The Trump Train is Leaving the Station. The Energy Report 07/01/2025

Oil prices are rising due to strong demand expectations, and stock markets have reached record highs. Trump’s global trade strategy is taking shape, and Iran’s nuclear ambitions have been curbed.

Despite OPEC planning to increase production, US producers are struggling, and inventories are at their lowest in 11 years. Reuters is touting, “Four OPEC+ sources told Reuters last week that the group – comprising OPEC and allies including Russia – plans to raise output by 411,000 bpd in August, following similar hikes in May, June, and July. If approved, this would bring OPEC+’s total supply increase for the year to 1.78 million bpd, equivalent to more than 1.5% of global oil demand.

Overnight reports indicate the European Union might accept President Trump’s universal tariff with some exemptions. The EU is open to a trade deal with the US that includes a 10% tariff on many of its exports but seeks lower rates for pharmaceuticals, alcohol, semiconductors, and commercial aircraft. They also want quotas and exemptions to reduce the US’s 25% auto and 50% steel tariffs.

Senate Republicans surprised clean energy developers by adding amendments to Trump’s $1.2 billion bill, cutting wind and solar tax incentives, introducing excise taxes on Chinese components, and changing tax credit criteria. This affects the $360 billion in clean energy tax credits from Biden’s Inflation Reduction Act. Yet Senate Republicans are reacting to the waste fraud and abuse that was carried out by the last administration  with its green energy madness and its detachment from energy reality.

When it came to the green energy obsession they tried to paint it that climate change was an existential threat to the country that was even more important than our national security. It meant spending billions of dollars in virtue spending on green energy projects with little plan or expertise for that matter. The administration had little or no real experience in energy and that shows up with the way they wasted our money.

Elizabeth MacDonald at Fox Business pointed out that Biden’s reckless climate spending waste was worse than realized. Half of the $93B in climate change loans Biden’s aides and his Energy Secretary Jennifer Granholm pushed out the door in the last 76 days when Trump won and was inaugurated, $42B was shoveled out in just the last two days they were in office, James Varney at RealClearInvestigations reports. That $42B is more than the prior decades’ total given out for that combined, he says.

Varney is already finding sketchy Solyndra-type companies that took taxpayer money–the green energy company that went bankrupt after the Obama administration gave it $570 million. These deals include: •Sunnova, a rooftop solar company that got $382M of its $3.3 billion loan guaranteed, filed for bankruptcy this month. •Li-Cycle, a battery recycling facility, got a $445M loan approved in November, but has filed for bankruptcy. •Zum Energy, an electric school bus company in California, got a $705M loan to sell electric buses that cost a whopping $350K each, double the cost of diesel buses. •Pacific Gas & Electric got a $15 billion loan, it’s one of Gavin Newsom’s biggest donors and Jennifer Granholm is now on the board of one of its subsidiaries. •Blue Oval SK got a $9.63B loan, it’s joint venture between Ford Motor Co. and a South Korean entity – has been dealing with numerous workplace complaints, and construction of a second EV battery manufacturing plant there has been delayed.  •Granholm just this year got invited to sit on the board of both Edison International and Southern California Edison. Edison International, along with other California energy agencies and utility owners, got a $2B federal grant, its  subsidiary, Southern California Edison, a $600M grant. I don’t know about you but I want our money back.

The global economy of course is getting a big boost because of the neutralizing of Iran’s nuclear program by the Trump Administration and Israel. Yet, things that are happening with Iran overnight are raising concerns after a sudden and unexpected halt to natural gas exports to Iraq. This will have to be watched as the whispers of regime change float in the air.

The Energy Information Administration noted that US refining capacity remains unchanged, and  we believe it is insufficient for expected demand  growth. The US needs to move forward and expand its capacity to meet the growth that we expect to see over the next few years. President Trump’s policies are influencing increased trade with the US. India intends to double its imports of US oil since the beginning of the year. Israeli Prime Minister Netanyahu is scheduled to meet President Trump at the White House on July 7th, following the OPEC decision.

According to the EIA’s latest annual Refinery Capacity Report, U.S. operable atmospheric distillation capacity, the primary measure of refinery capacity, totaled 18.4 million barrels per calendar day (b/cd) on January 1, 2025—essentially flat compared with last year. Diesel demand and demand so prices continue to be very strong. We think the diesel crack spread is going to start soaring again.

The demand for gasoline could hit a record over the 4th of July holiday as well gasoline prices at the pump have come down due to President Trump’s successful policies when it comes to the Middle East and lifting regulations on the oil and gas industry and making it easier to import and export oil. Not to mention producing it.

Triple A says that, “With Independence Day around the corner, and 61.6 million holiday travelers preparing to hit the road next week, gas prices may increase slightly.

Natural gas has been under pressure as production seems to be rising, keeping pace with record electricity demand.   The Energy Information Administration reported that, “Electricity demand in the PJM Interconnection and ISO New England (two regional grid operators covering the Northeast United States) reached multiyear highs on June 23 and June 24, respectively. Electricity demand increased significantly due to a heat wave that affected most of the Eastern United States this week.

On June 23, PJM’s peak load comprised 44% natural gas, 20% nuclear, 19% coal, and 6% solar. The rest came from hydro, wind, petroleum, and other sources. Petroleum generation tripled compared to the same hour the previous day.

Natural gas is going to keep an eye on the weather as well especially with hurricane season underway and its potential impact on both supply and demand for natural gas .

Fox Weather reports that Hurricane Flossie formed off the southwestern coast of Mexico late Monday night, and local officials are asking residents to prepare for flooding and life-threatening mudslides as the storm continues on its journey across the Eastern Pacific Ocean. Flossie became the sixth named storm of the 2025 Eastern Pacific hurricane season on Sunday when it gained strength and became a tropical storm – one step up from a tropical depression.

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