President Biden announced the release of one million oil barrels per day for the next six months. This is Team Biden’s idea of how to reduce the cost of gasoline, which it blames on the Ukraine Invasion.
This is the largest release in history. And it comes at a dangerous time when Team Biden has asked the very worst actors, like Maduro in Venezuela, for more oil. He has embraced USS LNG shipments to the EU after ridiculing natural gas despite the clean energy alternative it is.
For perspective, the International Energy Agency IEA requires a country maintain 90 days of net import cover in reserves. That would b about 315 million barrels The release of 180 mb will leave the US with no cushion at all. And eventually the 180 will need to be replaced. The U.S. consumes about 1 million barrels per day. So an addition of a mere 5% is hardly a game changer. Do Democrats not understand macro-economics, that supply demand thing?
The timing could hardly be worse. Saudi crown Prince Mohammed bin Salman literally would not take a phone call from the President who is begging for more oil. And he has literally declared war on the US Producers who finally made this country independent of foreign producers. What better time for OPEC to stage another US embargo, raising the price and punishing Biden for declaring Saudi a ‘pariah state?’
The markets yawned. Brent crude dropped about 4%. West Texas Intermediate remains around $100. And natural gas has soared to $5.73.
The answer is to back off micro-regulating U.S. producers. Speed up drilling and exploration permits. Stop claiming producers are gouging and recording windfall profits. Tell Bernie Sanders to forget his 75% of all profits tax grab proposal. Send Secretary of State Blinken to mend fences with the Saudis. Drop any and all deals with Iran. And symbolically re-instate the Keystone Pipeline. No, I don’t think he will do any of that, preferring to bow to the progressive left into the November election cycle. Biden’s support for Ukraine still lacks real punch. He calls for Putin’s removal but not for a Ukraine victory.
Investors sold stocks down 550 DJIA points the last day of March. The put/call ratio is rising. That means more bets on lower than higher stock prices. The market lacks conviction as inflation continues to rise. We are nearing the seasonal stock market peak around April 15. Expect continued high prices for nearly everything, except perhaps stocks.
