The Biden Surge is tracked here.
Why now, what changed? What prompted the Biden administration to release of one million bopd for an extended period of time and rebates for drivers to cushion the cost of gasoline at the pump?
So far, this is just a rumor, but it "feels real."
If the Biden administration does announce the Biden Surge, the first question is what prompted that now?
Obviously, the short answer is the mid-term elections.
Earlier, the administrations said the rise in the price of gasoline a) would be short-lived; b) would not cause all that much pain; c) if it did cause too much pain, folks could buy a Tesla.
My hunch is that the administration can now see that the rising price of gasoline a) will not be short-lived; b) that it will cause a lot of pain for those who plan to vote in November; and, c) the Tesla option is not an option at all.
So, what changed?
I'm too tired to go write much tonight, so I will address just one issue.
Everyone will argue if there will be buyers for Russian oil. Of course, there will be.
But sanctions on Russia are going to get worse, and for the most part have not yet begun to be felt. The fact is that Russian oil production is very much dependent on western technology and western resources. We won't see that impact for several months. But if you thought a shortage of toilet paper was a problem for Americans during the early days of the pandemic, the shortages that Russia begins to experience will make those toilet paper shortages pale in comparison.
No matter how much one sugar coats it, Russian production is going to fall significantly. And Russia is not like Kashagan or Libya when it comes to temporary losses in production.
This I did not know.
ReplyDeleteSince 2015, Congress has been selling the oil in the reserve to fund the deficit, in unpublicized sales. The U.S. Department of Energy has run at least seven sales since 2017, selling 132 million barrels, or about 18.2% of what had been in the reserve.
From Wiki.
And apparently the system will only allow minimum draw per day. Basically having little or no effect on the bigger picture
An announcement of one million bopd will get the attention of a lot of folks who really have no idea of what's going on.
Deleteyou're reading too much into it; they only have one handle to pull (the SPR) so they keep pulling it...
ReplyDeletei wouldn't assume that there's anyone in the administration that knows as much as you do... who is our energy secretary? the former governor of Michigan (because the automobile industry uses gasoline?)... before that, she held several other Michigan political spots, and was on the Obama transition team...degrees in law, French, & political science...before that, a small town beauty queen, a Hollywood wanna be, & a contestant on the Dating Game...
the others are probably even less qualified...
Thank you for your kind words. I will let the post simmer for awhile, and come back to it some time, perhaps. I'm not looking at how they arrived at the decision, although I will pursue that later, also, mentioning that the discussions must have been fascinating.
DeleteI'm looking at her comments from an oil investor's point of view.
So, lots of story lines. My problem is I cannot articulate my thoughts well; I'm often wrong; and, I lose energy trying to explain things. But this one is fascinating. I might come back to it.