President Joe Biden continues to bite the hand that feeds him and feeds the rest of the economy. In a speech that was more like the speech of a failing socialist dictator than an American president, he lashed out at the private sector for the inflation and bottleneck problems while refusing to acknowledge that many of the problems have been exasperated by his extreme left-leaning policies.
In fact, despite Biden’s angry diatribe, it seems they are coming to their senses and for the first time might be reaching out to the U.S. oil and gas industry for help in reigning in sharply higher oil and gas prices instead of begging OPEC for more oil.
OPEC of course laughed off the Biden administration’s pleas for more oil. Joe Biden’s hard line with Saudi Arabia and Russia backfired and Biden’s pleas for more oil were rejected time and time again. Unnamed OPEC sources were saying it was hypocritical of Biden to ask for more oil, not to mention the fact they were in no mood to help him because of the way he strained relations with Saudi Arabia.
Now the Biden administration is coming back to the U.S. oil and gas industry that he has derided and accused of manipulating prices while threatening them with investigations, carbon taxes, and royalties taxes. Not to mention the fact that Biden declared war on the energy industry with a temporary drilling halt on federal lands and killing the Keystone pipeline while openly warning banks and investors that they may be held responsible for investing in oil and gas if they are determined to damage the planet.
This comes as Biden is facing pressure from soaring inflation that hit 5.4% and plunging poll ratings. The inflation rate is being driven in large part by surging oil and gas prices that might have been calmed by US oil producers if it were not for the fact that the Biden administration has created a toxic environment for the industry, painting them as the enemy as opposed to an American economic asset.
These failures by the Biden administration, as I predicted would happen, have led to tight supply and sharply higher prices. Even the normally subdued Energy Information Administration (EIA) is predicting sharply higher heating bills this winter. The EIA in their ‘Winter Fuels Outlook’ says that they expect nearly half of U.S. households that heat primarily with natural gas will spend 30% more than they spent last winter on average—50% more if the winter is 10% colder-than-average and 22% more if the winter is 10% warmer-than-average.
They expect the 41% of U.S. households that heat primarily with electricity will spend 6% more—15% more in a colder winter and 4% more in a warmer winter. The 5% of U.S. households that heat primarily with propane will spend 54% more—94% more in a colder winter and 29% more in a warmer winter. The 4% of U.S. households that heat primarily with heating oil will spend 43% more—59% more in a colder winter and 30% more in a warmer winter.
What is clear is that based on what I am seeing, they are low balling these numbers. As I have written time and time again, the risk for these fuels is still to the upside. Also to the upside of these forecasts.
Today we get EIA data for both natural gas and petroleum. Natural gas at 9:30 and petroleum at 10 o’clock.
The API version last night was overall supportive. Myra P. Saefong at Marketwatch reported that,
“The American Petroleum Institute (API) reported late Wednesday that U.S. crude supplies rose by 5.2 million barrels for the week ended Oct. 8, according to sources. The API, which released its report a day later than usual because of Monday’s Columbus Day holiday, also reportedly showed inventory declines of 4.6 million barrels for gasoline and 2.7 million barrels for distillates.
"Crude stocks at the Cushing, Okla., storage hub, meanwhile, edged down by 2.3 million barrels for the week, sources said. Inventory data from the Energy Information Administration will be released Thursday. On average, the EIA is expected to show crude inventories down by 500,000 barrels, according to a survey of analysts conducted by S&P Global Platts. The survey also calls for supply declines of 400,000 barrels for gasoline and 800,000 barrels for distillates."
Natural gas also is back on an upward track as weather forecasts are starting to put some cold in our future. Expectations for today’s EIA report are around 99 bcf. We need a string of triple-digit injections to make sure we don’t go into winter undersupplied! Remind me…who put in a drilling moratorium that slowed the production of natural gas?