Personal Economics 101

Given the recent events in the Middle East, how dangerous is this Biden energy policy? Biden abused his power when he drained our Strategic Petroleum Reserve in an attempt to lower oil and gas prices, so his popularity wouldn't wane. While that didn't work, he has placed this country in a perilous position. As if his open borders wasn't threat enough. And it's also worth remembering that Chuck Schumer blocked Trump's request to buy 77 million barrels in March 2020, when lockdowns had pushed the spot price close to zero:

Jack Spencer, The Daily Signal Just last month, President Joe Biden took a major swipe at America’s energy independence when he declared nearly a million acres of uranium-rich land outside of Grand Canyon National Park off limits to energy development . Turns out that was just the setup jab. The knockout punch is on its way. According to reports, Biden wants to cancel drilling leases in the Arctic National Wildlife Refuge, or ANWR, which would deny Americans access to around a total of 11 billion barrels of oil (though it could be much more). That is a lot of oil. Canceling drilling when Saudi Arabia continues to cut production makes even less sense. That’s because this decision will continue to chill gas and oil development in the United States, meaning that Americans will not only lose this oil but the oil production that is forgone because of the political environment Biden has created . No company, after all, will risk the massive amounts of capital necessary to develop new ene...

Just when you thought it couldn't get any worse. Democrats are now pushing two very bad ideas: 1) Do away with the "gig" economy, as California has done with its draconian restrictions on independent contractors; and 2) nationalize the oil and gas industry.  The attack on American's right to work From National Review  (subscriber only):  The Department of Labor wants to effectively outlaw gig work. The Golden State has been there, done that, and the results aren’t pretty. The Biden administration has effectively declared war on gig work, with its Department of Labor proposing a new federal regulation inspired by California’s controversial AB 5 law that would limit people’s ability to be classified as independent contractors and work as they choose. This proposal, if successful, would cruelly upset millions of lives. At least 57 million Americans are currently involved in gig work, a number expected to grow to more than 86 million within the next five years. More on  ...

As shown by the chart below, the Biden administration is selling off US Strategic Petroleum Reserves (SPR) at the fastest pace on record. As of today, we are now at the lowest levels since 1985. Here is where things get concerning: despite the biggest decline ever in the SPR, total US oil inventories (outside of the government’s emergency SPR) have barely budged off their lows. Let me repeat that. The biggest release of oil ever in the US has barely increased our total domestic inventories. Low supplies can only mean higher prices (oil was at $97 today, July 15, down from its peak of $130 in March 2022) in the future, if demand remains the same -- or increases. you cannot have economic growth without energy to power that growth, and we will continue to see a humanitarian crisis until governments all over the world work to increase natural gas, nuclear energy, and oil production. If they don’t, shortages, cost-of-living spikes, and disruptions to our food and energy systems are likely t...

The untold story about “green energy” is that it can’t possibly be scaled up to provide anywhere near the energy to replace fossil fuels. (Unless we are headed back to the stone age – which is what some of the “de-growth” advocates favor). A new  World Bank Group report  finds that the production of minerals, such as graphite, lithium and cobalt, could increase by nearly 500% by 2050, to meet the growing demand for clean energy technologies. It estimates that over 3 billion tons of minerals and metals will be needed to deploy wind, solar and geothermal power, as well as energy storage, required for achieving a below 2°C future.  Recently, even some environmentalists are pointing to a the World Bank report showing that moving toward 100% solar, wind, and electric battery energy would be “just as destructive to the planet as fossil fuels.” This was the conclusion of a story in Foreign Policy magazine in 2019, The Limits of Clean Energy . A low-carbon future will be very min...

(Update 5/24: Since publishing this article (May 23), the price of Natural Gas increased to $8.81 per MMBtu or 8.6% on the NY Mercantile Exchange. The price of oil is $110.57 per barrel.) Since Biden was elected president with his declaration of war against fossil fuel production, the oil price has spiked from $60 a barrel to above $100 a barrel, an increase of about 70%. Gas prices at the pump have surged nationally at a similar pace, from $2.59 a gallon under Trump to about $4.59 a gallon last week.  But don’t fret, because the Biden White House is “doing everything we can to bring gas prices down.” Another energy crisis may be brewing, and that is a result of the surge of natural gas prices. (Don’t forget, natural gas is by far the number one source for electric power generation in America.) Here at home, those prices have climbed from less than $3 per MMBtu in 2020 to $7.40 as of last week. (See chart.) This is close to a 150% increase in price. James Grant from the Interest Ra...

As I've mentioned before these pages, price controls that were last employed on a widespread basis during the 1970s inflation era were eventually discarded by both parties as an abysmal failure. So we shouldn’t be too surprised that House Speaker Nancy Pelosi wants to bring them back. On Thursday, Pelosi pushed through the House her Consumer Fuel Price Gouging Prevention Act – which would allow the president to declare an “energy emergency proclamation” when prices are rising. During the emergency, companies would be barred from charging “unconscionably excessive” prices for gasoline or any other fuels. The Federal Trade Commission and state attorneys general would be empowered to pursue violators. There is no legal definition of price gouging, but apparently, it is the new pornography – the pols know it when they see it. Sadly, only four Democrats – Liz Fletcher of Texas, Jared Golden of Maine, Kathleen Rice of New York, and Stephanie Murphy of Florida – voted no. Pelosi isn’t do...

Why Some Rate Quotes Are So Different And Why "Points" Are On The Rise It was yet another tough week for the mortgage market with rates rising to their highest levels since 2009, but how high have they actually risen? Energy up nearly 50% YTD as crude oil climbs to $110 per barrel WTI crude futures ( CL1:COM ) jumped 4.9% for the week to $109.77/bbl, July Brent futures ( CO1:COM ) also added 4.9% to $112.39/bbl, and gasoline futures ( UGA ) in New York settled at a record high $3.76/gal, three weeks before the start of the U.S. summer driving season. Losing the People? Then Change the Rules Court-packing—the attempt to enlarge the size of the Supreme Court for short-term political purposes—used to be a dirty word in the history of American jurisprudence. The Disinformation Governance Machine Right out of 1984. Homeland Security Secretary Alejandro Mayorkas announced on April 27 the creation of the “Disinformation Governance Board.” The Nation's Top Scientists Lied Scott ...

Remember the good old days when liberals demanded: “Keep the government out of the bedroom!” Well now they want the government in the bedroom, the bathroom, the kitchen, your outdoor pool… Biden just rescinded a popular 2020 Trump order that increased how much water you can use in the shower. Capping the flow from a shower head to 2.5 gallons per minute doesn’t save much water, it simply makes you stand longer under the water as it drips and drips and drips. (It reminds us of those obnoxious low flush toilets the feds mandated to save the planet, but they didn’t because you had to flush twice.) Now Biden is pushing a spate of additional energy conservation measures restricting the power that can flow to power air conditioning units, gas-fire places and electric pool heaters. Sounds like Uncle Sam is turning into Big Brother. https://www.washingtonexaminer.com/policy/energy-department-targets-pool-heaters-and-ac-units-with-new-efficiency-rules

(Updated at 2:13 PM CDT) The Biden Administration, and Democrats in general it looks like, just don't understand good governmental policy or basic economics. The Federal Reserve is no better, and may yet push us into a recession, at the least.  The Biden administration plans to release around 180M barrels of oil from the Strategic Petroleum Reserve, in what be the largest release from stockpile since it was created in 1975. WTI crude futures tumbled 6.7% to $100.53 on the news, The coming SPR decision would likely see 1M barrels released daily over the course of six months, but analysts are still debating the benefits and whether it would put a dent in the inflationary forces seen in the current environment. "Stocks of strategic oil have a limit and flows of commercial oil do not. Flows that stop are a bigger problem than strategic stocks can solve over time," said Kevin Book, energy policy analyst at ClearView Energy Partners. "Historically, SPR releases have tempo...

States around the U.S. are resorting to a gas tax holiday to lessen the impact of rising oil prices due to the foreign policy decisions levied by the west. Here are a few examples: Maryland stepped up to suspend the gas tax for 30 days; net savings per gallon will be 36.1 cents Georgia did the same until May 31, saving 29.1 cents a gallon From April 1–June 30, Connecticut is reducing state gas tax by 25 cents a gallon Many more states may follow. And California, of course, has no desire to be outdone by any other state. Its governor is planning on an $11 billion package, not all of which is gasoline. $9 billion of the package will come in the form of sending $400 debit cards to registered vehicle owners. While the move may save drivers around 30 cents per gallon at the pump, economic and policy experts warn that it is only a stop-gap solution. "They may not lower [gas] consumption and they might increase it," Patrick De Haan, the head of petroleum analysis at gas price app Ga...

Biden's chart is wrong. The second chart shows price of gasoline futures, April contracts. The third chart shows price of oil, WTI, April contracts. There is always a time-lag between what is paid at the well-head or by the refinery.  Individual retailers set gas prices based on what they expect their future fuel deliveries to cost. But they have no clue right now due to all of the global uncertainty. Oil prices have plunged this past week in part because the United Arab Emirates said it would urge OPEC to pump more. But the cartel might not.  Another thing that the graph tweeted by Bloomberg's Blas shows is that the national average for gas did not jump as high as the cost of oil. In fact, it shows that oil and gas companies would have been generating less profit as oil prices spiked. Another inconvenient truth for Biden's attempt to make boogeymen out of oil and gas companies? "The vast majority of the nation’s 150,000 gas retailers are mom-and-pop operations" a...

With inflation running at percent 8 percent annually, according to CPI numbers released March 10, and energy prices at nearly all-time highs, some in Congress want to impose a windfall profits tax on crude oil.  The Consumer Price Index (CPI) rose 0.8% month-over-month (m/m) in February, in line with the Bloomberg consensus estimate, and up from January's unrevised 0.6% gain. The core rate, which strips out food and energy, increased 0.5% m/m, matching forecasts, and slightly below January's unadjusted 0.6% rise.  Compared to last year, prices were 7.9% higher for the headline rate—again the fastest pace since 1982—in line with estimates and an acceleration from the prior month's unrevised 7.5% rise. The core rate was up 6.4% y/y, matching projections, and rising from January's unrevised 6.0% rise. Initial jobless claims came in at a level of 227,000 for the week ended March 5, versus estimates calling for 217,000, and above the prior week's upwardly-revised 216,000...

As the Russia-Ukraine war continues to shatter whatever hopes remained of Europe’s post-pandemic economic recovery, Brent prices are already trading near $130 per barrel. Biden's announcement of a ban on Russian energy imports, including oil, coal, and LNG, has only added to the upward pressure in oil markets.  While European powers have made it clear they will not ban Russian energy imports (the U.K. will restrict imports), European natural gas prices are at all-time highs, dragging coal along to unprecedented levels as well. Moreover, with hopes of a quick Iranian deal cooling, there is no sign of relief for the current oil price rally. In a speech on Tuesday morning, President Biden confirmed that the United States would ban Russian energy imports. In his speech, Biden confirmed that its European allies will not be joining the U.S. in this measure due to their relative lack of energy security. Oil prices and gasoline prices both climbed on the news. He also addressed the US oil ...

Oil's price ascent is showing no signs of slowing down ahead of one of the most important OPEC+ meetings since the beginning of the pandemic. WTI crude futures ( CL1:COM ) climbed another 6.6% overnight to top $110 per barrel, and that was despite the U.S. and other members of the IEA agreeing to release 60M barrels from the Strategic Petroleum Reserve and other emergency stocks. The coordinated drawdown would be only the fourth in the agency's history, sending a "unified and strong message to global oil markets that there will be no shortfall in supplies as a result of Russia's invasion of Ukraine." Analyst commentary: "Although the sanctions are still being crafted to avoid energy price shocks, we believe this aggressive-but-not-maximalist stance may not be sustainable, with disruptions to oil and gas shipments looking increasingly inevitable," Evercore ISI wrote in a note to clients. "Russia is casting a long, dark, unpredictable, and very compli...

About 18 months ago, I overloaded (30 percent) my portfolio in energy, with ETFs FENY, VDE, and IEZ, along with pipeline and delivery plays AMLP and MPLX. These are increasing in value as energy prices are on the increase and are paying decent dividends along the way. This was a contrarian play; because traditional energy was going out of favor, I felt that over the next few years, it would increase in value. I was right, and Biden's anti-oil policies have only helped me.  Energy prices continue to surge to fresh records as renewed fears stoke panic of the worst shortage in decades. India has warned it has only four days of coal reserves left, German power plants are running out of fuel and China just unloaded an Australian coal shipment despite an import ban and icy relations. Supply is just not there as economies rebound from a pandemic-induced lull, while problems like logistical logjams and transport bottlenecks are adding to the pressure. OPEC+ didn't come to the rescue ye...

By Kelly Evans The Exchange , CNBC The price of fossil fuels keeps surging. The situation in Europe is getting worse. Natural gas prices are spiking through the roof--even worse than they were   last week . Even oil is higher today as Goldman says $80 for U.S. crude could be next, up from about $70 where it's trading today. Why? Because there is "growing scarcity across physical markets," with demand for all energy except oil back at pre-pandemic levels  while "the system is becoming increasingly constrained in its ability to supply goods."    The crucial difference between the energy spike today and any prior one over the past couple decades is that this one comes as policymakers (and "ESG" investors) have  chosen to cap supply . Europe, as I've mentioned, has basically, depending on how you run the numbers to get to "net zero" emissions by 2050,  about 600 gigatons of carbon left  to produce. Even traders are taking the goal seriously t...

Update Aug 16, 2021: OPEC+ sees no need to meet U.S. call for more supply (Reuters) .  While the administration begs overseas adversaries to ramp up oil production with jobs and development to the benefit of foreign citizens, Americans remain handicapped by Democrats’ zealous animosity towards fossil fuel extraction on domestic land. Just after assuming office, Biden announced last week a range of executive orders aimed at addressing climate change and starting the process of phasing out fossil fuels, a promise he made on the campaign trail. As part of the orders, all new oil and gas leasing on public lands was indefinitely paused to allow time for a “comprehensive review and reconsideration of oil and gas permitting and leasing practices.” The review will also consider adjusting royalty fees for oil and gas, which are about $2 an acre and haven’t been updated for decades. The order does not apply to tribal lands.  Underneath the tundra surface of Alaska’s North Slope sits an...

From the  American Institution for Economic Research Real gross domestic product increased at a 6.5 percent annualized rate in the second quarter, up from a 6.3 percent pace in the first quarter. Over the past four quarters, real gross domestic product is up 12.2 percent, putting the level almost back on trend. Growth in the second quarter was led by consumers. Real consumer spending overall rose at an 11.8 percent annualized rate, beating the strong 11.4 percent rate in the first quarter, and contributing a total of 7.8 percentage points to real GDP growth. The pattern of contributions to growth among the components of consumer spending in the second quarter was the mirror opposite of the first quarter, as the second quarter was led by consumer services, followed by nondurable goods and then durable goods. Spending on services grew at a 12.0 percent rate, contributing 5.1 percentage points to real GDP growth, while nondurable-goods spending rose at a 12.6 percent pace, contributin...

Why are car manufacturers still improving and spending money on combustion engines in the year 2020? Should all development research be going into electric cars and electric vehicle technology? Unfortunate news if you think ICE transportation is going away in the near future to be solely replaced by electric vehicles (EVs). The internal combustion engine is still incredibly relevant today, and can still use further improvements in order to reduce global emissions.  In this video we'll discuss scientific issues facing electric cars, environmental problems with ditching combustion engine research, how cost impacts customer decisions and manufacturer profits, and ultimately how consumer choice plays a large role in this industry. If you've ever wondered why combustion engines are still being developed, this video breaks down all the details.