President Joe Biden followed up his War on Energy—which began the day he took office with his abrupt and malicious cancellation of the Keystone XL Pipeline— with a direct threat wrapped in the flag on Wednesday, demanding in a letter to oil industry CEOs that they increase production while complaining about their profit margins:
“There is no question Vladimir Putin is principally responsible for the intense financial pain the American people and their families are bearing. But at a time of war, refinery profit margins well above normal being passed directly onto Americans are unacceptable.” [bold, links added]
His verbally-challenged press spokesperson Karine Jean-Pierre followed up with vague threats that Biden might invoke the Defense Production Act or some other executive powers if the oil industry doesn’t “voluntarily” comply.
The fate of President Harry Truman’s seizure of the steel industry in 1952 (declared unconstitutional by a pro-New Deal Supreme Court) must have fallen out of the Biden White House history books, along with any reference works on economic literacy.
The facts are these:
- Oil production and refining margins are at or slightly below average for all American manufacturing industries (between 5 and 12 percent, depending on region and product), and considerably below several other industries that are Democrat favorites because they’ve gone woke, especially tech.
- ExxonMobil is expected to earn less than one-half as much as Apple this year (Exxon: $41 billion; Apple: $100 billion), and Apple enjoys a much larger profit margin on sales than ExxonMobil (Apple: 26 % in its most recent quarter; ExxonMobil, 6.2%). But liberals never criticize Apple’s “profiteering” or Google, or Facebook, or…
- Our refineries are running over 92 percent of capacity‚ up from 86 percent last fall, and will likely reach 95 percent this month according to Biden’s own Energy Department. Our refineries can’t increase output much more even if they want to. And the government never offers to backstop oil companies or refiners when market downturns squeeze their margins close to zero, as periodically happens, such as in 2009, when refining margins collapsed to -7 percent.
It is impossible to exaggerate the ignorance and hubris—and greed—of the Biden leftists about energy.
The Financial Times reported a startling detail a few days ago: “When the White House started calling around in a panic, they thought shale oil production could grow sharply in the near term — like in a matter of months or quarters,” said Bob McNally, head of consultancy Rapidan Energy. “They were shocked to learn that that’s like asking for blood from a stone. It’s almost impossible.”
But it’s easy to be shocked when you’ve lost your grip on reality.
A CEO of a major American transportation company who agreed to serve on Barack Obama’s Council on Jobs and Competitiveness back in 2011 once privately told me that he asked Obama why we didn’t encourage more domestic production of oil and natural gas.
Obama’s answer stunned him: “Stephen Chu [the Nobel Prize-winning Secretary of Energy] tells me we’ll be well on our way to a transition to renewable energy by 2016, so we don’t need more oil and gas.”
President Biden seems even more self-deluded about oil and gas than Obama, peddling the same dreamy nonsense about energy.
Last month Biden said that high gasoline prices were part of the “incredible transition” toward a world of “renewable” energy that won’t need fossil fuels.
But the inexorable rise of gasoline prices has set off political alarms in the White House, prompting the administration to try to make nice with domestic oil and gas—and even with the Saudis, otherwise a pariah state for this administration—in hopes they will increase oil production and relieve Biden’s political gas pains.
But Biden’s grasp of the oil and gas industry is as simplistic and confused as every other aspect of his doddering administration.
Having demonized the oil and gas industry as required by environmentalist orthodoxy, Biden now thinks he can get the industry to bail him out of his self-induced political and economic crisis.
There are two primary reasons why domestic oil and gas can’t be turned on or off like a water faucet in your kitchen. The first is long-wave oil market cycles. The second is political and regulatory risk.
The oil and gas industry has at length figured out how to adapt to the first problem. The second problem—political and regulatory risk—is out of their hands, and is the one thing Biden and his gang refuse to acknowledge or consider changing.
There’s an old adage that the solution to high oil prices is high oil prices (and vice versa), and ever since the first oil shocks of the 1970s, we’ve seen several epicycles of world oil markets in which the price soars, slowly collapses, and then slowly soars again, drawing oil entrepreneurs into the market with some inevitable bankruptcies among the weaker firms later on.
We saw this cycle with a vengeance over the last decade, as rising oil prices in the “oughts” (2000-2009 or so) combined with technology leaps to produce America’s wonderful domestic oil and gas boom.
Opening new or expanding existing resources requires considerable up-front capital investment.
Both the industry and its investors have become more disciplined over the last decade to avoid the boom-and-bust cycle, and it is now largely oriented to developing oil and gas assets that can remain profitable at any reasonable price point in a typical epicycle, instead of chasing after large profits during price spikes.
A bigger problem for the industry is political risk. After years of open hostility to the industry from Democrats, why would the industry now put its neck on the line to rush new production when it is certain that Democrats will resume their old hostility to the industry once prices and profits start to come back down?
In the 2020 campaign, Biden said he’d halt further oil and gas production on public land while encouraging Wall Street to cut off capital to the industry.
He’s more than made good on that promise—until just the last few weeks—and the increasingly woke capitalists on Wall Street were happy to go along. (In a nod to reality, several of the big Wall Street banks have recently reversed their position and say they will now provide financing for fossil fuel companies.)
If Biden wanted to secure a robust and consistent supply of domestic hydrocarbons that his own Energy Department says we will need to use for decades to come, he’d call off the left’s political war on the sector.
But fossil fuels are the primary Emmanuel Goldstein of the left, the main target of their daily two minutes of hate.
Beneath these endless confusions and contradictions are the cognitive dissonance of Biden’s variety of leftism.
Over the years the left has considered high gasoline prices the acme of enlightenment because it would force people to switch to “renewable” energy and electric cars.
A whole volume of the Encyclopedia of Leftist Errors could be filled with statements of envy over Europe’s tax-driven high fuel prices, along with the open wish that we should follow their example.
The aforementioned Stephen Chu said during the Obama years, “somehow we have to figure out how to boost the price of gasoline to the levels in Europe.”
And yet when market conditions deliver price spikes, as happens on a regular basis, Democrats explode with Price gouging! Collusion! Greedy oil companies! We must investigate!
Every government investigation of high gas prices since the 1970s has failed to find any evidence of price-fixing or collusion in the oil industry because there isn’t any.
The lesson here is plain: for the left, high gasoline prices are only good when it comes about through a government tax rather than market forces.
Actually, the U.S. government already makes more on each gallon of gas than oil companies and refiners do, but you never hear that inconvenient fact reported, because apparently, the government can never be “greedy.”
The dramatic revolution in domestic oil and gas production that began about 15 years ago falsified two of liberalism’s most persistent clichés—that we had reached “peak oil” and that the U.S. couldn’t “drill our way” to energy independence.
One politician who quietly figured this out a decade ago was Barack Obama. By degrees during his second term, Obama started endorsing an “all of the above” energy policy, which represented a de facto truce with domestic oil and gas.
It is telling that Biden can’t even bring himself to say “all of the above,” and this silence is all the industry needs to know as it weighs the enduring problem of political risk so long as the left is in power.
Read more at The Pipeline
Western civilization will not survive on wind, solar and hydroelectricity alone, unless our population is severely reduced. It’s only been lately that nuclear has been embraced by the socialists as “green” , out of necessity. Now thermal coal generation has been resurrected . Whole lot of backsliding happening.
Cut off all Power and Water to the District of Crooks
I Read this statement by Climate Dispatch on this site:
We have absolutely no affiliation—fiscally, morally, or theoretically—to the “massive and well-organized campaign of disinformation lavishly funded by polluters who are determined to prevent any action to reduce the greenhouse gas emissions that cause global warming out of a fear that their profits might be affected if they had to stop dumping so much pollution into the atmosphere.”
So CD supports the phony climate change “Green house gas” agenda.
”Are you saying that my statement that “The European Union has been very aggressive in attempting to move to weather dependant energy.” is political propaganda?” No. Just that you didn’t give the reasons behind it, which is what the politically motivated deniers always do. When I called you out you told some of the truth. Note. Some.
“I have been closely following the climate fraud for twenty years” You mean the fact of AGW, which I have been closely following for a lot longer.
When Germany closed its nuclear plants the plan was to replacement the power with renewable energy. That failed. This has forced them to use coal and Russian natural gas.
“The European Union has been very aggressive in attempting to move to weather dependant energy.” is a fact we can both agree on. Calling the failure to give their motives “political propaganda” is ridiculous.
Having degrees doesn’t equate with not being gullible. Jason Lisle is an astrophysicist but swallows the creationist mythology. Stephen Meyer is a Ph.D. yet denies the reality of evolution. He also contends that those who oppose Darwinism are persecuted by the scientific community and prevented from publishing their views.” Totally ignoring the facts that he has Ph.D, and is a widely published author. Then we have Georgia Purdom, a molecular geneticist but is a young earth creationist.
So sorry, degrees are no guarantor of being in touch with reality.
That you call a fact “the climate fraud” and equate science and politics is also rather telling.
“Yet, saying nearly all countries go along with it might be considered an exaggeration. China and India will be heavily relying on coal in the future” Indeed, but both accept the reality of AGW and are intent on reducing their dependence on FF.
“Still trying to nice” Calling people suckers is not exactly nice is it, or claiming anyone accepting reality is a liberal. Much of the dialogue in the US and Australia has been controlled by Murdoch, who is a science denier and proven liar.
I definitely agree that having degrees doesn’t equate with not being gullible. This is proven by the large number of well educated people who have brought the climate fraud. However, my response was about your statement that I have low intelligence. That certainly is not true.
Windfarms raise incomes and house prices in rural US, study finds
Oil majors ‘not walking the talk’ on climate action, study confirms,
China is set to add at least 570 gigawatts (GW) of wind and solar power in the period 2021–25, more than doubling its installed capacity in just five years.
The International Energy Agency (IEA) has raised its forecast for the global growth of wind and solar by another 25% compared to figures it published just six months ago.
Furthermore, the IEA’s “renewable energy market update” forecasts nearly 40% higher growth in 2021 than it expected a year ago, putting wind and solar on track to match global gas capacity by 2022.
Go find somewhere else to troll globalist!
Interesting that someone who posts facts and the truth is called a troll. You will be overjoyed to know that people who believe Earth is flat call me a troll for posting facts. Just let that sink in.
China’s development of weather dependant energy is to fool the suckers. Though large in numbers it is small compared to their massive development of coal power. The Chinese are a smart people. The massive development of coal fired energy by the China shows it is the most economic power.
“China’s development of weather dependant energy is to fool the suckers ….. The Chinese are a smart people.” You obviously didn’t realise those contradict each other, did you.
“The massive development of coal fired energy by “the China”, sic, shows it is the most economic power.” No, it shows it is cheap and readily available.
The PRC’s staed ain os to phase out coal but regional governments are greedy and want a quick return which coal gives them. A bit like the USA. Try using facts not FF propaganda.
What about the fact that nearly all countries are phasing out coal and increasing wind and solar? Presumably that fact is beyond your limited inteelect.
What about the PRC’s nuclear power implementation? As nuclear plants come online, together with more solar and wind, coal will be history and oil and gas use minimal. That is 21st C. technology, not the 19th C. tech of the FF reality denying Luddites.
It has never escaped me that a large number of countries have bought into the climate fraud. In an attempt to be diplomatic haven’t said much about it. Still trying to nice, I’ll pointed out that climate change is primarily a political issue that appeals to liberals. The nations buying into the fraud are mostly run by liberals. Yet, saying nearly all countries go along with it might be considered an exaggeration. China and India will be heavily relying on coal in the future. Russia seems to give climate change more lip service than action. Australia, Brazil, and the United States fluctuate depending on the last election.
My intellect can hardly be called limited. I worked 37 in high technology often working on the cutting edge. I have degrees in electrical engineering, chemistry, and microbiology.
You obviously don’t realize that Chinese being a smart people and their rapid use of coal is no contradiction at all. Don’t be fooled by the lip service the national government is giving climate change to appease the international community. I once read an article by a woman who is very close to the top Chinese leadership. She said they don’t believe that climate change is a threat but put on a face of going along with it for political reasons.
Climate change has a number of liberal agendas hitchhiking on it. Global warming was started as an excuse for new taxes, to increase the power of government, and to force de-industrialization. The latter was a surprise to me, but we do know of the movement from its defectors. Since then other causes have joined. I have read many articles written by Marxists that concluded climate change can’t be solved under the free enterprise system. Christiana Figueres, former head of the IPCC, readily admits that the real climate change agenda has nothing to do with the environment, but instead is about redistribution of wealth. The movement that goes back to the 1970’s that wants to force people out of their cars has come aboard. I have read articles by some that believe the middle class has an excessive and sinful life style and needs to be punished. A big player that has joined is the huge renewable energy industrial complex. Not everyone who supports action on climate change supports all of these agendas, but many have strong support such as more taxes and bigger government. This explains the wide support for action on climate change by most nations. Note these factors have nothing to do with real world data. We can see the role that politics plays in the United States. The blue states governed by liberals tend to support action on climate changer were as the red states governed by conservatives tend to oppose it.
David, I am not some callow youth who follows fads,like you climate deniers, as you should have realised from my factual comments.
Also, this channel’s claim that it is fighting junk science is risible as all it produces is political propaganda and has nothing to do with science. In fact its older articles attempting to be scientific prove those in charge are science illiterate.
Biden sounds more like Bart Simpson every day – I didn’t do it!
Well, he didn’t, if you look at the facts and not the propaganda funded by the Exxon.Peabody/Koch axis.
Ending all use of Fossil Fuel over this Global Warming/Climate Change one of the most irresponible acts ever
The intention is to phase it out as and when possible, other countries are committed to this so why are so many in the USA denying the facts?