How's that green energy transition going? Oil is surging higher! The reality of failed energy policies along with rising geopolitical risk is driving prices higher.
Some might argue that it is green energy policies that have exasperated the tensions between Russia and Ukraine and Russia is using its energy advantage. Some suggest that it’s Biden administration policies that are making the tensions worse by his leadership and his erratic energy policies. Europe’s rush to get off fossil fuels has left them particularly vulnerable because they decided to close nuclear power plants, curtail natural gas production, and failed wind and solar projects. So now their fate is in the hands of Russia.
This has left the European Continent vulnerable and now they are panicking to secure additional supplies. The Biden administration announced on Tuesday that it was working with gas and crude oil suppliers from the Middle East, North Africa, and Asia to bolster supplies to Europe in the coming weeks, in an effort to blunt the threat that Russia could cut off fuel shipments in the escalating conflict over Ukraine according to the New York Times. But that is more easily said than done.
If Russia decides to invade, oil prices and natural gas prices will spike. European politicians are realizing their mistakes and even talking about reclassifying natural gas as a green energy fuel. Climate diehards who fail to face the reality that we need the energy to survive are against that reclassification of natural gas. Yet all of their green dreams will fail if their policies create a situation where we end up using dirtier fuels to keep the lights on in times of crisis.
It is time that they wake up to the realization that we need to go back to the drawing board and create with real science a plan to transition off of fossil fuels and that political demagoguery is not going to save the planet.
The U.S. president is threatening severe sanctions against Russia that most assuredly will include oil, that because of Biden policies, the U.S. is more reliant on. The XL pipeline could have been ready to come to the rescue of U.S. refiners very soon if it were not for the fact that Biden killed it along with all those jobs on his first day in office.
Now the president is getting blamed by some for sending mixed signals to Russia on the Ukraine invasion that is raising the risks of a Russian invasion in a conflict that Russia says has been inflamed by Biden policies.
Zerohedge reported that,
“The President of Croatia has gone rogue! He’s trying to prevent war over Ukraine. It just might work. For background, it was already clear that the alliance was divided over how involved to be in Ukraine. America, the U.K., Poland, and the Baltic states were transferring weapons. But Germany refused to let any German-made weapons enter the conflict zone.
"Then-President Biden put 8,500 troops on “high alert”—and warned he might deploy 50,000 to Eastern Europe. The question was… would NATO stand behind this ramping up of pressure? Or would troop deployments on the border of the conflict fracture the alliance? We now have a preliminary answer, thanks to Croatia’s President.
“'Croatia will not send any troops in case of an escalation,'” said Zoran Milanović. “On the contrary, it will recall all troops [from NATO], to the last Croatian soldier!” This is notable because it isn’t coming from a Euroskeptic with a history of picking on NATO. Milanović is a member of Croatia’s center-left Social Democrat party, which is strongly pro-European. But even many sympathetic to Europe wants no part of the conflict with Russia.
"Mr. Milanović went further and made two points that are almost universally banned in the West. 1. He pointed out that the Ukraine conflict is happening on Russia’s doorstep 2. He said that NATO “must reach a deal that will take account of the security interests of Russia. '“These points violate the Western orthodoxy on the Ukraine conflict. It is forbidden to recognize that Russia may have legitimate security interests."'
Yet today Bloomberg reported that Russia criticized U.S. and NATO security proposals aimed at defusing a crisis over Ukraine, while still leaving the door open to further talks. This comes a day after the U.S. and the North Atlantic Treaty Organization delivered written responses to Russia, broadly rejecting Moscow’s demands that the Western alliance close its door to Ukraine’s potential future membership and roll back forces from former Soviet states.
Zerohedge reported that officials from Russia and Ukraine met in Paris on Wednesday and held what Moscow described as “tough” talks. Despite whatever difficulties there were, the two sides agreed that the ceasefire in Ukraine’s eastern Donbas region must be upheld. That brought prices back up and oil inventories suggest that there is no room for error.
The EIA reported that oil inventories at the key Cushing, Oklahoma delivery point are at the lowest seasonal levels since 2012 and Saudi Deputy Oil Minister, Nayef Al-Mishel, warns that oil and gas investment must grow at 5% per year to meet oil demand, a number we know is not happening.
This is what happens when you have politicians with a green agenda with no thought to the consequences of their actions start making decisions that are based on ideology and not science and fact.
Oil inventories yesterday were taken as bullish despite missing some of the headline predictions. The building gasoline supplies is suspect because a large part of the number is still blending components that is making up that increase in supply. There’s a lot of questions as to whether or not the U.S. export numbers are correct that we saw dropping has given the market support. The bottom line is globally oil supplies are tight.
Natural gas got a little bit of a pop on the frigid cold weather. Today we should see a withdrawal from the supply of 220 bcfs in the Energy Information Administration supply report that comes out at 9:30 central time.
The EIA reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.4 million barrels from the previous week. At 416.2 million barrels, U.S. crude oil inventories are about 8% below the five-year average for this time of year.
Total motor gasoline inventories increased by 1.3 million barrels last week and are about 2% below the five year average for this time of year. Finished gasoline and blending components inventories both increased last week. Distillate fuel inventories decreased by 2.8 million barrels last week and are about 17% below the five year average for this time of year.
Propane/propylene inventories decreased by 4.6 million barrels last week and are about 9% below the five year average for this time of year. Total commercial petroleum inventories decreased by 4.1 million barrels last week. Total products supplied over the last four-week period averaged 21.2 million barrels a day, up by 11.6% from the same period last year.
Over the past four weeks, motor gasoline product supplied averaged 8.2 million barrels a day, up by 6.1% from the same period last year. Distillate fuel product supplied averaged 4.2 million barrels a day over the past four weeks, up by 14.5% from the same period last year.