Joe Biden is starting the realize he’s in a fight for his political life and the future of his presidency may depend on the price of oil, states Phil Flynn of PRICE Futures Group.
Biden’s plunging poll numbers, as well as people in his party, have been raising doubts as to whether he should run for reelection. The possibility that his party might ask him not to seek re-election is causing him to make some incredibly rash decisions in a feeble attempt to lower global oil prices, most of which will backfire just like his other attempts, like his release from the Strategic Petroleum Reserves has failed.
Biden gave an angry speech yesterday trying to suggest that despite what the American people think, he is doing a great job on the economy. Yet the American people beg to disagree. He also has resorted to making false and misleading statements about the US oil and gas industry that are not based on fact but only angry rhetoric. This is what you can expect from a politician that is angry that his poll numbers are lower than who he calls his predecessor.
Yet it was the reversing of his predecessor’s policies regarding oil and gas production as well as its policy towards Saudi Arabia that have helped create and enhance this energy crisis that the country is in. The energy crisis that is funding Russia’s war in Ukraine and causing food price spikes and other economic hardship to the most vulnerable Americans. Reuters reports that, “US President Joe Biden on Wednesday demanded oil companies explain why they aren’t putting more gasoline on the market, sharply escalating his rhetoric against the industry as he faces pressure over rising prices. Biden wrote to executives from Marathon Petroleum Corp (MPC), Valero Energy Corp (VLO), and Exxon Mobil Corp (XOM) and complained they had cut back on oil refining to pad their profits, according to a copy of the letter seen by Reuters.
This is another pathetically sad moment for many from this anti-fossil fuel President and is an embarrassment. It can all be explained due to his war on fossil fuels. Tougher rules on refiners and the promise to replace fossil fuels over time have caused the lack and stoppage of investment that is desperately needed in the refining sector to flee. Biden’s policies have helped reduce refining capacity at a time when demand is rising.
Just today the International Energy Agency, “Predicted that world oil demand will reach 101.6 mb/d in 2023, surpassing pre-pandemic levels. The IEA says that while higher prices and a weaker economic outlook are moderating consumption increases, a resurgent China will drive gains next year.” This is an incredible statement coming from IEA because this is the agency that has been pushing the green energy revolution. This is the same agency that lost 200 million barrels of oil, has consistently overestimated global oil production, and has consistently underestimated global demand. Some people are suspicious that the IEA did that to make green energy look more realistic and we could stop investing in fossil fuels with no real impact on the global economy or impact global security, but we know now that that was not true. Now in its first look at 2023, the IEA warns that “Global oil supply may struggle to keep pace with demand next year.”
What do you think?
Still, the oil market sold off yesterday on confusion after an update on Biden’s draining of the nation’s Strategic Petroleum Reserve. Do you remember the release that was supposed to bring down gas prices? Reuters reported, “The US Department of Energy on Tuesday said it was selling up to 45 million barrels of oil from the Strategic Petroleum Reserve as part of the Biden administration previously announced, largest-ever release from the stockpile. Deliveries of crude from the SPR sale would take place from August 16 through September 30, the Energy Department said. The Biden administration said in late March it would release a record one million barrels of oil per day of oil for six months from the SPR, held in a series of hollowed-out salt caverns on the coasts of Louisiana and Texas.
The other Biden attempt to lower oil prices was to suggest that an Iran nuclear deal could be imminent. Reuters reported that “the United States said on Tuesday it awaits a constructive response from Iran on reviving the 2015 nuclear deal without “extraneous” issues, a possible reference to Iran’s demand its Revolutionary Guards be dropped from a US terrorism list. “We await a constructive response from the Iranians, a response that leaves behind issues that are extraneous to the JCPOA,” State Department spokesperson Ned Price said, referring to the deal formally called the Joint Comprehensive Plan of Action.
One should worry that the Biden administration is going to make a bad deal with Iran just to get their oil to try to save his floundering presidency.
We already know that he did an about-face on Saudi Arabia a pariah policy. At first, the president’s team said that the meeting with Saudi Arabia had nothing to do with oil production and that oil was not even on the agenda. Now the administration admits that oil prices and oil production will be on the agenda; the other big thing is that Biden will meet with Crown Prince bin Salman, which is angering some of the people in his party. Yet when you’re desperate to get oil prices down and you’re desperate to save your presidency, you will go back on your word to try to get more oil production.
Maybe Biden should be working with the US energy industry instead of accusing them of price gouging and every other type of crime. Maybe he should acknowledge that his policies have some responsibility for these rising prices. Yet if you listen to the angry Biden, he seems to suggest that everything he’s done has been just terrific for the American people and if it wasn’t for all these outside forces, people would realize what a great President he is.
Oil traders not only have the Fed to worry about today but also oil inventories. Last night the American Petroleum Institute (API) reported some supportive numbers. The API reported that crude oil supplies rose by only 736,000 barrels and if that included the record-breaking 7.7 million barrel release from the strategic petroleum reserve, then we better start worrying about US crude supply.
The API also reported a pretty sizable 2.159 million barrel drop in gasoline supplies. That shows that US gasoline demand is probably holding up pretty well and should be very bullish for prices, assuming that the Energy Information Administration (EIA) confirms that draw today. Distillate inventories rose by a modest 234,000 barrels in that it’s not a big enough build to ease distillate supply concerns.
Natural gas prices got hit hard after the Freeport LNG terminal said it would not be restarted for 90 days. Yet natural gas is bouncing as a heat wave and a heat dome is baking America. Natural gas is halting oil flows into the Nord Stream pipeline could cut capacity to Europe by 40%, and may give this market some backdoor support even though the US is exporting as much as they possibly can to Europe right now. Obviously, with Freeport being down, that is not helping the situation in Europe as far as natural gas is concerned.
Learn more about Phil Flynn by visiting Price Futures Group.
