Millions of American consumers, already struggling with the highest inflation rates in over 30 years, will be hitting the road this Thanksgiving weekend and paying the highest gasoline prices since 2012. They might well ponder on Lewis Carrol’s fantastical novel “Through the Looking Glass”, when Alice keeps running but remains in the same spot and she tells the Red Queen “Well, in our country you’d generally get to somewhere else—if you run very fast for a long time, as we’ve been doing.” “A slow sort of country!” says the Queen. “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”
Raiding the US Oil Stockpile
In President Biden’s America, it seems, oil policy keeps morphing as fast as it can, but with scant achievement. Indeed, it has proved regressive for the country. Energy analysts tracking US oil policy since President Biden’s inauguration find themselves deeper and deeper into the absurdities of Alice’s Wonderland. The latest in President Biden’s approach to soaring fuel prices is to release crude oil from its strategic crude oil reserves. This marks the first time in decades that a sitting US president has resorted to releasing its emergency oil stockpile to handle market-determined rising fuel prices. The stockpile, to remind the reader, was set up in concert with other members of the International Energy Agency as a national security instrument to meet unexpected supply shocks from wars (such as Libya in 2011) and extreme weather events (Hurricane Katrina in 2005).
Biden’s announcement on Tuesday that the United States will release 50 million barrels of oil from the U.S. Strategic Petroleum Reserve to try to tame fuel prices was in coordination with small stockpile releases from China, India, South Korea, Japan and Britain. China’s Foreign Ministry spokesperson, it should be noted, said the country will arrange a release of oil from Strategic Petroleum Reserve (SPR) according to its own actual needs, declining to comment if it would be releasing crude in the coordinated effort led by the United States. Goldman Sachs GS -1.8% called the US-led “coordinated release” of crude oil which may amount to some 70 to 80 million barrels a “drop in the ocean” for a global market that is running at about 100 million barrels per day. Hours after the announcement the international bellwether Brent crude oil prices rose by over $2.00 a barrel, since the market had expected a more substantive release when it was first mooted by the Biden administration.
Blaming OPEC+
The Biden administration’s SPR release follows its repeated high profile requests for increased production from the OPEC+ group. Back in August, US national security adviser Jake Sullivan had criticized big oil producers in OPEC+ which include Saudi Arabia and Russia for what he said were “insufficient crude (oil) production levels”. “At a critical moment in the global recovery, this is simply not enough.” In a TV interview on November 6th, US Energy Secretary Jennifer Granholm responded to a question on what could be done about the US gasoline price increases by stating that “Oil is a global market. It is controlled by a cartel. That cartel is called OPEC, and they made a decision yesterday that they were not going to increase beyond what they were already planning.” The sheer effrontery of castigating the OPEC+ oil producers group’s for not increasing its planned output schedule while the Biden administration is doing its best to hobble domestic oil and gas production in its climate change crusade did not seem to concern the Energy Secretary.
In early November, President Biden said “I do think that the idea that Russia and Saudi Arabia and other major producers are not going to pump more oil so people can have gasoline to get to and from work, for example, is not, is not, right.” This is after Biden called Saudi Arabia a “pariah” state when he was on the campaign trail. Adding further insult after having won the Presidency, Biden refused to communicate with the de facto ruler Crown Prince Mohammed bin Salman, insisting that he would only be speaking to the frail and aging King Salman as his appropriate “counterpart”. Unsurprisingly, Crown Prince Salman, kingpin of OPEC policy, is more concerned with global oil supply and demand fundamentals than the political needs of a flailing US President worried about high gasoline prices and sinking popularity polls. The OPEC+ group, wary of overshooting scheduled oil supply increases and risking an oil price crash when the resurgence of covid cases in Europe and China threatens to mute global oil demand growth, has repeatedly ignored Biden’s requests.
…And US Oil And Gas Producers
Having blamed OPEC+ for high US fuel prices, the Biden administration turned next to another familiar whipping boy: the US oil and gas producers. Last week, President Biden wrote to the Federal Trade Commission to probe possible illegal conduct in US gasoline markets, citing “mounting evidence of anti-consumer behaviour by oil and gas companies”. White House Press Secretary Jen Psaki asserted at a press briefing that “we will continue to press oil companies who have made record profits and are overseeing what we consider to be price gouging out there.” Calling Biden’s demand for an FTC investigation a “distraction”, the American Petroleum Institute retorted “Rather than launching investigations on markets that are regulated and closely monitored on a daily basis or pleading with OPEC to increase supply, we should be encouraging the safe and responsible development of American-made oil and natural gas.”
In what must surely be the highlight of our tour of Biden’s Energy Wonderland, the President offered these words of wisdom: “For the hundreds of thousands of folks who bought one of those electric cars, they’re going to save $800 to $1000 in fuel costs this year,” referring to the $112,595 electric Hummer pickup he test drove at a General Motors GM -1.4% factory in Detroit earlier this month. It did not seem to occur to President Biden that the average American households struggling to put a turkey dinner on the table or gas in their tank this Thanksgiving weekend might not have $100,000 to spare.
Further Down Alice’s Rabbit Hole
Since its inception, the Biden administration has done just about everything to wage war on US oil and gas. President Biden signed an Executive Order in his second day in office to “protect public health and the environment and restoring science to tackle the climate crisis”, cancelling the $7 billion Keystone XL pipeline. A series of executive orders prioritized “fighting climate change” across all levels of government, halted all new oil and natural gas leases on public lands and waters, and began an obstructive review of existing permits for fossil fuel development. Blaming OPEC+ and US oil and gas producers in rapid succession and then following up with an ill-considered release of oil from its stockpile to handle self-inflicted fuel price increases mark this administration’s disastrous management of energy affairs.
The Biden Administration’s Attack On Oil And Gas Is Destroying LivesOn his first day in office, Biden waged a war on the oil and gas industry, effectively destroying thousands of w…
For the hapless American consumer, running fast enough to keep ahead of the US energy policy not only not keeps him in the same spot, as Alice found out in her adventures, but may well push him further down the rabbit hole.
I have worked in the oil and gas sector as an economist in both private industry and in think tanks, in Asia, the Middle East and the US over the past 25 years. I focus on global energy developments from the perspective of Asian countries that remain large markets for oil, gas and coal. I have written extensively on the areas of economic development, environment and energy economics. My publications include “Singapore in a Post-Kyoto World: Energy, Environment and the Economy” published by the Institute of Southeast Asian Studies (2015). I won the 1984 Robert S. McNamara Research Fellow award of the World Bank and received my Ph.D. in Economics in 1992.
It’s a bit rich to be complaining about price gouging by oil companies, while simultaneously trying to do everything possible to strangle production.
Not only is it “rich” it’s flat-out stupid.
Chutzpah
Biden and his administration are bald-faced liars as well as idiots. Can we last another year?
Let’s hope so.
Biden cancelled the approved-and-financed Keystone XL pipeline that would ship crude oil from friendly Canada into the USA, and then pleaded with America’s enemies Russia and Saudi Arabia to increase production.
Yep. Stupid. Imbecilic…
Rich? As in railroad owning, pipeline hating Biden supporter Buffet? That kind of rich? Or are you talking tech billionaires supporting GND goals? That kind of rich?
Don’t forget that Berkshire Hathaway owns several pipelines, including the Northern Natural Gas pipeline.
Michael, that is probably why Biden’s approval has sunk to a single digit. That’s right, someone gave him the middle finger while he was enjoying Thanksgiving. Film at 11:00.
Don’t forget, they also don’t pay “their fair share”, when in fact the various Governments makes much more per gallon of gas sold…
Indeed. Back in the 80’s and 90’s the BBC made programs about how North Sea oil was the “black gold” that allowed the Thatcher government to pay benefits for very high levels of unemployment as the industrial economy tanked. It saved her government and possibly the consequences of very very serious social unrest.
Now, a few decades later, oil and gas is apparently “subsidized” by government.
The dissonance and ignorance is astonishing.
According to the left, if you still have more money then they do once you finish paying your taxes, then you aren’t paying your fair share.
Mr. W: I heard of some folks who have enough after taxes to hire private cops! Obviously they are severely undertaxed!
It is what happens in a centrally planned economy! Do you think it was the Commissars in the USSR that suffered when crops or fuel fell short of “plans”? Think again, it was the little guy!
The next idea will be price controls, followed by nationalization since the government can always do a better job of running a large industry don’t you know!
A lot of people have dismissed this move by Biden as pointing out that the entire release was only 3.5 days of US consumption. Since oil is an internationally traded commodity. How much oil Biden released compared to US consumption is meaningless.
It’s how big the US release is compared to world consumption is the correct measure.
True. It’s about half a day’s worth of global oil production. 12 hours’ worth. Woopie do.
Less than 3 days. Where are you getting your fake news?
LOL this site downvoting you pointing out facts…
What the current administration is doing as policy would be meatheadedly counterproductive if their stated goals were in fact their actual goals. I would argue that the rise in energy prices is in fact intentional, with the goal of trying to attain the Green New Deal energy policies.
It is not a bug, it is a feature.
Well ,Obama already said years ago that his policies will make energy prizes skyrocket.
Now Biden is simply continuing the execution of those plans on purpose,
therefore Biden crying and blaming OPEC or big corp
is therefore a total lie (especially as there is no bigger corporate whore than Biden).
Biden is just doing what Build Back Batter(stupid people are best fooled by alliteration mantras)In Orwellian terms means : destruction,degeneration,dystopia.
And if they sell an infrastructure bill that costs 0 dollar,
the Orwellian translation means :Destruction and sell out of infrastructure and it will cost you everything (that’s no crazy conspiracy theory but the slogan of the World economic forum = “You will own nothing and you will love it”)
And if they claim that Biden got the most votes ever than you can bet that he didn’t even manage to beat Bernie Sanders.
“… (stupid people are best fooled by alliteration mantras)…”. Not necessarily. An alliterative description of CAGW alarmists as Misanthropic Marxist Malthusians is quite effective, as well as accurate.
It is accurate but i doubt it would be effective as those words are simply too long to memorize .
If you’d ask me tomorrow i could remember the words(and i wouldnt if i never heard of malthus before)but I’d for sure forget the order.
Therefore i don’t think it would go mainstream but would remain an intellectual running gag among insiders.
Btw,Malthus supported the corn laws( taxation )that led to riots by a starving population.
So he was well aware his theory needed some outside help.
> “This marks the first time in decades that a sitting US president has resorted to releasing its emergency oil stockpile to handle market-determined rising fuel prices.”
These are NOT “market-determined” price increases. Deliberate public policy from California’s usurious gas taxes to Biden’s GND caving on pipelines and fracking, we are experiencing the antithesis of market pricing.
Rob — i mentioned market-determined in the sense that the cause was not war or weather but market prices which are determined partly by the policies adopted by the Biden administration, including their war on domestic oil and gas producers. But, you are right to point out that “market-determined” sounds as if the government had nothing to do with it, which is absolutely the opposite of what I argue.
Thank you
I watch with glee from Canada. This morning’s crash, in response to a panic attack about a disease little worse than the flu, is a buying opportunity one rarely ever sees. OPEC will slow its pumping rate and oil will be back up there again in no time at all… or did you forget that winter is coming? Good article… Tilak Doshi.
The problem is $50 oil is still $70 and still under the thumb of idiot public policy constrictions. This is only a buying opportunity if you think regressive, oppressive, subversive public energy policies continue to tighten the screws on market forces.
Well, apparently Germany will effectively be increasing demand for gas, and the Biden Administration is hell bent on adding taxes, regulations and barriers to production. So, who is going to make up the shortfalls in production? The “green energy revolution” will divert investment from productive activities in the meantime.
If we get a cold winter (a virtual certainty sometime over the course of the next few years, a lot of folks are going to be cold and some will die–with the burden falling on those with lower incomes. If we are lucky, the UK, Germany, and the EU will show us how much pain this virtue signaling inflicts.
Thanks John, glad you enjoyed the article. Your commodity/stock market note might be spot on!
If the Biden administration believed reducing US oil production was saving the climate, how could it think OPEC increasing production was a good thing? And, how could it think we would not notice their hypocrisy?
“Their master’s voice.”
“Think”?
Mr. Reddish: After a few decades of seeing their hypocrisy never exposed by the progressive press, dems think that people who oppose hypocrisy are raycist. Think they can’t possibly make a neutral word like “hypocrisy” raycist? Watch what happens to “looter”.
Just assume that everything that comes out of the Democrat Marxist regime is a power grab and a lie. The last thing they are about is the American people, at least half of whom they consider domestic enemies of the State.
Fighting Climate Change…. For those of us who understand that climate always changes and man can not influence it, The fact that CO2 levels are the effect of temperature, and not the cause, and that the 100 yr and the 60 yr cycles are demonstrably influentials in climate change, It is maddening that these very ignorant ( or purposeful destructive) people are destroying the economic base of our country in attempts to control our lives and curtail our freedoms .
What can we do about it ?
Everyone must personally choose the reaction that they feel is most appropriate . I don’t have answers , but for me I refuse to comply with any dictate, mandate , or law passed by this administration. It is civil disobedience, and if there were a couple million more we would have a movement . If you choose this route your responsibility is to pay the price if needed . I have that willingness and have paid the price in fines.
Everyone will have to decide their course …it is the American way… but I urge you not to take the easy way and do nothing. That way leads to the loss of freedom , and eventually our country
I wouldn’t say we can’t influence climate, locally we definitely can. Though I would say that we can’t control it. Our best bet is to adapt and prosper.
UHI proves it.
For me the message is clear and that is that one must NOT be ruled by your emotions which these days have been expertly manipulated by a compliant media in its search for Clickbait income. Harsh reality is the name of the game; so your squeaky little vote is important and what you do to knock sense into the politicians vital.
Civil disobedience is the best course at this point in time.
Might I suggest a purchase of “I did that” stickers from Etsy to be placed on your local gas pumps? It’s a start.
Pump
Good idea. 🙂
Put thst POS Obama’s picture next to China Joe & I’ll buy a thousand of them.
The KXL pipeline, which Biden axed on his first day in office could have delivered 50 million barrels of crude to refineries in Texas in about 2 months. What a hypocrite.
Said another way, if the Obama/Biden administration had not stopped KXL pipeline, 830,000 KXL barrels of oil / day would have refined more than16 million gallons of gasoline (1 bbl produces approx 20 gallons gasoline) and would have filled up more than a million cars every day.
More people have begun to follow the science.
The end game … please the young, activist, liberal, Democrat voters.
The rich don’t care about fuel prices. Same with upper middle class, an annoyance, but they have the money to redirect at least from savings. The very poor don’t drive. Meanwhile everything everybody does is more expensive for all the transport and hydrocarbon heating costs go up and are folded into the general costs. As both taxes and business profits are viewed as % of revenue – costs, the more revenue the higher quantum of profits for a given %.
There is a philosophy of “in the future you will own nothing, and will be happy”. The idea is that you spend 100% on services, leases, rents, while relying on governments to fund your non-income years of retirement. Building personal equity is ended … except for the stockmarket. Which benefits the already wealthy.
It’s a tantalizing concept. If you save nothing, your lifestyle will improve as 100% of your income goes towards personal activities, all consumables. The stockmarket accesses every nickel as even car companies lease you a car for more than it’s original cost over 7 years. The house you pay for over 40 years goes to a corporation … which then sells your house or rents it out again while you languish in a government care center.
This concept treats the citizen as a worker bee. Nothing for the worker, all for the corporate state, and when finished working, just like with the worker bee, he/she is tossed aside, a cost center rather than a profit center.
Democrat Marxists specialize in talking the talk while all the while making sure not to get in the way of, or preferably enhancing, their destructive policies. Everything they do is intentional, nothing is done out of ignorance or incompetence. That’s what makes them all evil.
I feel very sorry for decent and hard working Americans that have no confidence in the present politicians. I doubt they will be kicked out of office unless the general public experience an implosion of the US economy with the richest seeing their wealth devalue like when the Zimbabwean currency was being printed in million and billion dollar amounts (2007-2009). I cannot believe that the endless US printing of huge amounts of money will not end in anything but a disaster.
Reading Tilak’s carefully crafted prose is always a real treat.
Cheers!
Here is another Biden power play:
https://www.cfact.org/2021/11/26/bidens-climate-power-grab-via-trillions-of-dollars-in-annual-federal-procurement/
It’s important to understand that Zhou Bie-Den has no hand in what is taking place. It’s unlikely he even understands what’s going on (not that he ever did). The Left have the perfect simulacrum as a front for a hidden administration.
This must be Bidenomics in action
The country’s in the very best of hands,
the best of hands, the best of hands.
“Lil’ Abner” (1956) Gene de Paul / Johnny Mercer.
If more Americans buy BEVs then that will ease the pressure on fuel prices. Then the only problem is getting reliable electrical supplies!
It will become a challenge for the climate cult to reconcile their belief will the horrible reality of life without fossil fuels.
Any substantial increase in Electric Vehicles that could avoid direct taxes will immediately be followed by a federal tax on all electric production according to the elctricity used in small l regions- county levels or perhaps even voting precincts.
Or, an alternative would be increased electrical taxes at the supplier level- to be passed on to the users.
If it is any size expense on the individual person or business it make go as a line item on Federal and State tax forms.
So instead of pumping oil from an ethical source of Canada down an ELECTRIC run pipeline to the markets in the US. Biden was calling for OPEC to produce more unethical oil and load it on BUNKER “C” burning tankers to transport it half way round the world to the US. Great climate change policy that is.
From the article: “The latest in President Biden’s approach to soaring fuel prices is to release crude oil from its strategic crude oil reserves.”
Democrat U.S. Senator Joe Manchin says Biden should reopen the Keystone pipeline.
TC energy just sued the US Govt for $15billion and I hope they win
Has to be cost consequences for cancelling an approved project based on optics
TC Energy has been slowly buying up a number of pipelines in the US to the point they have almost total control of the Natural gas eastern markets.
TC Energy is a very responsible company where if there are shortages or lack of supply they will invest the money to correct the shortfalls. Due to the Lefty Easterners calling for the closing of all of the coal fired power plants in their areas. Switching these plants to natural gas from coal has caused these supply shortages during high demand events. To alleviate some of this TC Energy tried to run a new line into the New York / Boston area but it had to cross the Albany River to reach its destination. Governor at the time Chomo vetoed this pipeline crossing after 6 years of environmental and government review.This is a gas pipeline not an oil pipeline and the line was going to cross under the river bed using directional drilling method so there would be NO disruption of the river bottom. It still was vetoed for environmental reasons so the supply shortages are still there when it gets real cold but now the power companies are cut back so there are brown outs to protect the consumers gas supply. It is a little hard to run a furnace or a boiler when there is no power for the fans or the pumps.
I seem to recall several years ago the sitting president at the time was accused of being a dictator. I will not list the dictates he was accused of imposing on the populace. But I believe they were all done to improve the country as a whole. History would bear this out.
So what may we call the present inhabitant who has done nothing discernible to move America forward. I see nothing positive. I need not list his accomplishments. Suffice to say they cannot be deemed positive.
Wonderful article that nails the relevant points.
These recent announcements were moves designed to try to create a new false narrative…..putting the blame on other entities (evil fossil fuel companies) and not acknowledging the real reasons. Pretending to be fighting for lower prices……….while doing everything imagineable to CAUSE higher prices.
Here are the real reasons:
Crude oil ending stocks have been dropping fast. They are now down to the lowest in 7 years(since 2014). Gasoline stocks will soon to be the lowest in 7 years. They are dropping because demand is exceeding supplies as a result of MARKET FORCES, mostly from discouraging new production because of the war on fossil fuels.
Crude supplies have dropped around 100,000 barrels in the last year. Adding SPR oil will only slow the rate of decline for a short while and is like putting your finger in a dam leaking in several places to slow the loss of water in one place, instead of fixing the dam.
Weekly US ending stocks of crude oil.
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRSTUS1&f=W
Unleaded stocks are the lowest in 4 years and soon to be the lowest in 7 years. Exact same fundamental situation as with crude oil.
Weekly ending stocks for unleaded gasoline.
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WGTSTUS1&f=W
There are only 2 things that will push prices substantially lower for any sustained period of time.
Higher fossil fuel prices were not only inevitable but they were exactly part of the plan. The financial incentives for fossil fuel companies to drill new wells is drying up. All the investment advantages and tax breaks are going to solar and wind to make them more competitive. Natural gas prices have doubled in the last year and for the first time in history, the number of ng rigs drilling for new wells has not gone up ……….still half of the number of just 3 years ago…..when prices were LOWER than this. The big money understands the war on fossil fuels and the best bang for their buck is solar and wind. This is actually what this administration has wanted from the get go…………exactly.
Much more comprehensively explained in the discussion at this link below:
Killing Coal
https://www.marketforum.com/forum/topic/78168/
112595 is 140times of 800!that means spent 140years money.
Joe Brandon’s popularity is decreasing because this administration has no solutions and are out of touch as to what is happening with inflated prices. People are tired of platitudes, “We need to work together”, “We are going to start a commission to determine how best to address that problem”, “We are going to investigate any shenanigans going on with pricing”, “So and so (mainly Trump) is the problem and we need to get around that”, “Inflation is transitory”, “COVID done it”.
Not one solid “Here is what is going to happen by this date” from this administration. Just all rhetoric and platitudes. At least Trump would commit to an action and follow through rather you liked it or not. The difference is between a businessman and a career politician who never had to write a paycheck from his own money.
When Brandon’s top adviser’s went over the “release SOR to reduce price” strategy, do you suppose Jen Granholm was explaining (while giggling) that such a dollop won’t make a difference because, “tee hee, it’s a global market silly”? My guess is, she said “brilliant idea sir”, but still giggled.
Biden thinks that pharma companies will develop vaccines, antibiotics etc for free. If he can afford to spend 5 trillion dollars on climate change mitigation he could surely buy up the next 5 years of Astra Zeneca’s covid vaccine production at market price plus a generous margin, give it all away to the third world along with needles etc claim credit for saving the planet and then charge China 10 trillion dollars for starting the pandemic from their Wuhan lab in the first place showing a considerable overall profit. He could then rest on his laurels and return to non profit socialist principles.
Senator Kennedy: “The reason gas prices are going up is because the oil is in Louisiana and Texas, and the dipsticks are in Washington, D.C.”
Perspective: The 50-million-barrel withdrawal from our strategic petroleum reserve is equal to 50 days of oil from the canceled Keystone XL pipeline.
It goes without saying that you can’t fix stupid.
A chilling summery of one area of the Biden mismanagement of the US economy.
One thing that should also be mentioned is that just as they are willing to ignore China’s human rights outrages in order to get a disingenuous promise from them to do something on climate, this administration is at this very moment doing a deal that would allow Iran to build an atomic bomb! That 4 million barrels a day in Iranian oil being let back into the market is something Biden and his crew of nit-wits would love to see right now.
So what if it results in another war in the middle east (with atomic weapons this time) that disrupts oil shipments from the region. We will all be living on wind energy by then anyway right?
I have calculated the average yearly human contribution of CO2 to the atmosphere from 1960 to 2020 to be 9/100ths of one PPM of atmosphere. Biden’s actions toward the elimination of fossil fuel use to reduce such a microscopic human CO2 contribution are indefensible.