Emission Mission. The Energy Report 06/25/2024

Petroleum markets, which saw a surge of buying on geopolitical risk factors, are coming down a bit ahead of tonight’s American Petroleum Institute (API) report. Shipping container costs are going through the roof and tightness of supplies.Houthi rebels continue their attacks in the Red Sea and in Israeli. Yesterday the Russians blamed the United States for a Ukrainian missile strike raise concerns that the war between Russia and Ukraine will drag the United States ever so closer to direct conflict. While those concerns are real and there’s even rumors about the Biden administration talking about bringing back the draft, you must remember that they think that the biggest existential threat to the world is climate change.

Obviously with all the trillions of dollars that have been spent on trying to reduce greenhouse gas emissions, it’s been an abject failure with greenhouse gas emissions hitting a record high. Yet here in the United States they continue to use the incredible wide-ranging powers of the Environmental Protection Agency to ram through regulations without the due process of law. Yet is the EPA overstepping their bounds? Well, there’s a case that is going to be heard before the Supreme Court that can tell us.

OIL Price’s Charles Kennedy writes that, “The U.S. Supreme Court has decided to hear a case that could have far-reaching implications for future energy infrastructure projects in the country by establishing the limits to federal agency power over emission assessments. On the face of it, the case is small. It concerns an 88-mile railway that would carry oil and other commodities from northeast Utah to markets. The project was approved by the Surface Transportation Board but an appeals court in Washington D.C. nixed that approval citing “numerous” violations of the National Environmental Policy Act in the project’s review.

The case was brought to the appeals court by environmentalist organizations but now supporters of the $1.5-billion project are fighting back, challenging what they suggest is overarching powers. In their request for the hearing, the groups behind the Uinta Basin Railway project asked the judges to have their say on whether the National Environmental Policy Act gives federal agencies power “beyond the proximate effects of the action over which the agency has regulatory authority.”

The Biden Administration has been touting price caps on Russian oil and price caps on natural gas, but Russia continues to export oil in a big way. Reuters reported that India and China were the top destinations for Russian seaborne fuel oil and vacuum gasoil (VGO) exports in May, traders said and LSEG data showed. Russian fuel oil and VGO seaborne exports last month rose 12% from April to about 4 million metric tons, helped by completion of seasonal maintenance.

The European Union’s full embargo on Russian oil products went into effect in February 2023 and the bulk of Russia’s fuel oil and VGO was redirected to other regions, mostly Asia. Good luck with that.

Despite the high prices and the strapped consumer, we’re seeing demand expectations start to rise once again air travel demand based on TSA members hit another record high so the demand for jet fuel continues to be strong. We’re seeing consumers get back behind the wheel as demand for gasoline seems to be picking up.

We’re expecting to see inventories fall across the board this week and should give us a little bit of a bounce. I would assume that the market is getting close to a bit of a bottom here and expect to see the supplies tighten as we get closer to the 4th of July holiday and that should keep the market on an upward trek.

Natural gas prices rebounded as the heat domes stay in place. This once again raises demand expectations for air conditioning electricity demand. Fox Weather reports, “Triple-digit heat frying central, southern US on Tuesday. Heat alerts stretch from Omaha, Nebraska, to Houston, Texas, to Jacksonville, Florida, to Charleston, South Carolina, as the central and southern U.S. is backed by a large dome of high pressure. People in these areas are urged to stay hydrated and take frequent breaks in the air conditioning.

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