companies to disclose greenhouse gas emissions in a standardized way for the first time, adding millions of dollars of regulatory costs. But other than that, he did nothing to stand in the way of oil and gas production.
Well actually there are a lot more things, but we only have a couple of pages for this report. Yet Biden’s contention that his administration did nothing to stand in the way of the oil and gas industry is just plain malarky. The malarkey that Joe promised he would never give to the American people. Maybe he was joking? It is April Fools or maybe he thinks we are all fools.
Biden is trying to redirect blame for the increase in the price of oil and his failed energy policy and he’s doing everything in his power to deflect the blame. Now he’s talking about that tired old excuse about oil companies not using their drilling leases and is threatening to fine them for not using the leases. Of course the government doesn’t guarantee that there’s oil or gas on these lands. They don’t want to give well companies any tax-exempt status for taking the risks of drilling on these lands. On top of that, they want to change the rules of the ball game because most of these companies have long-term leases with pre-agreed terms. So why would anybody invest in drilling on federal lands if the government can change the rules of the game, increase the risk to their investment and decrease the possibility of profit? Where are the labor unions? Why are they not calling out the president for hurting their oil and gas workers?
Even the promise of the million barrels a day from the strategic petroleum reserve is based in malarkey. Right now the best that the SPR can do on a day-to-day basis is near 500,000 to 600,000 barrels a day. They cannot release the oil that fast at a rate of 1.0 million barrels a day. Maybe if the Biden administration would have allowed some pipelines to be built it might be possible, but Biden is anti-pipeline.
Oil prices fell hard on this announcement and talk that other countries would join, also put downward pressure on the market. But every analyst in the world knows that this is going to have just a short-term impact on prices. This will not change the underlying supply shortage but will drop-down U.S. SPR supplies to the lowest level since the 1980s.
Biden and other politicians around the country are getting the heat for higher gasoline prices. They are trying to do everything they can to get prices down before the midterm elections. The democrats are going to get a shellacking unless they can convince the world that their energy policies have had no part in rising oil and gas prices. They need America to buy Biden’s malarky. This is the administration that told you that inflation was transitory and then that inflation was really a good thing and then inflation was Vladimir Putin’s fault.
Do not believe the Malarky. Be on guard for April fool jokes at our expense at the pump. Oil inventories are still the tightest they’ve been in decades with the Biden administration squeezing off investment in oil and gas has created a real damage to the economy. The Biden administration’s go broke policies is now causing the administration to say that the American people need to suffer. It’s for the greater good.
Why is it always democrat administrations that seem to ask the American people to suffer? Just like President Carter. Instead of fixing problems, they use policies that prolong the people’s pain, cause inflation and more burden on the poor and middle class.
Yet all of this promised strategic petroleum reserve oil might not be enough if Russia decides to cut off gas supplies over the weekend. Russian President Vladimir Putin’s demand that unfriendly countries pay for gas in rubles or risk getting their supplies cut off is another real upside risk for this market. I don’t think it would be wise to be short with that threat overhanging the market. Already we are seeing the price of electricity and natural gas surge in Europe. Oil prices will also get some support on this. U.S. natural gas prices are also being supported by the global demand for natural gas while the U.S. is exporting as much as they can. Right now the truth is that U.S. natural gas exports are going to rise dramatically and that could change the supply and demand fundamentals for this market going further out in the curve. The front month natural gas contract did pull back but I think we’re going to consolidate before we try to make another move higher.
Biden’s announcement of the biggest SPR release in history may have seemed to shock and awe the market for awhile but after the market adjusts, it will realize that this extra SPR oil will only have a short term impact on price. It does not solve the overall problem and the main problem is the Biden administration’s energy policies.
Oil and gas traders should use this break to secure hedges in the market after the market gets over the excitement of the global SPR release. Reality will soon sink and ultimately this release, like the last two SPR releases, will only serve to make prices go higher in the long run. We predicted that would happen back in November on the secondary release and it proved true and it should be true again.
Did you miss the Fox Nation Energy Independence Summit! Don’t Worry! You can see a condensed version tonight on The Fox Business Network at 8pm eastern time and re-air throughout the weekend. But to catch the full summit you need to get signed up for Fox Nation to see Phil Flynn, Larry Kudlow, Maria Bartiromo, Charles Payne, Jackie DeAngelis, Gregg Jarrett, Representative Sean Duffy as well as many other experts. You can also catch me tomorrow on Cavuto Live with Neil Cavuto on Saturday on the Fox News Channel.
Call me to open your futures account! Call Phil Flynn at 888-264-5665.