Guest “Don’t underestimate Joe’s ability to [frack] things up” by David Middleton
Despite Biden’s best efforts to destroy the US oil & gas industry, his dysfunctional Department of Energy expects US domestic production “to reach a new record next year”…
This is beyond stupid…
The President’s announcement authorized DOE to release up to 180 million barrels from the SPR to serve as a wartime bridge as domestic production—which is expected to reach a new record next year—ramps back up. Already this historic release of SPR crude has provided approximately 165 million barrels of crude oil supply to the U.S. economy—resulting in certainty of supply for American businesses and consumers.
DOE plans to release up to 3 million barrels of sour crude oil and up to 12 million barrels of sweet crude oil for a total of 15 million barrels, with deliveries from December 1, 2022 to December 31, 2022 from the three SPR storage sites listed below.
Department of Energy
The SPR was already at its lowest level since 1984, before the insane decision to drain 15 million additional barrels of crude oil from it. The 15 million bbl sale in December will put the SPR at less than 400 million bbl.
400 million barrels is equivalent to about 20 days of domestic petroleum consumption or about 130 days of net crude oil imports (imports – exports). The minimum allowable level under the International Energy Program agreement is 90 days worth of net imports.
Oddly enough, the Department of Energy hasn’t figured out how to incorporate Biden’s blunder into this explanation of the SPR’s purpose:
About the SPR
The Strategic Petroleum Reserve (SPR), the world’s largest supply of emergency crude oil was established primarily to reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of the United States under the international energy program. The federally-owned oil stocks are stored in huge underground salt caverns at four sites along the coastline of the Gulf of Mexico. The sheer size of the SPR (authorized storage capacity of 714 million barrels) makes it a significant deterrent to oil import cutoffs and a key tool in foreign policy.
SPR oil is sold competitively when the President finds, pursuant to the conditions set forth in the Energy Policy and Conservation Act (EPCA), that a sale is required. Such conditions have only existed three times, most recently in June 2011 when the President directed a sale of 30 million barrels of crude oil to offset disruptions in supply due to unrest in Libya. During this severe energy supply interruption, the United States acted in coordination with its partners in the International Energy Agency (IEA). IEA countries released altogether a total of 60 million barrels of petroleum.
Additionally, the Secretary of Energy may authorize limited releases in the form of exchanges with entities that are not part of the Federal Government. This authority allows the SPR to negotiate exchanges where the SPR ultimately receives more oil than it released; thereby acquiring additional oil. With the exception of the 2000 Heating Oil Exchange, the SPR has entered into negotiated contracts at the request of private companies in order to address short-term, emergency supply disruptions to a refiner’s normal operations on several occasions.
Department of Energy
The prescient geniuses at the Department of Energy have also developed a plan to refill the SPR at bargain basement prices…
The administration is also reinforcing its commitment to replenish the SPR to previous levels, with the goal of providing price certainty to taxpayers and a constructive buyback approach to bring certainty to industry. Today, DOE finalized a rule allowing fixed-price forward purchases of crude oil to replenish the SPR at lower prices than the barrels sold, while providing certainty to industry that will help encourage short-term production. Relative to conventional purchase contracts that expose producers to volatile crude prices, the fixed-price contracts can give producers the assurance to make investments today, knowing that the price they receive when they sell to the SPR will be locked in place, providing them with some protection against downward movements in the market.
Department of Energy
Think about it. WTI is currently in the mid-$80’s per bbl and the Department of Energy wants to buy it for about $70/bbl.
The question is whether oil companies respond with increased output when the Dept of Energy also says it wants to buy the SPR oil back at $68-72/barrel.. a far lower price than today? Why invest in expensive new production if you’re being told prices are heading down, at the same time your costs are heading up?
Brian Sullivan, LinkedIn
Setting aside the fact that they had filled the SPR at an average price of $29.70/bbl, who is going to lock in $68-72/bbl when they can sell it on the open market for $80-90/bbl? The EIA’s current STEO has WTI rising back into the $90’s during 2023. Biden & Co. are offering oil companies an “opportunity” to hedge future production at below-market prices… Unfrackingbelievable… Come on man!
With many, if not most, oil companies still taking losses due to over-hedging in 2020, most companies have reduced or suspended hedging. There’s a higher probability of Biden speaking in complete sentences than there is of refilling the SPR at ~$70/bbl in this environment.
What happens if (or when) oil prices collapse again? Is the US government actually going to honor long-term contracts to purchase crude oil at $70/bbl, when it’s trading in the $30’s to $40’s? Well Joe?
Are the US motorists so dumb as to change their vote on this gesture, I don’t think so.
Michael VK5ELL
dreamer
The crew around Biden does not want to admit high energy prices were a goal, not an accident. They transparently want to get through this election by lying.
Given this administration’s horrible performance to date, I’m at a loss to explain how the polls can remain so tight and/or favor the Democrats. The only possibility that comes to mind is that the polls are being cooked in order to cover the massive vote fraud the Democrats are gearing up for the mid-terms.
There’s one group that has been indoctrinated with the belief that if you are a minority, you are a race traitor if you don’t vote Democrat.
There’s another group that will vote for whoever promises them the most free stuff.
Between those two groups you have close to a majority. Then you need to add enough soft headed liberals who just want to do good and who have been convinced that Republicans are just plain mean.
What has changed? That’s still Brandon’s and the Dem’s goal.
There is also the San Francisco Chronicle clip of Obama saying that people could build coal power plants if they wanted to be bankrupted.
““Somehow,” Chu said, “we have to figure out how to boost the price of gasoline to the levels in Europe….. not-yet-in-existence Obama administration.”
PS Chu said that. Why did Barry “the price of energy will skyrocket” Obama appoint him? Because he said that?
That’s right, Tom, and part of the crew around Brandon is Secretary of Energy Jennifer Granholm. She is a Harvard lawyer, former Attorney General and Governor of Michigan, and a “political commentator”. Energy? Nasty oil and clean electricity? Qualifications for Energy position? Used to fill her car gas tank before long trips, now someone else does it. Agenda? Destruction of carbon-based energy, for, you know, that clean stuff.
She was also a contestant on the ‘Dating Game’. I imagine a lot of guys were pulling for her back then.
So, who lost and had to have a date with her?
They can’t lie about the fact that Trump wanted to fill the reserves @ $24 bbl but the Pelosi House wouldn’t allow any type of victory to occur during Trump’s administration.
The residents are running the asylum.
Objectively speaking, if the Feds did sign long term contracts at those prices for 2 or 3 or even 4 hundred million barrels, there would be likely enough of a margin to plan extraction and delivery.
The devil in the details is as you say, would the Feds be willing to honor their contract and maintain purchases when the world oil price drops to 30/barrel?
Unless the fixed price contract had unbreakable language that the feds would not purchase SPR oil at a lower price from elsewhere until the contracted amount was delivered, there is no way I would invest money that would be stranded. In other words, I would be the first priority in purchasing oil for the SPR.
Exactly. The problem is perhaps that those who write the laws governing contracts, can change the laws governing contracts.
You mean like what Obama’s crew did to bondholders of GM?
Yeah, then it could be kind of like wind and solar – you get paid at contract rates regardless of how low actual prices for your product go.
Not that long ago, the federal government (Obama) ignored the seniority of secured bond holders to give money to unions who held unsecured bonds, stiffing the teachers’ unions. Even if you are first in line, they can just ignore that, apparently. I would not be invested in that scheme, myself.
When they put in the Reserve they had to pump out some salt, despite worries found out that the ocean swallowed it. Currently Port of Corpus Christi is building a higher bridge for larger ships, but problems arose, one a delay with the bridge structure, two the tight ship channel at Port Aransas also requiring dredging, three freshwater supply, currently minor drought and other expanding industries. Haven’t kept up with it, but desalinization plans may be running into a another problem given the current situation as they had planned to put the waste salt into the channel.
There was an oldTexas water plan to get it from the Mississippi, so far only obtain some from the Colorado, in Texas, not the bigger one with its own water problems.
Appears that the UK Cabinet, controlled by theTory Party, have sent a few of their number to shadow the US Energy Department top brass with remarkably similar results interns of policy statements…..cue for a sharp 180deg handbrake turn…..maybe?
Notice how the price of Brent fell to $82 because of Biden’s measures but has climbed steadily since and is now hovering just under $94. I do not think he has managed to convince anyone.
Biden claims he had to use the oil because it was getting stale !
Maybe he learned that when he was a big rig driver.
I think that crude oil has a continental shelf-life of at least a few ten’s of million years.
“Continental shelf-life.” I like that!
The SPR was a government run project so it is rife with incompetence and corruption. The amount withdrawn is getting close to finding out that the “remaining” volume is gone.
Interesting.
None of the “salt caverns” created were pressure tested for leakage and there was one legendary “oil man” that sold tank bottoms(85% water) to the reserve at crude oil prices during GWHB’s term. If one individual was selling water to the reserve, one has to ask, “How many others were?
Well, they have a big dipstick…
It takes a lot of dipsticks to find the answer, but all they can they have is two legged dipsticks administering this circus.
The stupidity of incompetent ideologues on display. Elections have (pocketbook) consequences.
It’s just until after the midterm elections, innit?
Trump wanted to fill the SPR back in March of 2020 when WTI dropped to $20/bbl. Schumer called it a bailout for oil companies and the Democrats blocked it.
The word “strategic” has been redefined, just like “marriage”, “free speech”, “parental rights”, and “gender”. Now we have President’s Private Petroleum Reserve.
Strategic Political Reserve
When I was younger, I thought Carter was the worst US President I’d see in my lifetime…then Obama came along…then Trump…now Biden…it’s getting a little sketchy in politics these days. This is another boneheaded move by a President who has no idea what day it is, let alone how to run a country.
No one on your list did as much damage to limited government as Lincoln and Wilson.
In an effort to turn the US into a banana republic, Brandon,
O’Bozo’s puppet & O’Bozo himself went way beyond just expanding
gubmint. They’ve weaponized it more than everyone else combined
& are using that power against political opponents!
BTW, even Walter looks more animated than squinty-eyed Joe when
he’s “maxxed out” trying to read d-o-t com addresses on his
teleprompter!
Trump is best thing since Reagan. It’s the other two members of the Democrat Hall of Shame that were worse than Carter!
Other than a few mean posts on Twitter, what did Trump do that was bad?
Those “mean tweets” showed conservatives how to push
back against liberal BeeEss. Kari Lake is doing quite well
pushing back against election-denier claims.
https://pjmedia.com/news-and-politics/matt-margolis/2022/10/18/kari-lake-goes-savage-on-reporter-for-dubbing-her-an-election-denier-n1638011
That’s why the tweets were mean. Leftists hate anyone who opposes them. That gets increased exponentially when the ones opposing them are effective.
I always ask my favorite liberal, “What did Trump do that you don’t like?” I never get a coherent answer.
You hope to get a coherent answer from a liberal?
They aren’t liberals or progressives, they are radical leftists. They are extremists.
Well they certainly aren’t ‘liberals’, since that label pertains (before the Left stole it) to those who prefer individual liberty to collective coercion. Think Thomas Jefferson as an example of the former and progressives as examples of the latter. And yes, progressives are both radical leftists and extremists, since their desired endpoint is always expanding in that direction.
When I’m not calling them ‘commies’, I generally refer to them as ‘Regressives’.
Everything they do “for the working class” makes things worse for the working class.
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Gee, maybe they could build a natural gas pipeline from Pennsylvania to New England?
Ya think?
The only problem with that is NY and, of course, the NE states themselves. Re-read the ‘belling of the cat’.
Unfortunately, New York is both anti-fracking & anti-pipeline which kills
the common sense solution you proposed. Being anti-pipeline can also
have other consequences.
https://en.wikipedia.org/wiki/Lac-M%C3%A9gantic_rail_disaster
Energy costs are certainly soaring for some people.
I saw an interview of a fuel oil supplier the other day from the Northeast U.S.,and he said in prior years a customer might require two fill-ups of their oil tanks, if it was a particularly cold winter, which would amount to a cost of about $2400.00. He said this year, the cost for the same amount of fuel oil is going to be somewhere around $6800.00.
He was asking how people could afford such a drastic increase in their fuel bills. Good question. Let’s ask Biden.
Every time I think Biden cannot do worse, he does.
Obama was right about only one thing: Don’t underestimate Joe’s ability to mess things up.
If you over-hedge, does that make you a hedge hog?
For what it’s worth, Joey Biden has just given $2.8 billion to battery companies to help them develop new batteries for electric cars.
But the companies had to first pledge to follow ESG guidelines.
I doubt very much that either the subsidy or the pledge are legal, but what the heck, they’re trying to save the planet. Asking them to also follow the law is just too much.
https://www.foxbusiness.com/politics/biden-2-8-billion-battery-companies-esg-agenda
The end justifies any means.
You have to give credit to Biden for selling the oil today when it was bought for $29.70 a barrel. Good profit for the government. Better than raising taxes.
The credit goes to those who bought @ $29.70 not to Bozo Joe who’s
selling way too low as his plans will destroy the Wests’ economies via
inflation caused by under supply, not over demand. This will drive prices even higher despite demand destruction.
The gubmint is collecting a record amount of taxes- it’s the
over-spending that’s doing us in.
Why doesn’t Biden allow pipelines?
Buy high, sell low. What a moron. Biden gives morons a bad name.
It’s not pResident Brandon who is doing this. He’s the sock puppet who has been set up to take all the blame.
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The people pulling his strings are hoping that the coming (massive understatement alert!) ire will be directed at Gropin’ Joe and pass them by. French haircuts may come back in style.
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P.S. I’m not disputing your accurate assessment of The Big Guy’s cognitive ability. He was born that way.
Low-information voters and the media talking heads might be fooled by this into believing FJB is “doing something” about high gas prices. The rest of us are not fooled.
The SPR should be used for strategic purposes only. Now that we’re once more dependent on oil imports, what will happen if the Ukraine war escalates and the oil markets are further disrupted, or Saudi Arabia cuts production more than planned? We will have no reserves to rely on.
The Biden regime’s policies are borderline criminal. He is weakening our country. There should be a law requiring Congressional approval to tap into the SPR.
Maybe the Republicans won’t blow the mid-terms and FJB will be forced to resign or be impeached.
“Maybe the Republicans won’t blow the mid-terms and FJB will be forced to resign or be impeached.”
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There are a lot of left-wingers who openly state that they want to destroy capitalism, i,e,. the United States of America. No, they should not be impeached, they should be arrested, charged, tried and convicted for treason.
Shot
Before or after hanging?
As soon as Biden took office, he put his boot firmly on the neck of the fossil fuel industry. He clamped off production, pipelines and exploration. Now he’s extracting our emergency supply of oil in the name of ‘helping us’? He could help us by having a heart attack.
You can get a pill for that, mate
Unless it is a law passed by Congress and signed by the president, presidential promises are only good as long as his administration lasts. Only a complete idiot would bet the farm on any politician’s promises, let alone Joe Biden’s.
“I have been doing everything in my power to reduce gas prices since
Putin’s invasion of Ukraine caused these price hikes.”
Steve Milloy did a great job of debunking Bozo Joe.
https://junkscience.com/2022/10/milloy-debunks-biden-lies-about-the-oil-industry-with-laura-ingraham/
Also, Brandon supposedly offered the Saudis $80/bbl vs US cos.
only $70.
https://michaelshellenberger.substack.com/p/why-biden-favors-foreign-over-american?utm_source=post-email-title&publication_id=279400&post_id=79436341&isFreemail=true&utm_medium=email
US average gas prices were ~$2.20/gal in Nov 2020 & had already risen
to $3.45/gal in early Feb 2022, before Russia invaded Ukraine. They
eventually peaked > $5, fell to $3.75 & are now ~$4. Using the SPR
has kept gas prices from peaking higher & rising even more.
Given his explicit campaign promise, any oil exec who believes a word that Joe Biden now says is an utter fool.
“Promises made. Promises kept.”
Grrrrr… 😡
It’s beyond stupid… it’s a lie.
Don’t hold your breath for the Biden Administration to actually take the steps to increase oil production.
They just want to get through the mid-terms, then they’ll go back to the same policy.
And, it’s a big “tell” when the same admin. talking head talks about transition at the same time he claims to want higher production.
2024 can’t come soon enough.
James F. Evans: “They just want to get through the mid-terms, then they’ll go back to the same policy.”
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It’s always been my opinion that win or lose, the FJB Administration will double or triple down after the midterms, particularly if they lose. That’ll be just for retribution. The lame ducks can do a lot of damage before January 2023 rolls around.
How has the major sale of released SPR oil to China helped American citizens?
FJB
Biden and his administration are such an embarrassment. I don’t know what else to say.
And yet many in the mainstream seem to be unaware of this discrepancy.
Why is this is so? How could this ignorance be encouraged? What are the implications?
Mebbe a landslide reversal of course? Is that even possible given the voting irregularities?
What if the midterms “somehow” ignore the will of the people?
How does a nation navigate through this morass of abject criminality?
Lots of questions, few answers.
The lifeblood of every developed country’s economy is it’s fossil fuels.
Diffuse, intermittent solar and the energy from environment hell, wind will never replace the fossil fuels that are greening up the planet. Despite all the crony capitalism and government throwing trillions to support it. 2+2 will never = 10.
It would take $433 trillion to completely electrify using solar, wind and batteries(with a battery technology not invented yet) based on proven physical laws of energy and economics. That’s 20 times the GDP of the United States.
The sooner our country realizes that and gets back to a sane energy policy, the less damage people like Biden can do.
This SPR thing is just a tiny fraction of the damage being done to the energy security of the USA and other developed countries.
The US has 24% of the worlds proven coal supplies. Many thousands of times more energy than what’s in the SPR.
So what are we doing with that coal?
U.S. coal production totaled 535 million short tons (MMst) in 2020, a 24% decrease from the 706 MMst mined in 2019 and the lowest level of coal production in the United States in any year since 1965.
They are intentionally and effectively killing off coal because of it’s CO2 emissions. The biggest affect from that CO2 is to green up the planet. The biggest affect of killing coal is US energy insecurity.
https://www.marketforum.com/forum/topic/89801/
https://www.marketforum.com/forum/topic/89801/#89913
Does Sullivan not know that we’re already in a recession??
In order to be a Regressive, you have to be able to pretend not to know a lot of things.
If only we had a long-term strategic petroleum reserve with enough energy to supply our needs for decades deep underground so we didn’t have to rely on the government-owned petroleum of sheethole countries that leverage their petroleum-fueled power for malign purposes…
Math is hard.