ELAM: Energy prices calm, so do stocks

Bring supply on-line to get more gas to the pump at lower prices

Energy Secretary Jennifer Granholm to Oil and Refining Executives

Secretary Granholm is yet another Harvard educated attorney with no direct experience in the energy industry.

Apparently she is not aware of the following.

The last new refinery built in the U.S. was in 1977.

The refinery industry is running at 94% capacity now.

Gulf Today reports there are seven refineries for sale today but no buyers.

Valero is recording nice profits but most refiners have net income more like grocers than oil producers.

The crack spread, the difference in the crude oil price and the sale price of the refined product has zoomed to $53. The average the last few years is a much slimmer $16, not much room for refining error there.

Energy investors are asking for more share buy backs and dividends, less drilling amid triple digit oil prices. Investors are remembering the wild swings in price since the $12 level recorded in 1998.

Starting up a refinery can take a year given the need for safety precautions. So with drilling and pipelines Federally handicapped, who should be surprised at $5 gasoline? Team Biden got just what it wanted.

Allowing more offshore drilling is finally under consideration by Team Biden. Neither that nor as predicted releasing oil from the National Reserve wil not rescue the November elections for Democrats.

And Team Biden has sent out every indication of its war on fossil fuels since inauguration day. From cancelling the Keystone Pipeline to limiting drilling permits on Federal Land to slow walking any and all permits.

But market help is on the way. In our last two columns we suggested energy prices were more likely to come down than rise further. Sure enough, gasoline futures peaked at $4.20 and are now $3.66. West Texas Intermediate peaked eight trading days ago around $125. It is now $104.

It will take a few weeks for those lower prices to work through the refining cycle. Granholm also criticized conservative media outlets for getting the word out on the expense of taming climate change. The Secretary and AOC got what each wanted – — high gasoline prices to discourage IC powered cars.

Our prediction of a peak in the two-year cycle of interest rates has also come true. The thirty-year yield peaked at 3.5% and is now 3.2%. Closed end municipal bond funds have been trading at a discount to the actual bond they hold. This makes that sector a great buy now.

The stock market is not showing much bounce after its 18-30% sell-off in various indexes. The Industrials would need a weekly close over 31,000 to turn the daily trend up. The index is 30,569 at the Thursday close.