Joe Biden And The Price Of Gas.
It’s been just 1 year, 3 months, and 21 days since Joseph Robinette Biden was sworn in as the 46th President of the United States. And yet it is almost a certainty that he will go down as one of the most consequential Presidents in our history.
Consequential, not just for what he has done, but for many of the circumstances and events which surround his Presidency.
When he ran for President back in 2020, Biden spelled out a very specific and detailed plan for dealing with the oil, gas, and coal industry. It was clear from the very beginning of his campaign that he was going to reduce this nation’s reliance on fossil fuels.
And as any seasoned observer, will point out, Biden’s campaign against fossil fuels has been perhaps the most successful single policy of his Administration.
At a campaign stop in early February 2020, Biden stated bluntly “We’re going to get rid of fossil fuels.” Later in that same campaign stop, when talking about the executives who ran the large oil companies Biden said: “We should put them in jail.”
This was a campaign run on the premise that the principal danger facing this country, was Anthropomorphic Global Warming. And as the chief champion in the fight against global warming, Biden was going to go all out in his fight against fossil fuels in general, and oil and gas in particular.
And that is exactly what he has done.
As the Washington Post pointed out in an article written the week of Biden’s Inauguration. Biden set out in his term by cutting back on new leases on federal land, challenging the depletion allowance, canceling the Keystone Pipeline Project, and seeking to penalize any methane released by oil producers or pipelines. Sought to curtail the use of fracking, and encourage the use of Electric Vehicles.
In short President Biden has followed through on all of his campaign promises in terms of energy.
He’s brought the country to exactly where he promised.
It’s no accident, it’s a consequence of a well thought out, long-standing policy by Candidate and now President Biden.
It has also been a policy that has produced dramatically higher prices for energy and transportation. One of the chief drivers of this inflation that we’re all suffering through.
The other principal driver from my perspective would be the incredible stimulus program initiated at the end of the Pandemic. But we’ll leave that for another day.
The Bureau of Economic Statistics, which is just a few minutes will release its latest calculation, tells us that the price of energy during the last 12 months is up an incredible 30%. Nothing else in their inflation formula comes even close. No other indicator, outside of oil, gas, and coal, is up as much as 10%.
And this is why I call Biden’s Presidency one of the most consequential in our history. Joe Biden is obviously someone who sets off to do something and then does it.
Unfortunately, in terms of energy policy, he has been wildly successful. And his success may put us all in the poor house.
Today we get a global perspective on inflation, with three of the top four economies reporting their current price increases. Already reporting has been the world’s second-largest economy China. And, the world’s fourth-largest economy Germany.
Leading off last night was China, which reported that overall inflation has risen to 2.1% the highest rate in 6 months.
And continuing with our theme, it is energy that is the driving force behind China’s inflation. In china’s reporting it is transportation that most closely tells the story of oil prices. And transportation came in up 6 ½ for the month of April, by far the highest jump of any of China’s price categories.
However, I would expect that as the oil and gas trade with Russia solidifies, it will go a long way in containing China’s energy inflation. And thereby overall inflation for the nation.
Turning halfway around the world, Germany also reported their inflation rate. And like China, the chief culprit here is also energy, principally oil and gas.
But unlike in China, these numbers are simply staggering. I’ve never seen anything like Germany has been reporting in energy costs in these last couple of months.
For Germany, the annualized cost of motor fuels this year is up by over 38%, natural gas up by nearly 48%, and heating oil, heating oil, up almost 100%. Doubling in price this year. Thank goodness we’re headed into Spring.
It is obvious that the German Energy Policy is failing, and presents an existential threat to that country.
In just a few minutes the world’s largest economy will report on its inflation rate. As the United States reports. I’ve noted some last-minute waffling by Wall Street on this one. As there is real uncertainty on where America’s price level will land.
However, most now seem to agree, that a slight easing is in store for us today. The consensus looks for inflation of about 8.1% annualized. That’s down 4 ticks from last month. And due almost entirely to, you guessed it, lower gas and oil prices.
In other economic news this morning, the latest Mortgage Interest rate has just been released. A 30-year mortgage will now cost you 5.53%. that’s about 1 1/2% higher than what you paid at the beginning of the year.
A mixed reading on earnings so far this morning, with positive results from Yeti Holdings, maker of those popular outdoor products, and also positive from ICL Group, a minerals-based company. However, on the other side have been negative results from beauty company Olaplex Holdings and generic drug company, Perrigo Company.
Now, after the market closes we will get the latest results from closely watched Walt Disney Company, and Manulife financial.