Alberta Premier Danielle Smith said after meeting with President Trump they will be prepared for tariffs because she saw no sign that President Trump would backdown. Now comes a Bloomberg report that suggests that while that may be true, there may be a measured approach to enforcement.
Bloomberg reported that ”Members of President-elect Donald Trump’s incoming economic team are discussing slowly ramping up tariffs month by month, a gradual approach aimed at boosting negotiating leverage while helping avoid a spike in inflation, according to people familiar with the matter."
One idea involves a schedule of graduated tariffs increasing by about 2% to 5% a month and would rely on executive authorities under the International Emergency Economic Powers Act. The proposal is in its early stages and has not yet been presented to Trump, the people said — a sign that a monthly stepped approach is early in the deliberation process.
Regardless of the tariff situation, Canada and Alberta are very excited that Donald Trump is in office. In fact they are looking at a new golden age of Canadian oil. Canadian oil companies are looking at plans to build pipelines. But even here in the US because of the expected increase in U.S. oil production, companies are getting excited.
Last week, Bloomberg reported that Enbridge (NYSE:ENB) is devising plans to rapidly boost capacity on its US oil pipeline system if the incoming Trump administration succeeds in kicking off a drilling boom. The company sees an opportunity to move “several hundred thousand” more barrels of oil a day within the US in the next two to three years, largely through optimizing its existing system with techniques like looped sections and drag-reducing agents, Chief Executive Officer Greg Ebel said in an interview Friday.
At least someone at the New York Fed believes in the Trump ‘Drill baby Drill’ philosophy. The New York Fed is predicting that the December year-ahead expected gas price down to the lowest since September 2022.
The incoming Trump administration has also given us a peace dividend. The Wall Street Journal reports that, “Israel and Hamas are finalizing the terms of a cease-fire deal that could be announced as soon as Tuesday, Arab and Israeli officials said, raising hopes of an agreement that would at least pause the fighting in the Gaza Strip and free some of the hostages held there. Negotiators—including Steve Witkoff, President-elect Donald Trump’s designated Middle East envoy, along with officials from the U.S., Israel and Arab countries—were meeting midday in Doha, Qatar, to finalize a draft of a deal, said the Arab officials, who are helping to mediate the talks.
The parties have agreed to the bigger points of the deal but were still working on some of the language, the Arab and Israeli officials said. Talks could fall apart as they have before reaching the finish line in previous rounds of negotiations, both sides warned according to the Journal.
Yet while ‘drill baby drill’ gives us a bright energy future in the short term, we still must deal with the short sightedness of the energy transition shortages.
Supply tightness here in the US and a possible squeeze play because of the lower inventories at the Cushing, OK delivery point are giving a very bullish market setup. The supply squeeze is becoming more apparent as The Energy Report has been warning for months that the prediction of a supply surplus in the oil market was wishful thinking. The International Energy Agency (IEA) continues to double down on this potential supply surplus but instead we have a supply deficit.
Today we’ll get the Short-Term Energy Outlook from the Energy Information Administration (EIA) at 11am Central. We will see if they adjust their numbers to catch up with the current realities.
Tougher sanctions on Russia by the Biden administration is also causing a scramble for supplies overseas. Biden now sees rising oil prices as Trump’s problem.
Energy Intelligence reports that the sanctions announced on Friday by Washington look damaging to India, the biggest buyer of seaborne Russian crude oil. Measures by the outgoing US Biden administration may affect up to half of India’s recent imports from Russia.
These averaged 1.67 million barrels per day in the three months to December, data from the analytical firm Kpler shows. The sanctions will also affect some 70 tankers that have delivered Russian oil to India. In addition, sanctions on two key Russian insurers, which cover nearly all Russian oil flowing to India today, have left refiners scrambling for options, according to highly placed refining sources and ship tracking data.
Combined, the measures could see Indian refiners incur additional costs of $6-$10 per barrel by tapping Mideast Gulf crude, refining officials say. The sanctions variously take effect after unwinding periods to Feb. 27 and Mar. 12.
Yet across the globe there are more signs that energy transition failures are becoming apparent to some of the top oil executives and gas executives and even to politicians. The green energy transition fantasy is not good for business. This experiment in politically driven decisions and energy are coming to an end and that’s going to be good news for the poor and middle class that bear the burden of this energy transition fiasco.
Jvier Blass at Bloomberg warns that “Germany is going to weather (no pun intended) a week-long Dunkelflaute, with wind generation expected to drop below 10 GW for several days. It’s going to force the country to rely more heavily on fossil fuel fired power stations (coal, gas, and even oil) plus imports.”
Natural gas had a huge surge in the cold weather but came back down. Natural gas is going to be up and down on the waves. As we get different waves of Arctic blasts in the coming weeks the swings will be dramatic, but we do expect to see a big upsurge of natural gas when we get closer to the weather event and potentially see major natural gas withdrawals over the next three weeks, close to 200 and 300 BCF’s consecutively.
Still, because of the potential for a warmup before the next Arctic blast, there’s going to be some high volatility. Make sure that you download the Fox Weather app keep up with the latest.