Energy Secretary Jennifer Granholm apparently has more talents than singing on the anti-fossil fuels song “Gasoline, Gasoline” (The World’s Aflame) video, but apparently she can also walk and chew gum at the same time. What is more, she thinks the fossil fuel industry can as well! Our green energy crusading energy secretary who once laughed when asked what it would take to increase U.S. oil and gas output, suggested that even though she is trying to put oil and gas companies out of business, they should raise production in the short term because of her amazing talent to simultaneously walk and chew gum.
The energy secretary said that we are in a war and the Department of Energy and the Biden administration is now ready to work with you. She said that we need oil and gas production and said it is possible to work towards a transition towards cleaner energy while boosting short term oil supplies – we can walk and chew gum at the same time.
Joe Biden seemed to agree but also tweeted that, “Loosening environmental regulations won’t lower prices. But transforming our economy to run on electric vehicles, powered by clean energy, will mean that no one will have to worry about gas prices. It will mean tyrants like Putin won’t be able to use fossil fuels as a weapon. No, he won’t. Instead he will use his rare earth minerals and the components we need to make electric batteries. You know things like platinum, palladium, lithium, rhodium, cobalt.
In fact, because of the war between Russia and Ukraine, the prices for components for electric batteries have gone through the roof! We’re going to see shortages and it’s almost impossible to produce enough batteries to create the electric car future Biden envisions. Biden also doesn’t take into account that green electric cars are not cleaner for at least the first 100,000 to as much as 200,000 miles when they’re first driven. He should also realize that they’re not any cheaper than gasoline cars either. The cost of charging these electric cars are more expensive at some of these charging stations than they would be by filling them up with gasoline.
The Biden administration continues to blame everybody but themselves for the increase in gasoline prices. Press secretary Jen Psaki used to blame seasonal factors on rising gasoline prices. Then they were blaming supply chains issues and now they’re conveniently blaming Vladimir Putin. What they are not blaming is the cancellation of the Keystone Pipeline, drilling moratoriums on federal land, talk of increased regulation and royalty taxes. They’re not blaming any of their energy policies for the increase in gasoline prices. The Biden administration blames oil companies for not drilling the leases that don’t have any oil in the first place!
The reason for the sharp price drop yesterday was a report that the International Energy Agency (IEA) was getting ready to release a lot of oil. There was also a report that the UAE ambassador to the United States said that they would press OPEC for more oil. Production apparently that the Biden administration was incensed that the Wall Street Journal had the nerve to publish an article about. The Biden administration is lobbying both Saudi Arabia and UAE for more oil yet both of those countries failed to return Biden’s call. Biden’s people vehemently denied that and it seems he put a lot of pressure on the UAE ambassador to give the impression that they were making progress with raising oil production. Yet, the UAE ambassador to EU S does not speak for the UAE energy minister. UAE energy minister, Suhail al-Mazrouei, said that the UEA remains committed to the OPEC plus Russia agreement. In other words, take that Joe Biden.
The bottom line is that even if the UAE pushes for more oil production, it is unlikely to happen because of the terrible diplomacy by the Biden administration regarding Saudi Arabia. Relations with Saudi Arabia and with the UAE have taken a decidedly bad turn since Biden came to office. Biden of course will not even acknowledge Crown Prince bin Salman because of the murder of Washington Post reporter Jamal Khashoggi. Yet if the Crown Prince, who controls the bulk of the spare capacity in the cartel, won’t raise output, then Biden will have to rely on Iran and Venezuela.
Diesel fuel is extremely tight and the Russia oil ban will not help. Oil watcher Brynne Kelly tweeted that Saudi Arabia is seeking to purchase an unusually large amount of diesel in a surprise move for the net exporter, sources say. Adding to the Diesel strain with rare buy tender. Oh boy!
John Kemp at Reuters points out that U.S. distillate fuel oil inventories fell by -5 million bbl to 114 million bbl last week- the lowest seasonal level for more than 15 years. Distillate stocks were already looking tight and are now on track to become exceptionally tight before mid-year. Distillate inventories are on course for an expected first-half low of 103 million barrels (with a range of 92-114 million). Stocks are on track to hit an even lower seasonal level than 2008, when distillate shortages helped propel crude oil prices to a record high at the middle of the year.
The low inventories of distillate which includes jet fuel is already causing some airlines to cancel flights because of the increased costs and jet fuel. If you remember in 2008 when jet fuel prices screamed, it drove at least three airlines out of business. One of the things to be on guard for is to hear of bankruptcies in the transportation space. The price run up in gasoline and diesel is a real threat to the rebound that we have seen in the travel and leisure industry. Biden’s energy policies may make vacations too expensive for many families to take this summer.
The Biden administration is still desperate to make a deal with Iran to raise oil output and reaching out to Venezuela it’s also a sign of desperation. We know that the Energy Information Administration supply report was very, very supportive especially in diesel but also the crude oil numbers with the surprise drawdown in the increase in refinery runs is going to keep the market on edge. We are not going to see the full impact of potential demand destruction from skyrocketing oil and gas prices just yet so it may be a few weeks before we get the full impact of people’s reaction to these price spikes. To avoid total demand destruction, we need stability in the marketplace. It’s too bad that we can’t get that with the current administration. They are all over the board when it comes to energy policy but no matter what you think about energy prices going up, the one thing you have to remember is that this administration wants you to know that it’s not their fault.
White House Press Secretary Jen Psaki of course wants to blame the oil companies. Yeah maybe it’s time to call out the green energy companies to help more. The green energy companies which this administration has thrown its total weight behind, why can’t they raise production to help out in this crisis. Maybe we can put windmills on electric cars to keep those batteries charged. Maybe we should get everybody to buy an electric car even though we’ll never be able to charge them all. Why isn’t green energy doing its part! They’ve had years of subsidies from the government. It’s time to call out green energy companies for their inability to supply the energy that America needs. Oh wait…the technologies to supply America with the energy it needs doesn’t exist in the green energy world yet. Well sure you can have instrumental incremental increases in solar and wind battery technology breakthroughs but right now they’re not there. Oh yeah, I forgot.