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 has tried to weaponize almost all government agencies in its desire to have the government do whatever it takes and almost by any means push its climate agenda. But Reality is starting to hit back as not only has the Biden team had to push back on its agenda as its electric car push is hurting Union job creation but also, but it’s also trying to turn the Securities and Exchange common to the Securities and Climate Commission and the Federal Reserve as the new climate policy. Yet the Biden team again has to push back as the Biden Energy Policies are becoming unworkable and putting undue hardship on hard-working Americans, labor, and the US oil and gas industry.

In an exclusive Reuters report, they say that the SEC is now dropping some emissions disclosure requirements from draft climate rules that the Biden Administration tried to force down the rights of public companies.
Reuters wrote that “The U.S. Securities and Exchange Commission (SEC) has removed some of its most ambitious greenhouse gas emission disclosure requirements from corporate climate risk rules it is preparing to adopt, people familiar with the matter said on Thursday. The SEC has dropped a requirement for U.S.-listed companies to disclose so-called Scope 3 emissions, (Scope 3 emissions account for greenhouse gases, such as carbon dioxide, released in the atmosphere from a company’s supply chain )which was included in its original draft of the rules published in March 2022, the sources said.”

Reuters wrote that “If adopted, the new draft would represent a win for many corporations and their trade groups that lobbied to water down the rules. But it would also deviate from European Union rules which make Scope 3 disclosures mandatory for large companies starting this year and potentially complicate compliance for some global corporations. The SEC’s original draft proposed mandatory disclosure of emissions for which companies are more directly responsible, dubbed Scope 1 and Scope 2. Some lobbyists pushed the SEC to require such disclosures only if they are material to a company’s business. Reuters could not ascertain whether the latest draft changed the Scope 1 and 2 requirement thresholds.”
In my opinion, I believe the Biden administration had to back off these requirements because it was almost impossible for many companies to look at the entire chain of their of their carbon supply chain. This would also add to the cost of good feeding into long-term inflation and be detrimental to the ability of many companies to do normal business.

This comes as the American Petroleum Institute and others in the oil and gas industry roll their eyes at the Claims by the Biden Administration and other mis formed people that Biden has been great for the US oil and gas instantly since we have seen record oil production.
The reality is that the reason why we have seen record oil production is due to investments in technology and innovation by the oil and gas that were made before Biden got into office.

The mistake that these people are making is that current oil production is based on investments made years ago and if you want to get a sense of the real impact of the Biden Administration impact is the lack of replacement oil for the inevitable sharp decline rate that is coming. In other words, you must look ahead and that is where this Anti-fossil fuel crusade is going to needlessly raise prices in the future. Its called the reserve-replacement ratio (RRR) which is the amount of oil added to a company’s reserves divided by the amount extracted for production which has fallen under Bbiden.

OPEC has warned that the oil industry needs at least $12 trillion in investment between now and 2045 to prevent energy prices from increasing. The American Petroleum Institute (API) President Mike Sommers warned that “Despite the silver lining of increased production, we’re very concerned about what the clouds look like ahead if we don’t get the policies right now. The continued signals from this administration and the policies they are pursuing – we have real concerns that is sowing the seeds for the next energy crisis.”
OPEC and the API are warning about this. OPEC should be taken seriously because the US Federal Reserve says they do.

In their note “Reasons Behind Words: OPEC Narratives and the Oil Market” The Fed states that their analysis of the content of the  (OPEC) communications and whether it provides information to the crude oil market. To this end, we derive an empirical strategy that allows us to measure OPEC’s public signal and test whether market participants find it credible.

Using Structural Topic Models, we analyze OPEC narratives and identify several topics related to fundamental factors, such as demand, supply, and speculative activity in the crude oil market. Importantly, we find that OPEC communication reduces oil price volatility and prompts market participants to rebalance their positions. Our analysis indicates that market participants assess OPEC communications as providing an important signal to the crude oil market.”

In the meantime, US demand for products bounced back last week for both oil and gasoline according to the Energy Information Administration (EIA). The EIA reported a 3.5 million barrel increase in crude oil supplies which was smaller than what was reported by the American Petroleum Institute. Even with that build crude supplies are still 2% below the five-year average for this time of year. We saw an increase in strategic petroleum reserve supplies but still with the drawdown and SPR stocks the cushion of backup supplies is much smaller than it was in previous years.
Globally distillates continue to be a problem even with the flip back to above normal temperatures because of El Nino conditions US supplies have distilled fell by 4 million barrels last week and that puts us 10% below the five-year average for this time of year. Gasoline inventories also fell by 300,000 barrels and are 2% below the five-year average for this time of year if you look at total overall stocks, they fell by 800,000 barrels.
I did see that we saw a bounce back in crude oil refinery inputs as they average 14.6 million barrels a day which was 31,000 barrels a day more than the previous week refineries are still operating at only 80.6% of their capacity due to seasonal maintenance as well as the continuing problems at the Whiting IN BP plant.
While diesel prices are soaring and plunging grain prices starting to raise questions as to whether farmers are going to plant as big a crop as they normally would. Here in the United States, low grain prices have led to surging meat prices’. The cattle herd needs to be rebuilt to meet demand.
The lack of interest in China buying US grain at this point is putting the US farmer behind the 8 ball while the Biden administration bowed to pressure to increase the usage of E15 in many parts of the country year-round it still might not be enough to bail out the farmers especially because he put it off until after the election.
The tightness in diesel supplies means that we need to be hedged going into the planting season. Even as oil prices seem hesitant to break above 80 the first time around the likelihood that we’ll see $80.00 plus oil in the coming weeks is highly likely.

Natural gas is trying to build on hopes that production will cut back to meet the lack of winter demand. Shanir LNG for one is saying that they are not going to let the Biden administration’s pause on LNG export facilities change their future expansion plans there’s a growing sense in the industry that Biden will have to back down and this overreach in his green energy agenda. People in the industry see this as just another political move by President Biden who is getting desperate it’s his poll numbers and approval ratings are dismal. The markets going to watch very carefully for any signs of potential bankruptcies in the natural gas-producing areas.

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Phil Flynn

Senior Market Analyst & Author of The Energy Report

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