Democrats know how to run a show trial. This time it’s called “GOUGED AT THE GAS STATION: BIG OIL AND AMERICA’S PAIN AT THE PUMP”. It will be another attempt by House Democrats to point the finger of blame for higher gas prices away from their own shortsighted and anti-fossil fuel policies that led to rising inflation and higher gas prices.
There will be a lot of grandstanding and false accusations against U.S. oil gas companies and their workers as House Democrats will be trying to get their gotcha moment where they can share it on YouTube and Twitter. Yet when the democratically controlled Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce met last February, there was not a peep about rising gas prices. Last February, it wall all about climate change, what big oil knew, and when they knew it. It was an attempt to get big oil the way they got big tobacco.
Rep. Carolyn B. Maloney, Chairwoman of the Committee on Oversight and Reform, and Rep. Ro Khanna, Chairman of the Subcommittee on Environment, held a hearing to examine whether climate pledges were made by fossil fuels fuel companies Exxon (NYSE:XOM), Chevron (NYSE:CVX), Shell (LON:RDSa), and BP (NYSE:BP) are adequate to address global warming. It appeared to be an audition for a made for Netflix tv movie. Chairwoman Maloney, in her opening statement, had her Meryl Streep moment, saying:
‘“The message is clear: Big Oil intends to continue its playbook from the past four decades, fighting meaningful action to prevent climate change while engaging in a PR campaign to deceive the public. This Committee will not stand for it. We launched this investigation to get to the bottom of Big Oil’s role in contributing to climate change, and we will get to the truth about these pledges.”
Yeah, now these democrats are trying to convince you that their biggest concern is rising gasoline prices, not climate change. They’re trying to convince you that because oil company profits are hitting record highs somehow, they are gouging people at the pump.
The democrats will fail to acknowledge that big oil companies were losing billions of dollars a couple of years ago, and this is just how the market levels itself out. Perhaps they don’t want it to level out, and they want these companies to go bankrupt. Oh, wait for a second, that’s exactly what they did say. They do want them to go bankrupt. The democrats are the party of high gasoline prices.
Before Biden was elected, I said that you’d be voting for higher gasoline prices if you voted for Biden. Now that they are here, why are democrats surprised? The party that wants to kill oil pipelines, close refineries, and ban drilling now blames oil companies for their own policies. The Biden administration that killed the Keystone XL pipeline now wants to get more oil from Canada.
Tim Puko from the Wall Street Journal, wrote:
“Biden administration officials are seeking ways to boost oil imports from Canada, people familiar with the situation say, but with one big caveat—they don’t want to resurrect the Keystone XL pipeline that President Biden effectively killed on his first day in office.”
The people said deliberations are in the early stages and no clear-cut solutions have emerged. According to the Journal, according to analysts and others familiar with the situation, Canada could export some more oil via rail. It could also pump more oil by increasing pressure on existing lines or by installing larger pipelines along permitted routes.
Train capacity is maxed out, and there is no pipeline space. Maybe the Democrats should investigate why Canada is refusing to build more pipelines. It’s sort of like they are asking big oil companies why they are not drilling more after they raised their taxes and threatened them with crimes against the climate, not to mention told bankers to bleed the oil and gas industry dry by stopping investment.
Bullish fundamentals for oil had to adjust as talk of aggressive interest rate increases caused stocks to fall. Yields rise, and oil falls. Yet today, oil is regaining footing because demand is still outstripping supply at the end of the day. Even with a massive 3.7 million barrel plus SPR release, the American Petroleum Institute (API) reported crude inventories rose 1.1mb, relative to the DOE expectation for a draw of 2.1mb on the week. According to the API, crude inventories at Cushing, OK rose 1.8mb on the week.
API reported gasoline inventories fell 0.5mb, relative to the DOE expectation for a build of 0.1mb on the week. API reported diesel inventories rose 0.6mb, relative to the DOE expectation for a draw of 0.8mb on the week. API showed a build of 1.2mb in oil and oil products on the week, relative to the DOE expectation for a 2.8mb draw. Today we get the Energy Information Administration (EIA) report, and according to sources should be a little more bullish.
After all of the war crimes reported in Ukraine, the big question is whether the world will keep buying Russia’s oil and gas.
Overnight, Reuters reports that China’s state refiners are honoring existing Russian oil contracts but avoiding new ones despite steep discounts, heeding Beijing’s call for caution as western sanctions mount against Russia over its invasion of Ukraine, six people told Reuters. Reuters also reports that Australia, Britain, Canada, and the United States have imposed outright bans on Russian oil purchases following Moscow’s invasion of Ukraine, but the European Union remains divided. The bloc’s 27 members have been unable to agree on an embargo, with Germany warning against hasty steps that could push the economy into recession.
Some countries, such as Hungary, oppose any bans. Germany, however, aims to phase out Russian oil imports by the end of this year, officials said, as does Poland. Reuters says that many buyers in Europe are shunning Russian crude voluntarily to avoid reputational damage or possible legal difficulties.
Meanwhile, India and China have refused to condemn Russia’s actions, and continue to buy Russian crude, taking advantage of deep discounts as other buyers back away. Refiners in India (the world’s third-biggest oil importer and consumer) have booked at least 14 million barrels of Russian oil since the invasion of Ukraine on Feb. 24.
Distillate issues are a big issue. Argus News reported that New York Harbor jet cash prices soared to consecutive daily record highs for the past two weeks as a lack of transatlantic and domestic imports perpetuated prompt regional shortages. Since 24 March, Buckeye and barge jet prices rose by $3.22/USG to close at $7.58/USG on 4 April as rising cash differentials outpaced declining futures. Jet differentials increased by $3.83/USG to May Nymex +$4.03/USG over the same period as bids struggled to find sellers in the spot market. The record rise in prompt cash values drove the forward curve into steep backwardation at $1.10/USG every five days from the prompt timeframe through late April.
The arbitrage from the US Gulf Coast to New York Harbor was open on paper for the past two weeks as a result of the strong gains in New York Harbor and relatively stable cash differentials in the Gulf coast. Regional spreads grew by $3.44/USG to a record high at $3.79/USG over the same time period. Despite the wide-open arbitrage, the Colonial pipeline distillates segment extending from Pasadena, Texas, to Greensboro, North Carolina, remained unallocated, while the Colonial line space value was negative at -0.65¢/USG through yesterday.
Global transatlantic cargo shipments heading to New York Harbor rose from zero in February to 123,600 tons in March. Still, those imports are not scheduled to arrive until mid to late April and early May, according to Vortexa. Regional jet stocks fell to a ten-week low during the last week of March at 7.6mn bl and were 20pc below the five-year average, according to data from the Energy Information Administration.
Enjoy your retail gas price break. It most likely will not last. Oil released from the U.S. SPR will go mainly to overseas refineries. The summertime blends are coming soon—top off the tank.
Natural gas is exploding! The squeeze is on. Be careful as there is still upside potential.