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The Energy Report : Who’s The Leader

Published 04/23/2024, 10:30 AM
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Who’s the leader of the club that was made for me. JOE-BID-eeeen.  Joe Biden, Joe Biden forever hold your banner high. High, High. For those of you young folks who missed being a part of the Micky Mouse Club, at least you have a chance to become a member of Joe Biden’s “American Climate Corp”. Joe Biden, in an effort to win back the hearts and minds of young, disgruntled Biden voters or perhaps in an attempt to get them to stop protesting at US college campuses across the land, is offering 20,000 jobs to young environmentally minded young folks so they can save the planet from what he sees as the biggest threat to mankind and to “ensure that poverty, race, and ethnic status do not lead to worse exposure to environmental harm”. To try to inspire young people and their hearts and minds and votes that he has lost, Biden is trying to summon his inner Franklin D. Roosevelt by trying to copy a 1936 summer camp for underprivileged youth that Roosevelt called the Civilian Conservation Corp (CCC) to help create jobs during the Great Depression. Now Biden hopes that he can win back some votes by getting them to join this fine club.

While this youthful group cannot wear Mickey Mouse ears, perhaps they could wear caribou antlers because at the same time, Biden has decided to block 40% of all oil and gas development in the Alaska National Petroleum Reserve in an attempt to protect the so-called native habitat of the caribou and polar bears. Now normally the population of the caribou thrives near warmer oil pipelines but that’s a story for another day.

The Biden team also wants to block a road in Alaska that can bring out the precious metals that we would seemingly need if we’re going to electrify our economy. But perhaps he’s a little bit worried about putting some of those slave labor kids out of work in the cobalt mines. Maybe he could send those kids some of those cute caribou antler hats to make up for it.

Biden’s energy policies are raising real concerns about the future of energy security in the United States. People in the oil and gas industry and the mining industry are just scratching their heads wondering why the president continues to encourage the production of oil and gas and rare earth minerals in other countries while continuing to try to stymie the US. It’s very disturbing to many in these industries that the Biden administration continues to make short-term political decisions regarding energy without any concept of the longer-term damage that it’s doing to the US energy space. There are warnings from the American Petroleum Institute and others that are saying that Biden’s policies are creating the next major energy crisis but if you can’t beat them, I guess just join the club.

In the meantime, the market doesn’t seem to be too phased by the sanctions that are being placed in Iran. There’s a growing sense that new sanctions are not needed but also what we must do is enforce the sanctions that are already on the books.  Javiar Blass at Bloomberg agrees writing that, “if you believe the Chinese government, the country doesn’t import any oil from Iran. Zero. Not a barrel. Instead, it imports lots of Malaysian crude. So much that, according to official Chinese customs data, it somehow buys more than twice as much Malaysian oil as Malaysia actually produces. Impossible? Well, of course. The reality is that China simply rebrands every barrel of Iranian crude it imports as Malaysian — the easiest and cheapest way to defy US sanctions, according to oil traders. It isn’t a small matter: “Malaysia” was China’s fourth-biggest foreign oil suppler last year, behind Saudi Arabia, Russia and Iraq. He says that, “The truth is, the US doesn’t need new sanctions on Iranian oil — it needs to enforce the ones it already has. For the last several years, either the White House has turned a blind eye to surging Chinese purchases of Iranian oil, with Biden seeming to be more concerned about rising oil prices than increased Iranian oil output, or the web of Chinese and Iranian obfuscation has outwitted US officials. I’m not sure which would be worse, but the result is the same: Iranian oil production last month surged to a six-year high of 3.3 million barrels a day, up 75% from the low point of 1.9 million barrels during the “maximum pressure” sanctions applied by former US President Donald Trump in late 2020.

I would take it a step further. I would argue that the lifting or the failure to enforce sanctions on Iran has made the world a more dangerous place. There’s absolutely no doubt that a lot of the turmoil that we’re seeing in the world today is because Iran has been able to fund terror groups like Hamas, Hezbollah and the Houthi rebels. Don’t believe the talking point that the reason why Iran is lashing out is because of Donald Trump and that he stepped away from the Iran nuclear accord. The reality is that Iran was never in the business of not wanting to get a nuclear weapon and that Iran nuclear accord would have stopped them.

WTI prices hit over $83.00 a barrel today before pulling back in a normal 3:00 AM central time sell off. The market did get a bit of a pullback on signs that manufacturing growth overseas is slowing while inflation continues to be strong. We get the S&P flash US services purchasing managers index today and we also get the flash US manufacturing purchasing managers index. The market is going to look at the rate of growth but also the inflation component and that could be a market mover for oil today. We also will get the American Petroleum Institute supply report, and the expectations are that we will see a pretty good draw across the board.

We’re seeing diesel prices gain on Rbob gasoline prices suggesting that refiners are starting to get caught up with gasoline inventories. If that gets confirmed from today’s report and tomorrow’s Energy Information Administration supply report, it could mean that we could be getting close to a peak on gasoline prices.

Natural Gas Futures prices are trying to hold steady. The big picture is there are still concerns about the Biden administration’s pause on liquefied natural gas exports approvals. Insiders continue to believe that this is just a political sideshow to try to win favor from Biden voters. Still, if the United States lives up to its potential as the largest natural gas exporter, then world will be a cleaner place. The best chance for developing nations to reduce their greenhouse gas emissions is to replace coal plants and oil plants with liquefied natural gas. It’s realistic and doable and affordable and ultimately good for the planet.

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