Biden’s Sending Energy Costs Even Higher
This Administration’s hard line against oil and gas is about to come to a crescendo, just in time for the coldest part of the year, winter. This President has made it a centerpiece of his term in office to oppose anything remotely associated with carbon-based energy systems.
And while this might sound good in the cloistered halls of Congress or the ivy-covered wall of some universities, the reality is that this is how most people heat their homes during those long winter nights. And Biden’s effort to make carbon fuels more expensive will hit us like a sledgehammer.
Three specific items will hit in late fall this year.
In March, President Biden announced that he would authorize the release of a million barrels per day from the nation’s Strategic Petroleum Reserve. Initially set aside to preserve this vital resource for a time of war only. This incredible pool of oil was to be used to power the ships, planes, and tanks used in the next war.
Instead, Biden chooses to burn this gas this past summer to curb the runaway inflation that the country is suffering.
For some of us, this is an unwise and foolish move. Action that places the country at risk during any future conflict. Nonetheless, there is no denying that this extra oil supply impacted prices. There has been a noticeable price decline at the pump since the release began.
But here’s the bad news. The extra oil flow from the SPR will end at the end of September, just five weeks from now. That’s step one in our higher energy prices for winter.
Step two in higher energy costs is the ill-conceived and hastily executed boycott of Russian oil. In reaction to Russia’s Special Military Operation in Ukraine, President Biden ordered all oil imports from Russia to halt.
As these imports represented between 8% and 10% of total US consumption, this was bound to have an out-sized impact on prices. But there is some question about whether those imports have been completely cut off. According to the Energy Information Agency, in their latest report, which unfortunately was back in April, the US was still importing about 10 million barrels a month.
I suspect that we have already cut off all Russian imports. Imports that amounted to 25k barrels a month earlier this year. And that oil supply will no doubt be gone entirely by winter — step two in the plan for higher winter energy costs.
Step three has just passed Congress. In what can only be described as a concerted effort to produce higher winter energy costs. Buried within this many pages of this signature spending bill is a 16.4 cent per gallon tax on all imported oil. It’s all part of the newly enacted Inflation Reduction Act of 2022.
The American Petroleum Institute estimates that this tax will cost the industry over $25 billion. A cost that they will move along to you and me, the American consumer. And best of all, the Inflation Reduction Act, of which this tax is part, is slated to take effect on January 1 of next year. You guessed it, just in time for winter.
So that’s a real one, two, three punch to our energy prices. First comes the Strategic Reserve Release ends in September, then the complete halt of Russian oil imports, which may have already happened, and finally, the new 16 cents a gallon tax on imported oil.
Put them all together, and I have to believe that we face even higher energy costs this winter — higher prices than we’re enduring now.
Notice the emphasis on Electric Vehicles? In observing how this group operates, I think this is all part of a much larger master plan — a plan to force us to change to green energy. According to this plan, our cars, trucks, and future battle tanks will all be electric. According to the program, light and heat for our homes will all come from wind and solar.
Now in a free market economy, each of us would be allowed to choose the sources of energy we feel best meet our needs. But the Biden Administration does not operate within that framework any longer. They believe that they know what’s best for us. And they want us to move away from the traditional kinds of energy even if they have to price oil, gas, and coal out of existence.
These three steps are coming to a climax this winter when carbon-based energy prices are bound to rise even further. And it’s all part of a carefully orchestrated plan by this Administration.
Economic News
I’m afraid there’s not much positive economic news today. Bloomberg reports that the severe European drought is taking a toll on this year’s corn crop. Analysts estimate that corn yields could be just 80% of normal, a big blow to food production.
Consequently, American agriculture futures are up this morning, and corn futures which have been languishing lately, are up about 2 1/2%.
More bad news out of Europe this morning, as the latest reading from the Purchasing managers are all down. Today Purchasing Managers in France, Germany, and the European Union are all pointing to slowing economies. As you know, any reading below 50 on the Purchasing manager’s index indicates economic contraction ahead.
Here in the US, we will get the latest report on new home sales for July. And like last week’s real estate reports, this one is expected to be lower.
From the earnings desk, a couple of retailers headed opposite. Traditional department store chain Macy’s is receiving a positive reception for their results. The stock is trading higher currently. At the same time, the outdoor store Dick’s Sporting Goods is headed lower. It seems that Dick’s is still at odds with the hunting community.
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