Category Archives: Energy

This article appeared online at TheNewAmerican.com on Friday, April 8, 2022:  

“We are here,” said New Jersey Democrat Frank Pallone as the inquisition, conducted by the House Energy and Commerce Committee against Big Oil, began on Tuesday “to get answers from big oil companies on why they are ripping off the American people. At a time of record profits, Big Oil is refusing to increase production.”

Chevron CEO Michael Wirth shot back: “We do not control the market price of crude oil or natural gas, nor of refined products like gasoline or diesel fuel.… We have no tolerance for price gouging.”

Nor could he or Chevron even if they wanted to: Crude oil is a global commodity, and as large as Big Oil is, it has little influence on the price of that commodity. And gas prices are largely set by gasoline stations themselves, in response to local competition.

Shell USA president Gretchen Watkins explained to Pallone and the other Democrats decrying high oil and gas prices and blaming them on Big Oil: “Because oil is a global commodity, Shell does not set or control the price of crude oil.” Indeed, Shell doesn’t own a single one of the more than 13,000 Shell stations serving consumers in America. “Each,” said Watkins, “of these independent businesses is responsible for setting the local price for gasoline.”

The solution to high prices is, as it always is, high prices. That is, by allowing the free market to set prices, consumers will adjust their behaviors accordingly. They will, in effect, “ration” themselves by purchasing less, reducing demand pressures. At the same time, high prices will stimulate more production, which will bring prices down.

It’s already happening. In December, oil producers began reopening wells in the Permian Basin located in west Texas and New Mexico, boosting (according to Reuters) production by nearly a million barrels a day by the end of the year. NexTier Oilfield Solutions, the country’s third-largest fracker, told investors in January that demand was already pushing its utilization rates above 90 percent. Those rates fell as Biden canceled the Keystone XL pipeline project and paused the issuance of oil leases on federal lands. Covid restrictions also played a part in the reduction of production.

Oil analysts at Bank of America are forecasting a rise in global investment in drilling and completion of 22 percent this year, the strongest year-over-year gain since 2006.

Prices of WTI (West Texas Intermediate) crude oil topped $116 a barrel in late February. As this is being written, WTI has dropped to less than $97 a barrel. Nationally, gas prices peaked on March 17 at $4.33 a gallon, but now average nationally just over $4.13 a gallon.

Ranking Republican committee member Cathy McMorris Rodgers of Washington called out efforts by Democrats to blame the high prices on the oil company executives or Russian President Vladimir Putin: “This is not the Putin price hike. This is the Biden price hike. It’s been on a steady climb since he took office.”

Democrats such as Maria Cantwell of Washington aren’t buying the free-market argument and are calling on the Federal Trade Commission (FTC) to investigate Big Oil for price gouging and manipulation. Unfortunately for Cantwell, the last time the FTC investigated Big Oil, it found nothing. In its letter to then-Representative Brian Higgins dated May 13, 2009, the FTC declared:

After careful and extensive investigation, FTC staff did not find any evidence of illegal activity in gasoline markets.… To the contrary, staff found evidence suggesting that it is unlikely that illegal conduct caused these price [rises].

The best thing the committee in charge of this inquisition could do would be to urge Congress to issue more federal permits to allow additional oil leases by the oil industry. That would have a much more permanent and favorable impact on the long-term price of oil and gas than would the silly, temporary release of critical oil reserves which only serves the political purpose of improving Biden’s falling approval numbers.

Instead, in this crazy upside-down world where truth is the first victim of politics, Joe Biden will soon discover the advantage of claiming that falling gas and oil prices are now the result of his policies.

This article appeared online at TheNewAmerican.com on Friday, April 1, 2022:  

The White House’s “FACT SHEET: President Biden’s Plan to Respond to Putin’s Price Hike at the Pump,” released on Monday, is so filled with misstatements and half truths that one scarcely knows where to begin.

There is little, if any, truth to Biden’s claim that gas prices are hitting all-time highs because of Russian President Vladimir Putin. First, gas prices had been steadily rising long before Biden announced he was shutting down imports of Russian oil and gas in response to Putin’s invasion of Ukraine.

Second, according to CNN Business, “very little of that Russian supply goes to the United States — just 90,000 barrels of crude per day in December.” The U.S. consumes nearly 20 million barrels of oil every day, so the move by Biden to end Russian imports is little more than a rounding error in the global energy equation.

Biden’s move to release a million barrels of oil every day from the nation’s strategic oil reserves is clearly pandering and political cover for his administration’s policies that are primarily responsible for the spike in oil and gas prices. And it’s a short-term fix anyway. When the temporary release ends in 180 days, the “energy equation” — the United States is using more energy than it is being allowed to produce — will force gas and oil prices to rise spectacularly once again.

The White House’s FACT SHEET declares that the Biden administration is “doing everything we can to encourage domestic production now … as a bridge to greater supply in the months ahead.” It then declared that the real cause of the spike in oil and gas prices is the country’s oil and gas industry: “The fact is that there is nothing standing in the way of domestic oil production.”

Nothing, that is, except increased regulations and the dampening of investor enthusiasm for fossil energy projects thanks to the negative pressure of “ESG” — environmental, social, and governance — in the financial world, which views investing in fossil-fuel companies as somehow socially irresponsible because of the canard that fossil-fuel emissions “exacerbate climate change.”

The FACT SHEET attacks the oil and gas industry of gouging and hoarding: “Too many companies aren’t doing their part and are choosing to make extraordinary profits … without making additional investment to help with supply.”

It rolls out another half-truth: “Right now, the oil and gas industry is sitting on more than 12 million acres of non-producing Federal land, with 9,000 unused but already approved permits for production.” To “fix” that “problem,” the FACT SHEET declares that the administration will tack on a fee for any of those permits that aren’t being used.

First, oil and natural-gas production from existing wells operating on federal land only provides a small portion of the total being produced. Second, many of those leases don’t have enough proven reserves to justify the enormous expense of exploiting them. Finally, there are, in most cases, clauses already in those leases that cause the lease to expire worthless at the end of 10 years if they haven’t been exploited.

All those new fees would do, in other words, is increase the costs borne by the very companies the White House says it wants to encourage.

It’s clear what the White House’s agenda is: raise the cost of oil and gas to such a level that it forces Americans to “go green,” primarily by buying electric vehicles and installing heat pumps and solar panels. From the FACT SHEET:

The President will call on Congress to pass his plan to speed the transition to clean energy that is made in America.

 

His plan will help ensure that America creates millions of good-paying union jobs in clean, cutting-edge industries for generations to come.

 

And it will save American families in the immediate future — including more than $950 a year in gas savings from taking advantage of electric vehicles, and an additional $500 a year from using clean electricity like solar and heat pumps to power their homes.

There is nothing “clean” about “clean” energy. Those batteries require key minerals and precious metals that need to be mined using fossil fuels: metals such as lithium, nickel, cobalt, graphite, and manganese. And those batteries, at present, have a limited life span, raising the next question: where to discard them, and at what environmental cost?

And those “electric vehicles” about which the FACT SHEET rhapsodizes so eloquently? According to Kelly Blue Book, the average price of a new electric vehicle in February was $64,685 — more than twice the average price of a new compact car or new compact SUV. With the average American living paycheck-to-paycheck, who among them will spring for a new EV?

As the old saw goes, “Politicians are elected to office to solve problems caused by politicians.” As American Exploration and Petroleum Council (AXPC) CEO Anne Bradbury put it:

The administration is claiming they are responding to “Putin’s Price Hike at the Pump,” but their planned solution is to target American energy producers with new taxes and fees, while our industry continues to face increased hurdles and regulatory red tape the Biden Administration itself has put in place to restrict domestic production.

 

A punitive fee on federal lands will not incentivize or expedite development.

 

Pulling crude from the Strategic Petroleum Reserve will not lower prices in the long term and may even do more harm than good.

 

And targeting American energy workers with false narratives about pricing does not change the law of supply and demand.

This article appeared online at TheNewAmerican.com on Friday, March 11, 2022:  

Early indications from Montana, where much of the Bakken oil field is located, and from Baker Hughes, the oil-field services company, show that the U.S. oil industry is slowly awakening from its government-induced slumber.

Alan Olson, executive director of the Montana Petroleum Association, told Helena, Montana’s KTYH news outlet on Monday that, at current prices, he is seeing “a growing interest [among oil developers in the state] in restarting idled wells.”

The wells were shut down during the pandemic and remained shut down as the Biden administration launched its attack on fossil fuels starting on its very first day. That day Joe Biden kept his campaign promise to “go green” by revoking the Keystone Pipeline permit. Months later, the developer gave up all hopes of restarting it, removing any chance that oil flowing from the Bakken field would be allowed to increase.

According to Olson, the breakeven point for the developers working the Bakken field is $80 a barrel, giving them enough revenue to cover their fixed and variable costs and returning a profit to their investors.

Baker Hughes is reporting that increases in the rig count are confirming the nascent recovery. At the beginning of the year, there were 588 active rigs working in the country. As of March 4, that number had increased to 650, a gain of 10 percent.

The recovery, however, is going to be slow, according to Olson: “Now that the oil price is rising rapidly, it’s been a challenge to hire new employees.”

It’s also a challenge to meet the new regulations imposed by the Biden administration:

We’ve got a lot of very small, independent oil producers that, to meet some of the proposed new federal regulations, it’s going to leave them with a couple of choices: you either bite the bullet, spend the money, take it off your bottom line — which will cost jobs, which will also cause revenue to state and local government coffers to decline — or you plug your wells and walk away from them.

Biden is deaf to pleas to take his administration’s foot off the oil industry’s oxygen hose. Said Senator Dan Sullivan (R-Ala.), “You [Biden] need to do a lot more. You have to get off the necks of American energy producers.”

That’s not going to happen. The green agenda is to raise the cost of fossil fuels, especially gasoline, so high that Americans will be forced to purchase the vaunted EVs that allegedly would reduce carbon emissions and save the planet.

The primary reason for those high gasoline prices is simple economics: According to the U.S. Energy Information Administration (EIA), total U.S. petroleum production in 2021 was 16.6 million barrels of oil per day. But the recovering economy was consuming nearly 20 million barrels per day. The three-million-barrel shortfall was made up of imports from so-called enemies of the United States, and drawdowns from reserves.

There is a political impact to the slow revival of the U.S. oil industry. It will take months to bring those idled rigs and shut-down wells back online, just in time for the November elections. The Biden administration is sure to tout its success in bringing down gas prices, thanks to the industry’s recovery and no thanks to his policies. But for the low-information voter with a short memory, it will appear that Biden is finally doing something right after all, and some may vote to keep Democrats in control of the power levers in Washington.

This article appeared online at TheNewAmerican.com on Tuesday, January 26, 2021: 

Unions that supported Joe Biden are having serious second thoughts.

Back on September 7, Terry O’Sullivan, president of the Laborers’ International Union of North America (LIUNA), couldn’t say enough nice things about the Democrat Party’s candidate for president:

After discussions with our leaders and members, the General Executive Board of the Laborers’ International Union of North America (LIUNA) unanimously, enthusiastically, and proudly endorses Vice President Joe Biden and Senator Kamala Harris for President and Vice President of the United States of America….

 

Joe Biden is one of us; he knows, first hand, the trials and tribulations faced by working men and women across this country.… Over the crucial next few months, the 500,000 strong, proud, and united men and women of LIUNA will be on the front lines relentlessly working to elect Joe Biden and Kamala Harris, and leading the way to fulfill their mantra of “Build Back Better.”

Following Biden’s executive order canceling construction of the Keystone XL pipeline, O’Sullivan was singing a much different tune. His union tweeted:

This article appeared online at TheNewAmerican.com on Sunday, September 20, 2020: 

The results from The Epoch Times’ Rust Belt Poll released on Sunday provide one more reason why the president is likely to repeat his 2016 miracle in Pennsylvania, where he won by 44,000 votes out of 6.2 million cast: A plurality of the 3,500-plus registered and likely voters polled last week in Iowa, Michigan, Minnesota, Ohio, Wisconsin, and especially Pennsylvania support fracking.

On the surface it shouldn’t be a surprise: