Investing -- Idle Rambling -- March 10, 2022

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

From MarketWatch, twelve dividend stocks paying at least 3.5% that are well-suited for high inflation. These companies are expected to produce rapid growth for sales and earnings, and have high dividend yields well-covered by cash flow.

The twelve.

Oil and gas:

• Equitrans Midstream (ETRN)
• Devon Energy (DVN)
• Pioneer Natural Resources (PXD)
• Phillips 66
• XOM

Real estate:

• EPR Properties
• Realty Income Corp (O)
  

Home Building:

• MDC Holdings (MDC)

Other:

• Merck & Co
• VF Corp
• Huntington Bancshares
• Cracker Barrel Old Country

*************************************
Free Cash Flow

This was perhaps the most interesting item I read all day.

Wall Street's 2022 free cash flow estimate for AAPL is the same as combining the free cash flow for the following:

• XOM
• CVX
• COP
• PXD
• FANG
• DVN
• MRO
• OVV
• OXY
• HES
• APA

AAPL's net cash is $80 billion vs the other eleven companies with new debt of 177 billion.

What wasn't said:

• the list of eleven oil companies are trading at/near their 52-week highs due to a most peculiar set of events that most feel is not sustainable;
• AAPL is well off its 52-week high, as folks rotate out of tech and into energy, particularly oil. 

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

Hoping They Release 260 Million Barrels Of Oil From The SPR -- March 10, 2022

I can hardly wait to see the reaction of politicos and mainstream media tomorrow morning.

Previously posted:

A reader suggested I check in on Steven Hayward over at PowerLine together. 

Shortly after that was posted, this was released by Senators Markey and Heinrich:  

This legislation would also provide relief to Americans by advancing the direct the near-term sale of the more than 260 million barrels of oil by 2023 that are in the Strategic Petroleum Reserve.

Holy mackerel! Folks get excited when 50 million bbls of oil is released from the SPR. I wonder what they will think when five times that amount is released.

I think this is fascinating.

I'm not going to go through it again, it gets tedious, but a release of oil from SPR is generally followed by an increase in the price of oil.

Note: I am not suggesting any direct cause and effect between releasing oil from the SPR and an increase in the price of oil. All I'm saying is that in general, when oil is released from the SPR, the price of oil goes up, not down.

I am really, really hoping they go ahead with this sale. I would like to see if my hunch is correct: that the release of crude oil from the SPR will be followed by an increase in the price of oil if nothing else is done. Again, I'm not implying a direct cause and effect. Just saying there will be an increase in the price of oil.

A Lot Of "Free Advertising" For EVs Coming Out Of The White House -- How Are They Doing? March 10, 2022

I track EVs here.

From an earlier post:

It appears the White House, via the press secretary, is telling Americans:

• it's going to get worse ...
• it's going to stay worse for a long time ...
• cardigan sweaters won't work this time ... 
  
• the high price of gasoline is due to Russia invading Ukraine ...
• the answer to the high price of oil is more renewable energy ...
• to transition to renewable energy we need Saudi Arabia to produce more oil ...
• until Saudi Arabia produces more oil, we need to release more crude oil from the SPR ...
• those folks driving Teslas do not have to worry about the high price of gasoline ...

So, I was curious. With all this "free advertising" I was curious how the EVs were doing. But instead of looking at Tesla, I looked at the other three first: RIVN, LCID, and RIDE.

Today:

• RIVN: down over 6%; down almost $3; closed at $41 vs 52-week high of $180;
• LCID: down over 4%; down over $1; closed at $24 vs 52-week high of $58;
• RIDE: flat today; closed at $2.34 vs 52-week high of $18;

And then this story from Bloomberg: Rivian's $117 billion wipeout has turned some into skeptics -- Wall Street’s embrace of Rivian Automotive Inc., last year’s electric-vehicle startup darling, is waning already as the company has lost about $117 billion in market value in just four months.

Analysts are paring back their expectations for this once-hyped stock ahead of Rivian’s fourth-quarter results, which are due after the market close on Thursday. At least four analysts have lowered their price targets this month by an average of 40%.

So, I was curious. Are these three "different" than Tesla?

So, let's check TSLA.

TSLA closed down 2.4%; closed down $21; closed at $838;

• after hours, closed down another 0.75%, down another $6.
• TSLA's 52-week high is $1,243.

So, all this "free advertising" and incredibly high gasoline prices, investors are very, very skeptical about EVs, not just the newest, smallest startup. 

My hunch: high commodity prices are going to mess with margins for these EV manufacturers.

I'm Just A Spectator -- This Is Going To Be Fascinating -- March 10, 2022

IN DRAFT.

For the record, I've pretty much quit reading any "energy" story with a headline that begins....

• what you need to know about high prices (oil and any other commodity) .....
• why it costs to much to fill your gas tank ...
• what the president needs to do to bring down the price of crude oil ...
• here's how Biden could bring oil prices down ....

I personally think this is fascinating. It appears the White House, via the press secretary is telling Americans:

• it's going to get worse ...
• it's going to stay worse for a long time ...
• cardigan sweaters won't work this time ... 
  
• the high price of gasoline is due to Russia invading Ukraine ...
• the answer to the high price of oil is more renewable energy ...
• to transition to renewable energy we need Saudi Arabia to produce more oil ...
• until Saudi Arabia produces more oil, we need to release more crude oil from the SPR ...
• those folks driving Teslas do not have to worry about the high price of gasoline ...

So, I'm a spectator. It will be absolutely fascinating. The minority party needs to sit back and let the majority party solve this problem. 

You know, President Johnson knew it was "over" when Walter Cronkite "broke" with US policy on Vietnam. I don't think we're quite there, but give it another two weeks, maybe four weeks, and there will be very few local news stations that will not be reporting the price of gasoline as the lead story. It may already be  happening for all I know. When that happens, it's all over.

For two years, "we" did everything remotely -- due to Covid. It looks like the fastest way to bring down the price of gasoline is to quit using the part needed for transporation. Go back to doing as much as possible remotely. 

Again, US shale has 9,000 permitted locations to drill according to the White House.

• There are 765 active rigs -- unidentified source; some will say more, some less, but it's in that ballpark.
• 9,000 / 765 = 12 wells.
•  One rig can drill two wells / month.
• That works out to a six-month inventory.
• This is March. Six months from now it's September, and it's over. 

Let the majority party sort this out. 

It is pretty amazing. There really is enough oil but somewhere along the line someone made the wrong decision:

• in Canada,
• in Mexico,
• in Venezuela.

Speaking of Canada, I have not seen one story about Just-In Trudeau in the last several weeks, if it's already been that long.

US Crude Oil, Petroleum In Storage -- March 10, 2022

IN DRAFT

A reader suggested I check in on Steven Hayward over at PowerLine together. 

Shortly after that was posted, this was released by Senators Markey and Heinrich:  

This legislation would also provide relief to Americans by advancing the direct the near-term sale of the more than 260 million barrels of oil by 2023 that are in the Strategic Petroleum Reserve. The sale of these barrels has already been mandated by law and are available to be deployed for the Strategic Petroleum Reserve’s stated purpose of helping protect American consumers from economic damage due to energy supply disruption. This would create a significant financial return for the American taxpayer, guard against short-term oil price spikes, and adhere to our statutory mandates.

It's important to note I'm not taking "sides" on this one. My "beef" is with folks not presenting the full picture. Right now most folks are only presenting the drop in crude oil in US inventory over the past few months. Some show only the crude oil in the SPR; some show "petroleum inventories" excluding the SPR. Some show only "crude oil" and others include "all petroleum products." They note it in the graphics but don't point it out, explaining the importance of what they chose to post.

There is also no analysis of oil / petroleum products in SPRs around the world.

Most of the graphics, as noted above, show only the last pew months which includes some record high inventories. See the third graph below which is non-SPR crude oil in commercial storage measured in number of days of storage which I think is very helpful in putting things into perspective. 

There are two huge data points that no one seems to talk about:
pre-2007-pre-shale and post-2007-post-shale; huge difference; and,
the amount of pipeline and storage that has been added, especially along the Texas coast 

Although some say we're quickly depleting the DUC inventory, that may or may not be true, but whatever DUC inventory is left is something we did not have prior to the shale revolution (DUCs). 

So, lots of variables.

Generally speaking, the president if releasing oil from the SPR in increments of 50 million bbls over one to two months

Link here. 

Link here.

Link here.

Three New Permits; Ten Permits Renewed -- March 10, 2022

Active rigs:

$106.00	3/10/2022	03/10/2021	03/10/2020	03/10/2019	03/10/2018
Active Rigs	31	15	55	67	59

Three new permits, #38823 - #38825, inclusive:

• Operators: Rimrock (2); Whiting
• Field: Twin Buttes (Dunn County); Dollar Joe (Williams County)
• Comments:
• Whiting has one permit for a Ryder Olson well in Dollar Joe, lot 2 section 1-155-97;
• to be sited 839 FNL and 2373 FEL
• Rimrock has permits for a Hoser well and a Loonie well, both on the same pad in SESE 21-147-92; 
• to be sited between 1168 FSL and 1178 FSL and between 217 FEL and 189 FEL

Ten permits renewed:

• NP Resources 6): three Barkland permits; one Roosevelt permit, and one Ellison Creek Federal permit, three in Billings County; three in Golden Valley County; southwest corner of the state:
• Petro-Hunt (4): four Noonan Federal permits in McKenzie County

XOM To Sell Bakken Assets? Bloomberg -- March 10, 2022

Updates

March 12, 2022: wow, wow, wow. See my figures below. They were my numbers; no other source except the blog. Now, look at what the "professional analysts" came up with over at SeekingAlpha:

• XOM produces: 138,000 boepd; I said: 135,000 boepd
• valuation of deal: $36,000 for flowing bbl; I said: $37,000

Later, 2:02 p.m. CT, Reuters: LOL. The Reuters article had nothing more than that -- Bakken assets for $5 billion. My data provided much more that. My data, right or wrong, at least a starting point.

Original Post 

$5 billion? Other than the headline and the $5 billion figure, all other data points are mine.

• 600,000 net acres?
• $8,000 / acre
• 135,000 boepd?
• $37,000 / boepd

More to come, I'm sure.  

Link here.

By the way, if any reader gets an offer from a landman, she/he will quote an offer in dollars / net mineral acre. 

A landman has told me that a better (?) method for a "mature" basin is an offer / quote in dollars / flowing boepd. 

If you don't have production data for your wells, and you are curious, let me know and I can provide most recent production. I probably don't have the time for a request for more than a dozen wells or so, from more than three or four readers. 

The other option is to ask the individual who offers you dollars for your mineral rights, ask her/him to provide the offer in a "per boepd" format.

Back to XOM and the Bakken.

Harold Hamm is salivating.

He just bought $20 million of his company's stock.

But XOM assets in the Bakken, $5 billion. But CLR:

• $20 billion market cap;
• $60 million  in cash
• debt: $7 billion
• operating cash flow: $4 billion
• XOM: 135,000 boepd x $40 / boepd = $8 million / day = $2 billion / year
  

*******************
AXP Raises Dividend

American Express to raise its 43-cent quarterly dividend to 52 cents. 

a 21% increase in its quarterly dividend.

**************************
The Players

PGA tournament starts today.

Rain delay. Bryson playing? A Saudi Sands casualty? He played this tournament last year.

**************************
Manslaughter? Two Years House Arrest

Link here.

"Felony manslaughter" reduced to "felony battery."

Sounds like the 77-year-old man needed to be taken out. He was known as a regular trouble-maker. Apparently defunding the police offers other solutions.

And people are upset Russia has detained American athlete found to be carrying hashish in her baggage.

Meanwhile, this guy, same charge, a single punch kills a guy, is given two years in federal prison followed by two years probation. But two years for killing a guy?

Motley Fool: On EVs -- March 10, 2022

I track EVs here. 

The Motley Fool: one EV stock to buy hand-over-fist; two to avoid like the plague. Interestingly enough, less than five minutes of casual research before seeing this article, I came to the same conclusion. 

I track Russia-Ukraine here. Goldman Sachs becomes the first large Wall Street bank to pull out of Russia. 

**********************
Ukraine - Russia

US "slams" Russia for atrocities of unimaginable "proportion."

Proportion. Are atrocities proportioned?

Whatever. I'm sure the Ukrainians are thanking the Biden administration for its support. 

Proportion. The war changed March 8-9, 2022, if the Ukrainians were not violating the Geneva Convention by any use of that hospital for military purposes, not even military command posts.

**************************
The Book Page

On this date in 1969, the best year ever for music, on a completely different note, Mario Puzo's The Godfather was published by G. P. Putnam Son's.

On a completely different note, read this essay, substituting "the greenies" for "the flat earthers." 

Ms Kelly introduced me to a new use of the archaic spelling of tendencies: tendences (line 7 in that essay). It might be a typo; apparently she has a history of typographical errors.

*************************
My LifePlan Is Still On Schedule

This plan has been tweaked over the years, but about 2007, I broke it down to 15-yeear increments. 

• 0 - 15 years old: primary education, Williston, ND.
• 16 - 30 years old: training for profession; preparing for life
  
• 31 - 45 years old: profession; life; raising a family
  
• 46 - 60 years old: preparing for retirement
• 61 - 75 years old (only three more years left): retirement; teaching three granddaughters to ride bicycles, and swim; teaching two to drive an automobile;
  
• 76 - 90 years old: sitting on the porch with Jan and Dave; watching two grandsons on Lake Flathead every summer;
  
• 91 - 105 years old: build a small museum on Montana lot for Oksol and Garcia memorabilia; plans already drawn up; architect will complete; grandchildren will complete if necessary.

Why I Love Blogging -- Reason #1 -- The Things Readers Send Me -- March 10, 2022

This is a must-read. Sent to me by a reader. From Wired. 

Link here.

Three things need to happen, and probably in this order, for any crackpot idea to take hold of the culture: (1) its nonthreatening introduction to the masses, (2) its legitimization by experts, and (3) overwhelming evidence of its real-world effects. In the case of the so-called simulation hypothesis, you could hardly ask for a neater demonstration.

Yes, I'm buying the book. Later: Amazon. One click. Done. Hardcover. $22.

It's 500 pages long. I need something to get me through the Biden administration.  

Wow, only another couple of weeks and I'll be able to read outside at the pool, every morning. Spring in north Texas can't come fast enough.

Now, Do You Understand Why US Shale Doesn't Want To Generate More Profits? -- March 10, 2022

Windfall profits tax. 

This is not rocket science. 

Biden's Permitorium Program.
Pocahontas' windfall profits tax.
Pipeline bans.
Courts vacating permits.
Approve pipeline projects in purgatory for decades.

So, How Bad Was It? February's CPI, Other Economic Data -- March 10, 2022

Headlines from CNBC online (I've quit watching it on television):

• CPI: inflation rose 7.9% in February as food and energy costs push prices to highest in more than 40 years;
• excluding food and energy, core inflation rose 6.4%; in line with expections
• highest since 1982; in 1982 the USAF was telling me I would be moving from northern California to North Dakota
• the assignments officer thought he was sending me on a hardship tour; I was headed home after being gone for ten years
• headed back to God's country; the only choice the assignments office gave me: Grand Forks or Minot. Even I knew that was an easy choice.
  
• look at this wage inflation: inflation-adjusted, workers paychecks fell 0.8% in February, contributing to a 2.6% decline over the past year
• not only are wages not keep up with inflation, it appears wages would hardly be keeping up in a non-inflationary world
• investors lapping non-investors
• Dow futures fall 400 points after talks between Russia and Ukraine falter

Biggest decision today: with Dow futures falling 400 points, should I buy on margin today? I will have the cash by Monday next week. And it won't be a trivial amount. Decisions, decisions.

Back to Linda Ronstadt, Blondie, and ABBA. 

Wow, this is good. "My Back Pages."

XOM Has Partial Solution For More California Oil Production; California Says "No" -- March 10, 2022

Article for the day: some much needed substance on the Russian oil debate, link to David Messler. More of the article here.

• Biden’s decision to ban Russian oil imports to the U.S. had a predictable effect on oil prices, but the long-term impact on the U.S. oil industry is less clear.
• While the volume of oil imported from Russia wasn’t significant, the quality of the oil was as it was used to improve the API gravity of the throughput from U.S. refineries.
• To replace this heavy oil, the U.S. is now looking to Iran, Saudi Arabia, and Venezuela, not countries that the U.S. would want to rely on in a crisis.

XOM: solution for more US oil production. California says "no." This story first came to light several years ago. Several links, and there are probably more. A google search of "Santa Barbara" on the blog will probably find those posts, but this is probably all you need:

• June 24, 2015; production shut down "temporarily"; that was seven years ago; still shut down. LOL. 
• June 5, 2015: buried in this post. 
• August 18, 2021: just last year, the map.
  

Huge light bulb went on: there are two reasons US SecEnergy, US Transportation Secretary and President Biden seem to tone deaf when it comes to high gasoline prices:

• one: two of the three are simply nuts; the third one is from Delaware
• second: Biden's poll numbers are incredibly low; incredibly low; without their cult base who absolutely hate Big Oil their numbers would be even worse; they need to keep their cult base and the only way? Keep bashing Big Oil, no matter how expensive oil gets
• link here.

New Hampshire voters: surprised and frustrated that heating oil now costs more than $5 / gallon. Perhaps time to re-think a) hydro electricity from Canada; 2) natural gas from Pennsylvania.

Ford EV: previously posted. Reminder. Ford's new mega campus in Tennessee and battery plants in Kentucky. 

Bait and switch: Rivian faces lawsuit after price hike on R1T, R1S preorders. Link here. 

************************
Saudi Arabia -- Diesel Buy

Updates

Later, 10:55 a.m. March 10, 2022: see comments. Reader has figured it out, why Saudi would be buying diesel fuel.

Just a thought on Saudi's buying 1.2 million to 4.6 million bbls of low sulfur diesel for delivery to several ports in Saudi Arabia by mid-March to April. 

In years past, when the Saudi's talked about putting more oil on the market, the usual joke was they were trying to market a very low grade, high sulfur crude they
have been unable to sell. 

Apparently, it would make a very low grade road tar! Maybe, just maybe, they are going to try to blend this "Gunk" with low sulfur diesel and get a marketable product. We'll have to wait and see. 

Original Post

Diesel: rare buy tender from Saudi Arabia. Paywall at Bloomberg. For those who have forgotten, Saudi Arabia is the country with a lot of oil; and, Saudi has also been spending a gazillion dollars on building new refineries. And so, what are they doing now? Buying diesel. Something smells. No paywall at Mint.

• buying 1.2 million to 4.6 million bbls of low sulfur diesel for delivery to several ports in Saudi Arabia by mid-March to April
• does one suppose that Saudi is getting ready to dump huge amounts of oil on the global market;
• those tankers run on low-sulfur diesel
• Saudi is usually an exporter of diesel
• Saudi would not have a lot of storage capacity for this diesel; they are going to use it in the short term;
• but traders say Saudi will have trouble finding this amount of diesel, and it will be quite expensive
• markets are sharply backwardated
• bears watching

 ********************************
More

Japanese SPR: will lower requirement from 70 days to 66 days.

• for US, back-of-the-envelope:
• US: 700 million bbls in SPR
• US demand: 20 million bbls per day, but could be cut back significantly if necessary
• let's say 15 million bopd US demand
• 700 / 15 = 46 days
• at 20 million bopd = 35 days
• commercial storage: 450 million bbls
• 27 days of US crude oil in non-SPR storage
• 450 / 27 = 17 million bopd demand
• I wonder if US SecEnergy knows this off the top of her head, as they say
  

Fidelity: Johnson family wealth surges to $48 billion on back of trading boom, link here;

• no word yet from Pocahontas on windfall profits tax
• two largest investment bankers: Fidelity and Schwab
• some numbers
• global stock market, by value: $95 trillion
• Fidelity: $5 trillion
• Schwab: $3 trillion

Odds and ends to clear out the in-box:

• EIA hikes Brent forecast; link here:
• just one month ago, EIA forecast Brent to average $83 / bbl
• now, one month later (March, 2022): one-year forecast, average: $105 / bbl
• for March, the forecast is an average of $117 / bbl
• for 2Q22: $116
• for 2H22: $102
• for 2023: $89 (Brent)

Thanks to Duolingo, I can now read the subtitles. The women, unfortunately, are distracting.

• The 43-year-old genius behind the $3-billion language app, Duolingo. I love it. Link here.
  
• at 24 year of age, he was already a millionaire: CAPTCHA
• phrase coined by Carnegie Mellon University research team
• CAPTCHA was a pain; a lot of folks couldn't handle (see GEICO robot ad)
• he simplified it with two matching pictures
• Duolingo:
• a free app, ad-supported
• subscription plan available (which I pay for; it's worth it)
• market cap: $2.8 billion earlier this year
• what I find most remarkable: he too on one or two large language-teaching programs
• in technology, it seems no moat is wide enough
  

Spare capacity: a myth.

• OPEC agreed some months ago to increase production by 400,000 bopd month-over-month, rolling forward
• we all thought they would cheat, and we'd see 600,000 bopd
• until most recently, they had not been able to hit 400,000 bopd
• fourteen of the OPEC members have not been able to hit their quotas

Linda Ronstadt: I try every day to find a better video than this; so far unsuccessful. Observations:

• incredibly mediocre vocal and instrumental support
• smartest thing the producer did: told her to rise above the background support
• either that or the sound engineer pushed the levers in opposite directions
• a most unappealing outfit by the lead vocalist
• where did she come from? Simply incredible. When did she know she was something special?
• lots of cowbell, especially noticeable, starting at 1:24.
  

Quality Matters -- David Messler -- March 10, 2022

Article for the day: some much needed substance on the Russian oil debate, link to David Messler.

• Biden’s decision to ban Russian oil imports to the U.S. had a predictable effect on oil prices, but the long-term impact on the U.S. oil industry is less clear.
• While the volume of oil imported from Russia wasn’t significant, the quality of the oil was as it was used to improve the API gravity of the throughput from U.S. refineries.
• To replace this heavy oil, the U.S. is now looking to Iran, Saudi Arabia, and Venezuela, not countries that the U.S. would want to rely on in a crisis.
  

Wow, we've been talking about this for years. This is/was what the Keystone XL was all about. Heavy oil. Pretty amazing.

Now we are looking high and low for replacements in a lot of places with less than savory reputations, and some under U.S. sanctions currently. As I have explained in various places recently, oil companies need blending stock to improve the API gravity of the throughput from their refineries. As the BTU Analytics graph below shows, the major fracking basins that produce most of the ~9 mm BOPD that we rely upon, produce very little of this heavy oil. That’s just life.

What this means though is that we have to replace like for like in terms of API gravity oil, and once again therein lies the rub. Nations that the president is contacting to ease the strain on American motorists include: Venezuela, Saudi Arabia, and Iran. What is the likelihood of our "friends" in these far-flung places coming to our rescue?

Oh, oh: this is before the Russian ban which doesn't kick in until May, 2022, and before the current SPR release is completed (another 50 million bbls to be released from the SPR):

One Well Coming Off Confidential List Today -- March 10, 2022

Demand destruction, link here:

The anti-Cushing: lack of oil storage adds to Russia's woes. Perhaps best article this hour. Link here. 

Looking for a buyer: I guess the Russian tankers that got out of the Black Sea are unable to find buyers for their oil. Link here.

Saudi: buying "large quantity" of diesel. More to follow, but many, many story lines here. I'm not sure if folks understand the concept of "it doesn't matter what the price of the first barrel of oil is, what matters is the price of the last barrel of oil."

Never mind: it was so ludicrous yesterday, I did not post it. Today, UAE said they misspoke -- they won't raise oil production. Just got slapped down by Saudi Arabia. LOL. 

Oil:

• international oil traders are playing us. LOL.
• WTI: down $15 yesterday; up $5 today

*********************
Back to the Bakken

Active rigs:

$113.20	3/10/2022	03/10/2021	03/10/2020	03/10/2019	03/10/2018
Active Rigs	32	15	55	67	59

Thursday, March 10, 2022: 10 for the month, 119 for the quarter, 119 for the year
38128, conf, CLR, Dennis FIU 6-8H,  

RBN Energy: what will it take for Europe to give up Russian gas?

The fallout from Putin’s full-scale invasion of Ukraine has been multifold, with the human tragedy front and center. But it’s also reverberated across world economies as governments move to sanction Russia and corporations cut their ties with it. In a bid to minimize the impact on energy supplies and prices, the U.S. and its European allies have been grappling with how best to wean themselves from Russian crude oil and natural gas. That was relatively easy for the U.S. — the Russian import ban announced earlier this week by President Biden is likely to have only minor side effects. But the challenges for Europe are far greater due to its significant dependence on Russian supplies. If you’re stateside and trying to make sense of the market implications of all that — and trying to wrap your head around Europe’s energy infrastructure (and its approach to discussing energy volumes) — you’re not alone. In today’s RBN blog, we begin a look at what the European response could mean for the global LNG market.

Let’s start with the flurry of recent announcements, with the U.S., UK and European Union all moving to cut or curtail Russian oil and gas imports. The Biden administration on March 8 announced an immediate ban on Russian energy supplies into U.S. ports, including crude oil, LNG and coal. In concert with the U.S., the UK followed with its own plan — to ban all imports of oil and refined products from Russia but take a more phased approach, with the goal to end them by the end of 2022, given its heavier dependence on Russian oil. The UK’s plan does not include natural gas or LNG. On the natural gas side, however, the European Commission (EC), which represents the 27 countries in the European Union (EU), on March 8 announced plans to reduce imports from Russia — which make up 40% of Europe’s gas supply — by two-thirds by the end of this year. The plan echoed and built on elements of a plan outlined by the International Energy Agency (IEA) last week for the EU to reduce Russian gas imports by more than one-third within a year.

We recently dissected the impacts of a potential (now real) ban on Russian oil to the U.S. — in particular, the implications for U.S. refineries — in We’re Not Gonna Take It. Banning Russian supplies is a much bigger deal for Europe, however, especially when it comes to its natural gas requirements. So, we now turn our attention to the European gas situation, putting the EC/EU’s plan in the context of the continent’s gas market landscape, what the curtailments could look like and implications for the global LNG market, including exports from the U.S., given its increasing role as as marginal LNG suppleierin global LNG trade.