Energy company layoffs are coming as over 100 U.S. oil and gas companies went bankrupt because of the COVID-19 oil demand drop. Now, with Biden cancelling the Keystone XL Pipeline, disrespecting our Canadian trading partners and rejoining the Paris Climate accord and a drilling moratorium in Alaska, he will add to the carnage in the petroleum industry, costing the U.S. tens of thousands of jobs. Add to that, he is forcing businesses to raise the minimum wage during an economic slowdown and that will cause more layoffs in an economy that is already struggling.
If you want to put in policies that will raise oil prices and put the economy back into recession you are doing all of the right things. Of course, climate change is more important to the Democrats because they have little regard for the American family. He will look for the U.S. taxpayer to subsidize green energy projects in poor countries and will offshore global oil production to other countries that do it a lot more dirty and less efficient than the U.S. The U.S. taxpayer is going to pick up the bill for it, not to mention paying off government-mandated unemployment. Of course, the Biden administration claims that those tens of thousands of lost jobs will be replaced by the government with trillions of dollars spent on green energy projects. The problem is that they can’t even pass a COVID-19 bill not to mention a much broader green energy package.
The federal government also does not have the best track record in promoting green energy. They have wasted a lot of money on failed projects and have not shown that they can dictate energy sources efficiently. Just throwing money at green energy won’t make it work if it is not scalable in the first place. The Biden administration fired tens of thousands of union workers with no plan to replace those jobs anytime soon. What other jobs in the U.S. will be sacrificed to push the Biden agenda?
OPEC unity is strong as they see an opening to raise oil prices with no opposition from the White House. OPEC plus Russia has been empowered and they will have more influence on the price of oil. S&P global reports that Iraq plans to cut oil output in January and February to make up for breaching its OPEC+ quota last year, according to the state company that markets the nation’s crude. OPEC’s second-biggest producer will pump around 3.6 million barrels daily for the two months, according to Ali Nizar, the deputy head of SOMO. That would be the lowest level since 2015 and compares with around 3.85 million in December, according to data compiled by Bloomberg.
Oil drama over the weekend as it was reported that Indonesia’s Coast Guard has secured two tankers engaged in an unauthorized STS (ship-to-ship) transfer of oil off their coast, while (mandatory) AIS was switched off. One of them is the Iranian VLCC “HORSE,” which supplied 2 million barrels of gas condensate to Venezuela.
Biden pump watch! The era of the Biden gas pump bump. Triple-A reported that the national average for a gallon of regular gasoline has increased by one cent to $2.39, which is two cents more than a week ago, 16 cents more than a month ago, and 15 cents less than a year ago. Pump prices have increased nominally this week, while gas demand increased substantially from 7.53 million b/d to 8.11 million b/d last week, according to new data from the Energy Information Administration (EIA).
Total domestic gasoline supplies decreased by 300,000 bbl to 245.2 million bbl and total crude utilization across domestic refineries took a small step forward from 82% to 82.5%. All of these factors, including sustained higher crude prices, have contributed to higher pump prices for drivers and will likely lead to continued increases in pump prices in the weeks ahead.
More snow but the cold will not last. Andrew Weissman of EBW Analytics says that, “In the natural gas market, the European and American weather models continue to struggle with a unique set of conditions in the atmosphere, leading to extraordinary model volatility and price moves that are difficult to predict in advance.
• Last week, the models shifted strongly bearish early in the week, sending gas prices down sharply despite a bullish draw on Friday. Over the weekend, both models rebounded strongly, opening the door to another move up. Model uncertainty, however, remains high.