About The Author

Phil Flynn

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

The Biden administration is incensed that they might not be able to use the US Strategic Petroleum Reserve for their own political oil slush fund. The administration changed the mandate for the reserve to be used for emergencies only and instead used it to try to manipulate prices when gasoline prices started to rise. Gasoline prices increased in part to Biden’s reckless and damaging executive orders. The releases from the SPR started well before the war in Ukraine and are now raising concerns in the energy space that the historic crude drawdown by the Biden administration will hurt the US economically and geopolitically. Now because the House of Representatives wants to put a stop to what has been a total misuse of the SPR, the Biden administration is screaming bloody murder because let’s face it, that is how the Biden’s like to do business.

Republicans want to put a stop to this administration using the SPR that was paid for with hard-earned taxpayer dollars by introducing a bill called HR21, which would prohibit the energy secretary from tapping the SPR without producing a plan to increase oil and gas leasing on federal lands – unless the release is for a severe oil supply emergency. Reuters reports that, “In a letter last week, Granholm warned Republicans that limiting the Democratic president’s authority to tap the nation’s oil reserves would undermine national security, cause crude oil shortages, and raise gasoline prices.” The Energy Secretary offered no evidence that this is the case. I would argue that the statement is false. The SPR was never designed as a price control tool nor was it created so a President could use the reserve anytime he determined that the price of gasoline was too high. That is not the President’s job to determine and besides, he does not have the qualifications to make that type of judgment. That’s best left to the market to judge, not some dictator of the SPR.

In yesterday’s Press Briefing, spokesperson Karine Jean-Pierre asserted that, “House Republicans will vote to raise gas prices on American families. The contrast in priorities could not be more stark. Biden spent the last two years, as you know, doing everything he could to lower gas prices for American families, and prices are down about $1.60 a gallon since last summer. Now, House Republicans are using their narrow majority to force the American people to pay higher gas prices, just as big oil companies are amassing record profits.”

This statement again offers no facts and is a total mischaracterization of the bill. It also fails to point out that oil companies’ records profits are offsetting record losses just years ago. It also does not point out that Biden has said he wants to replace oil companies, which has reduced investment and has discouraged people from entering the oil and gas field and set the stage for less supply in the future. Biden’s tax and regulations on oil and gas will only make oil and gas go higher and even if Biden released every barrel in the reserve, that will not change it.

The Republicans have also correctly questioned the wisdom of exporting our strategic oil to China. There should be real scrutiny of Biden’s relations with China considering his family’s close ties with the country. It should be mentioned that his family has received significant amounts of cash from China and the fact that Ye Jianming, chairman of Chinese energy conglomerate CEFC, gave Hunter Biden a 3.16-carat diamond estimated to be worth $80,000.

In the meantime, many in the oil industry are getting very concerned that the severe drawdowns could do long-term damage to the SPR.  There are also concerns that the US government may have to pay a lot more than $70 a barrel to refill the reserve. Remember the administration was bragging that they were going to make money on the SPR sales but have not been able to close the deal. Maybe it is because they are holding out for 10% for the ‘big guy”.

The short-term relief consumers may have seen at the gas pump will be paid back in spades as Biden’s SPR folly and anti-fossil fuel agenda have helped global spare oil production fall to historic lows. That gives more power to OPEC and its favorite co-conspirator, Russia, the upper hand. Now Bloomberg News is reporting that delegates from OPEC+ said privately that they expect the panel of ministers to maintain the status quo, as they await clarity on the recovery in consumption in China and the impact of sanctions on Russian supply.

Biden has left the country not well equipped to handle a real energy emergency and has mortgaged taxpayer futures. Now they complain when the House wants to rightly stop this misuse of the SPR.

This outrage may be covered because the administration knows that gasoline prices are beginning to rise. AAA reported that gasoline prices hit 344.6 a gallon. That is up almost 12 cents from a week ago. Biden though, still tweeted that gasoline prices are down from the historic peak he oversaw hitting $5.016 on June 14th. And he is not taking into account that the price comparison he is making is summer blends versus winter blends that are cheaper. I can predict that Biden will take credit when gas prices go down but blame Republicans when they go up.

Gasoline and heating oil are outpacing oil on reports that, “Exxon Mobil (XOM.N) is performing planned maintenance on several units at its Baytown complex in Texas, it said on Monday. “Maintenance is expected to last several weeks,” a spokesperson said in an emailed response. The Baytown Complex houses a chemical plant, an olefins plant and a 560,500-barrel-per-day oil refinery according to Reuters.

This should support products and crude. The base case is for more movement higher.

Scott DiSavino of Reuters has been all over the Freeport LNG Story and now we could have the first step in what could be a reopening and maybe help put in a floor on natural gas. He reported that Freeport LNG, the second largest U.S. liquefied natural gas exporter, on Monday said it had completed repairs to its Texas plant and asked U.S. regulators for permission to take early steps to restart the fire-idled facility. The closely-held U.S. liquefied natural gas (LNG) company’s export facility was knocked offline by a fiery blast on June 8 and barred from resuming production while federal regulators could complete an extensive safety review and approve resulting changes. On Monday, it asked regulators to begin introducing liquefied natural gas into the plant’s piping system according to a regulator filing. It also asked for a response to the request by Tuesday. Natural gas could use a blast of winter as well. Europe is getting colder and in the US it getting more wintery as well.

You should download the Fox Weather app. Fox Weather is reporting that, “Millions of people in the Northeast and along the I-95 corridor are being asked to take it slow on the roads Monday as a winter storm brought rain and snow to the region. The storm began Sunday, and by Monday morning, snow was reported across the interior of Northeast and northern New England, while the rain fell in southern New England and along the I-95 corridor through New York City and points south. The storm created messy travel for commuters across the East Coast. In Maine at Portland International Jetport, an American Airlines plane slid off the runway Monday afternoon due to the snowy conditions. All passengers were said to be okay.

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Phil Flynn

The PRICE Futures Group

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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