Mar

9

Goosing the crude

March 9, 2022 |

would someone who wishes a prize send me a good tweet about all the ways the admin has goosed up the price of crude — including the general meme that one should be ashamed of drilling because of climate change.

A reader responds:

The main conclusion is that through policy action as well as through promises of future regulation & threat of capricious punishment the admin has clearly signaled to producers that their days are numbered. The idea that the industry will surge production for an admin that can't wait to crush their margins & replace them is farcical. If they invest to grow production they will do it with extreme caution. Here is my case:

During the primary, Mr. Biden promised a policy of "no new fracking".

During the presidential debate he responded to a question about whether he would "shut down" the oil industry with: "I would transition from the oil industry".

During the campaign, he promised to reduce gov support for oil & gas, ban drilling on federal lands & waters, "hold oil execs accountable" (jail time?), and rejoin Paris Climate accords.

From day one the administration "moved to dismantle Trump's oil and gas legacy". This article while old summarizes the key points of early action.

Granting of federal permits have been paused & in court for the past year.

Keystone XL had a target start date of 2023, and with planned capacity of >800kbd and >500kbd of commitments already in hand, it would have helped anchor the back of the crude curve.

Day one the admin rejoined the Paris Climate agreement, committing to net-zero by 2050.

Big oil was then grilled by congress about why they haven't spent enough money lobbying for the Paris Agreement. (I'm serious!)

As this recent interview suggests, there's likely still no serious coordination with US producers.

Even now, Mr. Biden still can't talk about US producers without threatening them if they price gouge.

And finally, he has so seduced the KSA that Crown Price MBS has said he does not care what Biden thinks of him, and declines his phone calls (lol).

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