As we predicted would happen, the average cost of a retail gallon of gasoline hit a record-breaking nominal of $4.374 a gallon causing more pain for consumers, notes Phil Flynn of PRICE Futures Group

The Biden administration, which did not allow US energy companies a seat at the table, has gone from blaming them for rising prices to begging them for more oil production. They have asked them to bail out Europe, promising them more LNG exports. They are known for appealing to the patriotism of the industry they falsely accused of price gouging and are asking for them to produce more oil, a fuel Biden said he wanted to replace. Biden then plans to blame Republicans for inflation. What he should be doing is reversing his executive orders that undid the Keystone XL pipeline and reverse drilling restrictions and added red tape to energy production. That would be a major step in turning around Biden Inflation. Blaming the ‘ultra-MAGA’ plans for inflation when the Democrats control the White House and both houses of Congress won’t fly unless you live in la-la land.

As Fox Business reports, “the President is doubling down on his failed energy plans by calling on Congress to pass “clean energy and vehicle tax credits and investments” in an effort to reduce US dependence on “reckless autocrats like Putin,” while saving money for families and accelerating “homegrown clean energy innovation. It is obvious that this Administration is living in what the Saudi Crown Prince correctly describes as la-la land.

The prince, speaking at an aviation summit in Riyadh according to The Globe and Mail when asked whether geopolitical events in Europe would speed up the transition to cleaner energy or hinder it in the medium-term, the minister said: “I think it provided us with a reality check to how aspirations...can be compromised by the realities of the day.” He added that even before the Ukraine crisis, the “la-la land scenario about net-zero had been smacked with so many realities,” including cost. When discussing sustainability goals, the minister used the phrase “low carbon” rather than “zero-carbon,” saying that was “the difference between la-la land and reality.”

Well, the reality is that while Biden will blame the war in Ukraine for the high prices, the green energy short-sighted transition helped lay the groundwork for the war that happened on Biden’s watch. Yesterday, oil prices got hit hard on concerns that high energy prices could help drive the globe into a financial crisis. As much as Europe wants to send a message to Vladimir Putin and cut off their purchases of oil supply, they are having a hard time doing so because they have become too dependent on Russia. It is still unclear whether they can agree to stop buying Russian oil.

The Wall Street Journal reported that “European Commission President Ursula von der Leyen failed to reach an agreement with Hungary on Monday to secure the country’s backing for an oil embargo on Russia, setting back hopes of a quick deal on Brussels energy sanctions proposals. Ms. von der Leyen’s trip to see Hungarian Prime Minister Viktor Orban came after days of negotiations between Hungary and the commission, the European Union’s executive body, over the help Brussels would provide to reboot Hungary’s energy system so that it no longer needs Russian oil. Slovakia, the Czech Republic, Bulgaria, and Croatia are also making their acceptance of an oil embargo conditional on assistance from Brussels. EU officials and diplomats say they remain confident a deal to phase in a ban on Russian oil will eventually come together but hopes of wrapping it up quickly are receding."

Officials had hoped to win approval for the sanctions package last week. After Monday’s discussions, EU officials said work was still needed to address Hungary’s demand that alternative energy supplies will be available if they stop importing Russian oil, according to the Journal.

No EU ban on Russian oil is another reason that oil fell, along with a stock market that was melting down on growth concerns and Chinese Lockdown stories. Yesterday’s oil meltdown that tanked energy stocks is being driven by real fears of recession. While the odds of a recession are higher than they have been since the financial crisis, bold moves by Biden on reversing its energy policies might help us avoid it. Yet based on the early reports from his speech, Biden is so out of touch with reality that he will continue the US economy on a path of pain.

Biden is bad at oil diplomacy.

Not only his bungling of Saudi Arabia, but now Reuters is reporting that “US government officials in March asked Brazil’s state-run oil company Petrobras whether it could increase crude output after Russia’s invasion of Ukraine sent global prices soaring, three people with knowledge of the matter told Reuters. They came away empty-handed, the sources said. Officials at Petrobras, formally Petroleo Brasileiro SA, said output levels were a function of business strategy rather than diplomacy and also that a significant short-term production boost would not be logistically possible, the sources said."

After the margin call and selling, the oil market could rebound, and should, as we feel the selling got ahead of the reality. The oil supply will be enhanced by a seven million barrel plus release from the SPR, but products like gasoline and diesel should still fall. Demand is still exceeding supply, at least until this point, even as it is expected that we saw a drop in diesel demand in part due to high prices and part due to delayed planting by farmers.

Natural gas got walloped after turning higher and then a massive corrective plunge. Reuters reported that “German officials are quietly preparing for any sudden halt in Russian gas supplies with an emergency package that could include taking control of critical firms, three people familiar with the matter told Reuters. The preparations being led by the Ministry for Economic Affairs show the heightened state of alert about supplies of the gas that powers Europe’s biggest economy and is critical for the production of steel, plastics, and cars."

Learn more about Phil Flynn by visiting Price Futures Group.