Fantasy Island. The Energy Report 02/22/2024

The OPEC Secretary General HE Haitham Al Ghais wants to welcome you to Fantasy Island, as the private jets landed at the last climate conference. On the anniversary of the founding of the OPEC cartel, he said that “our energy future needs to be based on facts, not fantasy. This is the only way to deliver a just inclusive and realistic energy transition. This warning comes as the big green energy lobby is coming after Republicans as OPEC warns the world not to buy into the fantasy of the Green Energy Transition that the International Energy Agency (IEA) has made its main mission as opposed to energy security.

This comes as US crude supplies build in yesterday’s American Petroleum Institute (API) report on reduced refinery runs due to the Whiting outage and refining margins that have pulled back from recent highs. The API reported that crude supply increased by 7.168 million barrels versus +4.298 million expected. Yet a 2.908 drop in distillate will support diesel and a 415,000-barrel increase in gasoline was not sufficient enough of an increase as it competes with diesel for refiners’ attention.  Energy watcher Patrick Bourque says that refinery outages are right that were 600.000 barrels a day but should improve to 400,000 barrels a day roughly.

Global diesel tightness comes as Russia starts flexing its energy muscles raising their price to buyers and Russian sanctions have failed to reduce Russia’s oil revenue. Even India is complaining that they can’t get any more of that cheap Russian oil. Pricing power for Russia has returned as sanctions fail. So get ready for the Biden administration’s promised new sanctions that cause a surge in aluminum prices that will more than likely make Russia even more money.

Bloomberg News reported, “Aluminum and nickel jumped after US President Joe Biden said the US plans to unveil a “major” sanctions package against Russia on Friday following the death of opposition leader Alexey Navalny. Aluminum prices on the London Metal Exchange rose as much as 1.8% while nickel gained up to 1.3% after Biden’s comments Tuesday to reporters at the White House.” Yet John Kemp points out that non-OPEC production may be one reason that oil prices are not exploding. He writes that, “Brazil’s net petroleum exports climbed by 22% to a record 76 million cubic meters in 2023. Growing output from Brazil as well as other Western Hemisphere producers including the United States, Canada and Guyana have blunted OPEC⁺ efforts to reduce excess stocks and lift prices”

Breitbart is reporting that, “A leaked confidential 66-page document from a top environmentalist association obtained exclusively by Breitbart News reveals a plot by supporters of democrat Joe Biden’s signature legislative accomplishment to begin a pressure campaign against republicans to push them to protect green energy subsidies Biden secured for them. The document, a “February 2024 Board Memo” prepared for board members of the American Clean Power Association, is striking in how specific and aggressive it is in detailing plans for its members to push Republican lawmakers to oppose any GOP effort to repeal all or parts of Biden’s inaptly named Inflation Reduction Act (IRA). The IRA, which passed during Biden’s second year as president, did not lower inflation but did aggressively expand government spending, including perhaps most controversially on the left’s radical green energy agenda.”

They write that, “This 66-page document obtained by Breitbart News is marked on nearly every page as “ACP Confidential Information.” The first dozen or so pages of it include a breakdown of the normal business of a trade association, including a discussion about the election of board members and officers of the group, as well as the organization’s financials. The financial report section explains that the group pulls in tens of millions of dollars annually in revenue, and spends tens of millions of dollars per year as well—making this group a powerhouse trade association in the green energy space. The document, for instance, says the trade association’s finance team estimated a total of more than $62 million in revenue in 2023 and expenses at $55.8 million. In short, this group is extremely well-funded—and the document brags about ACP having more than $49 million in cash available on hand to begin 2024.”

This comes as climate-based fearmongering is out of control. The best way to get you to submit to the green energy agenda, reduce your standard of living and pay sky rocketing energy costs is to report on studies that scare the fantasy island out of you. Bloomberg covered a report that said, “Climate change will drive 200 million Africans into severe hunger, cut crop revenue by 30%, and slash GDP by 7.1%, according to a study”. NOOOO!

Bloomberg cites, “The Center for Global Development study, The Socioeconomic Impact of Climate Change in Developing Countries in The Next Decades, shows that the developing world will bear the brunt of the impact of a warming world. While “moderate economic loss” will be experienced until 2050, after that date the impact will be significant and Africa will be the hardest hit.” Of course, they do not comment on how their past doom and gloom predictions have panned out. Well not very well as their main focus is hyping climate change to try to get rich countries to take their wealth and fund poor countries as they increase their carbon footprint or as they said in 2014, “Climate change is regressive–awful for the rich, but catastrophic for the poor.” But great for the green energy lobby and the policymakers.

All of this energy madness comes as energy prices are working their way stubbornly higher. Oil prices are creeping higher even after the big building inventory and today we will get the Energy Information Administration report at 10:00a central time. Yesterday’s API report with the big build did slow down the market momentum but oil prices are hanging in there on the reality that supplies globally are tightening.

Natural gas prices are getting a boost as the reality that low prices are going to squeeze many producers out of business is causing many of the hedge funds to cover their massive, short position. We do know that there is still a glut of natural gas on the market because of the warm winter. At the same time these prices are so ridiculously low that they are almost out of touch with reality. Low prices cure low prices, and we probably are going look back at these prices longingly in a few years. That’s especially true if Biden looses out and we can see our LNG exports feed the world.

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