It’s always something. Just after one of the most bullish weekly American Petroleum Institute (API) supply reports in years was released that showed a massive 15.4-million-barrel drawdown in crude oil inventories, the Fitch Rating Services downgraded default rating for the US to AA+ from AAA. I mean come on, why can’t the government just keep spending like it’s going out of style and keep running up the debt? I mean how will we be able to pay off all those student loans and send billions to Ukraine if we can’t keep borrowing money from China at low interest rates?
Fitch says the reason for the downgrade was, “The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management.” Yet why now? The timing of this does not make sense unless it’s about other political standoffs. You know, kind of like a sitting President being accused of being involved in bribery schemes involving foreign governments while having his main political rival indicted for a crime in what could be like double jeopardy.
President Trump was acquitted of the same charges in an impeachment. Forget the constitutionality of trying to convict a President in a civil court where for a President they have no jurisdiction. And while the country’s so-called mainstream press goes out of its way to protect the crimes of one party while reporting on false charges against another party, or the FBI lying under oath to get FISA warrants to spy on Americans so they can go after democrat political rivals makes the whole country look like a shadow of what it is supposed to be. No wonder this administration and its politicization of the Justice Department and selective politically motivated prosecutions have done long-term damage to the integrity and the image of the United States around the world.
They have gone after President Trump with three indictments from the Stormy Daniels fraud and for supposedly having classified documents at Mara Lago. Yet Biden kept classified documents he had no right to have in a garage with his Corvette. It also doesn’t make any sense that investigators tipped off Biden before they investigated certain areas which gave them plenty of time to cover up potential crimes. Regardless about how you feel about Donald Trump personally or the stupidity of his January 6th rally, from the outside world, these selective prosecutions make us look weak and unstable.
They are obviously corrupt the way they investigated the Trump Campaign. They also impeached President Trump for trying to get Ukraine to investigate a corrupt Ukraine deal that the now sitting President may have been involved with taking a bribe to get a Ukrainian prosecutor fired. Using his office to get paid to interfere in another country judiciary using the full faith and credit of the US taxpayers as a threat.
Now he is sending billions of dollars to the same county to pay for a war that could have and should have been avoided.
Zero Hedge reported that, “Hunter Biden’s former business partner Devon Archer has spilled the beans to Congress, telling lawmakers in a closed-door session that Burisma Holdings pressured Hunter Biden in December 2015 to ‘deal with’ a Ukrainian prosecutor who was investigating the firm for corruption – shortly before then-VP Joe Biden threatened Ukraine with a quid-pro-quo over US aid in exchange for firing said prosecutor.” Archer said Biden, Zlochevsky, and Pozharski stepped away to take make the call.” A few days after that meeting, Joe Biden visited Ukraine as vice president and began an effort to force Ukraine’s president to fire Shokin, eventually threatening to withhold $1 billion in U.S. loan guarantees if the termination did not happen. Biden’s defenders have long maintained the firing was not related to Burisma and was a result of U.S. policy because the Obama administration felt Shokin was corrupt.”
At the same time somebody might also question the fiscal responsibility of putting the brakes on U.S. oil and gas production. Is it fiscally responsible to accuse the US oil and gas industry of war profiteering, racism and price gouging like the Biden administration has, enforcing new regulations on the industry to make our countries energy more expensive less reliable. Those moves can’t seem fiscally responsible to the outside world because it makes the cost of manufacturing anything in the United States more expensive than it should be. It also costs US jobs and attacks one of the biggest cash cows the government has in the form of taxes they have while subsidizing companies that will fail to pay taxes. That doesn’t make sense when you look at the US balance sheet.
There’s also a lot of questions about the irresponsibility of the way that the Biden administration used this Strategic Petroleum Reserve (SPR) for what many believe were strictly political purposes. We have learned that the release from the SPR has created a dislocation in the market. While it did pressure prices down in the short term, in the long term it has probably done damage. It caused oil and gas investing to dry up. Now we are going to start paying the price for that short term market manipulation.
Reuters reported that, “The Biden administration has pulled an offer to buy 6 million barrels of oil for the Strategic Petroleum Reserve, an Energy Department spokesperson said on Tuesday, as oil prices are expected to keep rising after a output cut from Saudi Arabia. The U.S. made the latest solicitation to buy the sour crude oil for the SPR on July 7. After the administration released a record 180 million barrels from the reserve last year to control prices after Russia’s invasion of Ukraine, the Energy Department has bought back 6.3 million barrels in recent months.”
That was after Energy Secretary Jennifer Granholm vowed to refill the depleted Strategic Petroleum Reserve. In a CNN Interview last month, CNN said it was a, “staggering task given that the rainy-day fund has shrunk by nearly 300 million barrels since Biden took office.” Secretary Granholm said, “The bottom line is we are going to replenish, and it’s “definitely possible” the Energy Department will pick up the pace of purchases for the SPR, but she conceded a complete refill is unlikely anytime soon. Well, I think the Energy Secretary can bet on that.
Overnight the diesel rally continued with a big spike higher before pulling back. Once again diesel fuel is the largest concern for the global market. The market is hoping for at least a short-term peak. Still, use the break to get hedged for the winter. Gas cracks still solid as pump prices rise. AAA reports the national average for regular unleaded hit $380.3 a gallon up 26.8 cents a gallon from a month ago. Diesel $410.3 is up 25 cents a gallon from a month ago.
Yet at some point the supply side issues may be too much to ignore. The market has done a pretty good job of ignoring this coming supply side crisis for some time. It’s going to be more difficult for the market to kick the can down the road. It’s obvious that we’re going to need higher prices to alleviate the shortages of supply. We know OPEC and Russia are going to be in no hurry to try to raise supplies. They feel that they have to get the prices higher to justify the investment that it’s going to take to meet demand.
Natural gas continues to struggle even with record-breaking hot temperatures on the hopes that maybe things will cool down just a little bit.