
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
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All Charged Up. The Energy Report 07/19/2024
Energy innovation is about to be unleashed after President Trump signaled that he would do away with Biden’s electric car mandate that had the government pick winner and loser and allow government resource to be used in a way that will not stifle the imagination and creativity. While some argue that Biden EPA regulations do not mandate electric vehicles at all, the reality is that it would make internal combustion engine cars more expensive and less reliable.
Biden’s Electric car push cost automaker billions of dollars in losses even with additional billions of dollars wasted of taxpayer money. The electric car push was ridiculous. It was a government policy that was designed by government bureaucrats to force Americans to change their habits and give up their freedom of choice. They tried to force Americans to buy a technology that was more expensive and less efficient than the cars they already had.
This I guess was supposedly to save the planet from what they believe is the ‘existential threat of climate change’ while failing to grasp that the production of these electric cars adds three-times their carbon emissions to produce than it would take to produce an internal combustion engine. Not to mention the challenge to the power grid to charge millions of the carbon intense produced cars.
It would take trillions of dollars in investment to meet that demand and it would take multiple nuclear power plants to make a dent in carbon emissions. Yet the reality is that more than likely the grid would be powered by natural gas and coal. Because wind and solar really would not be reliable enough to carry much of that increased load.
Nor did they have a plan to deal with the inevitable billions of dollars of cost to dispose of these car batteries when they reached the end of their life. Or a plan to deal with the shorter lifespan of electric cars that lose their value because no one wants to buy a used electric car because they know that when the battery goes, the cost to replace it will mean the car is headed to the junk yard.
This is a perfect illustration because the government with all of your tax money can’t make something happen that was never meant to be. By forcing their will upon the industry more than likely they stifled real innovation.
Now overnight a Microsoft outage gave markets a scare. What they are calling a global technology outage for Microsoft products is creating turmoil around the world. A Microsoft IT outage has caused airline and media groups, banks, and other businesses to basically get shutdown. United Airlines reportedly said that they were holding all aircraft at their departure airport. Reports of planes in the air are being asked not to land. Bloomberg is reporting now that the underlying cause of the outage has been fixed but said it is not a cyber-attack. Of course, that was the markets’ first thought. After the reports of the outage, the market sold off because of the type of world we live in. Oil and oil products fell on the news but are now stabilizing. Stock market also is trying to get a bid.
This comes with all the uncertainty surrounding the increase in oil products last week. The Brent crude spreads and the WTI spreads for oil or the signal in the very tight market this is very much in line with what we have been expecting. A major reduction in Russian exports it’s supporting this movement in the Brent crude time spreads. And with the US recount falling and the supplies of oil globally tightening, it will only be a matter of time before OPEC and its favorite coconspirator Russia will start waving the mission accomplished flag. If you believe what the markets are telling you the supply deficit is here, it’s happening right now before your very eyes
That means of course you should be hedged on both oil and gas products, especially in the winter months. Quantum Oil Daily said prices eased back after the ECB kept rates unchanged at its Thursday meeting, while Europe’s central bank continues to waver over the timing of the next rate cut.
Natural gas prices are still hanging in there. Still Bloomberg reports that, “natural gas traders are giving up on the idea that a sweltering summer will boost demand for the power-plant fuel and curb a massive US supply glut.
The spread between October and January gas futures — essentially a bet on how tight stockpiles will be heading into the northern hemisphere’s winter — has collapsed in recent weeks. By the end of October, inventories stored underground in depleted reservoirs, aquifers and salt caverns are expected to reach the highest since at least 2016, according to a government forecast.
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Thanks,
Phil Flynn
Senior Market Analyst & Author of The Energy Report
Contributor to FOX Business Network
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