Breaking: California Votes Reparations For African-Americans -- March 30, 2022

Mideast heats up: Gulf oil producers seek US military support against Yemen attacks. Link to Charles Kennedy. Several story lines here. How bad is it? The UAE is asking Israel for help in convincing the US to help. Okay.

Uinta: Crescent Energy closes $690 million acquisition of EP Energy Uinta assets. Source. At the time of the announcement, February, 2022, the total cash deal was said to be $815 million. The Uinta is tracked here. BusinessWire:

• 145,000 contiguous net acres
• $690 million / 145,000 = $4,750 / acre
  
• 30,000 boed (~ 65% oil)
• $690 million / 30,000 =$23,000 / boepd

Drought:

from earlier today --

Lake levels:

• Lake Mead: link here.Low. Really low.
• Lake Powell: link here. Low. Really low.

Now this, from the EIA: electricity at California's hydropower plants in 2021 was almost 50% below the 10-year average. In the Pacific Northwest, hydropower generation was almost 15% below the 10-year average. Full report here.

Drought, April 1, 2022, Sierra Nevada:

• California's all-important April 1 water measurements: Sierra Nevada snowpack at 38% of long-term average
• despite a massive late-December storm;
• but then the state's driest January through March on record;

The Biden Surge -- Why Now? March 30, 2022

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. 

The Biden Surge -- Will One Million Bbls Of "New" Oil Per Day Make A Difference -- March 30, 2022

The Biden Surge is tracked here. 

That's the million-dollar question, or as we used to say, the $64,000-question: will one million bbls of "new" oil per day make a difference?

This takes me back to a "not-ready-for-prime-time" post, February 19, 2018.

Buried in that post is a link to (I suppose it's the most recent) March 8, 2022, EIA short-term energy outlook. That means the analysts took into consideration Putin's War. 

Look at the "World Liquid Fuels Consumption" graphic:

• 2020: 92 million bpd the year of the plague
• 2021: 97 million bopd
• 2022: 101 million bopd
• 2023: 102.5 million bopd

Then look at the "World Crude Oil and Liquid Fuels Production" graphic:

• 2020: 94 million bpd
• 2021: 96 million bopd (demand-supply deficit of one million bpd)
• 2022: 102 million bopd (demand-supply deficit of one million bpd)
• 2023: 102.5 million bopd

Some argue the demand-supply deficit will be much larger. 

Earlier today, it was being argued that global supply is already short three to four million bopd on supply. OPEC+ does not have enough spare capacity to make up the shortfall, even with Iran. 

That "summer of '22" graphic at that link is pretty startling.

At this moment my thoughts: a release of one million bopd from the SPR is a wash. It could have a huge short-term (six months) psychological impact, but long term (one year) it won’t amount to much.

We've had this discussion before. Saudi is not going to let oil get below $80 / bbl, and may in fact move quickly to keep it from dropping below $90 / bbl. I have trouble believing that OPEC+ would react quickly to the Biden Surge but they will be watching closely. 

Bottom line:

• global consumption / global demand: 100 million bpd
• the Biden surge: one million bpd; one percent
• the Keystone XL: in round numbers, one million bopd

The Biden Surge -- Officially Announced March 31, 2022

Updates

April 11, 2022: the SPR release announced by President -- "smoke and mirrors."

April 6, 2022: week 0.

April 5, 2022: jet fuel, east coast, soaring.

April 4, 2022: futures. And, here.

April 3, 2022: futures. Days in storage.

April 2, 2022: commentary. Production: US, Saudi, Russia.

April 2, 2022: the graphic.

April 1, 2022: RBN Energy weighs in. 

March 31, 2022: one big Rube Goldberg debacle. 

March 31, 2022: Day Zero -- the Biden Surge.

March 31, 2022: the Biden administration is in deep trouble. Huge, huge release announced; how much might Americans see in savings at the gas pump? From President Biden himself: "The SPR release could cut anywhere from 10 - 35 cents a gallon, but it depends on how much allies release." The allies can't come close to releasing anything like the US promises to release.

March 31, 2022: it is now being reported that President Biden will release one million barrels of oil from the SPR on a daily basis for the next six month. WTI over night had dropped to $100/bbl (or thereabouts) but is now back up to $103/bbl. We've talked about this before, why a release of SPR oil could have a paradoxical effect on the price of oil.

Original Post 

I assume everyone saw the sell-off of oil today -- March 30, 2022.

The buzz is that the administration will release a million bopd for an extended period of time, and, at the same time, offer rebate coupons to help with high gasoline prices at the pump. 

There are so many story lines here, but we now have a new tag: the Biden Surge, just as we had the Saudi Surge tag when Saudi Arabia, 2014 - 2016, flooded the world with oil in an attempt to "break" (bankrupt) US shale. 

This is the post where updates for the Biden Surge will be tracked.  

Will it make a difference?

• March 31, 2022: unlikely to be enough. Reuters. 
  
• March 30, 2022.

Why now?

• March 30, 2022.

Data points of interest to be followed monthly for the next six months, baseline, March 31, 2022:

• US production of crude oil: 
• baseline: pending
  
• days of supply of US crude oil:
• baseline: 26.6 days; almost four weeks;
  
• amount of distillate in storage -- percent relative to 5-year average:
• baseline: -16.0% (that's a minus sign)
  
• refiners percent of operating capacity:
• baseline: 92.1%
  
• US imports of crude oil,
• US imports from Russia; tracked here.
  
• US exports of crude oil, EIA link:
• baseline, December, 2021: 3.452 million bopd
  
• US exports of finished motor gasoline, EIA link:
• baseline, December, 2021: 941,000 bopd
  
• destination of US crude oil exports; EIA link:
• baseline, December 2021, monthly, in 1000's of bbls: more complete list here; top ten destinations:
  
• Brazil: 11,944
• Canada: 26,436
• China: 14,345
• India: 25,061
• Japan: 18,538
• Korea, South: 18,082
• Mexico: 43,160
• Netherlands: 16,082
• UK: 10,725
• France: 5,766

Political analysis:

• The energy transition is dead. Tracked here. 
  
• ESG is dead, too. Tracked here.

 

Three New Permits; Seven Permits Renewed -- March 30, 2022

Gasoline demand: GasBuddy keeps telling us, almost daily, how much gasoline demand is picking up compared to last year, and, yet, the EIA data is not corroborating GasBuddy's statistics. Something doesn't add up. From today's weekly EIA data:

The "slap": one of the highlights of the Academy Awards the other night was Reba McEntire. I'm re-watching her performance and then reminded of the "crassness" of the penultimate award presentation Truly, truly sad. Everything "good" about the show was completely forgotten after the "slap." Pretty sad.

Lake levels:

• Lake Mead: link here.Low. Really low.
• Lake Powell: link here. Low. Really low.

No GoM leases through 2023: Biden administration. This tells me all I need to know how serious the "crude oil" shortage really is. 

US LNG export: already draining US natural gas supplies and lifting prices. Overseas shipments of shale gas are replacing Russian supplies in Europe and boosting prices at home. But no new GoM leases per the Biden administration. Source.

US petroleum inventories, source. But no new GoM leases per the Biden administration.

Summer draws are going to be epic. Source. The market is already short three to four million bopd on supply. OPEC+ does not have enough spare capacity to make up the shortfall, even with Iran. 

Dumb and dumber. And no new GoM leases through 2023 per the Biden administration. Like canceling the Keystone XL, one dumb decision after another.

Investing: I'm going to have to reconsider my plans to diversify out of oil. LOL

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. 

For investors: this is outstanding -- it's a two-fer.

• first of all, it makes these on-shore permits all that more valuable; and,
• Big Oil is not wasting money on CAPEX in the Gulf of Mexico; will result in greater FCF.
• as a reminder, XOM just spent big bucks to drill a DRY hole off Brazil
  

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

Update on Murex Borstad wells, Patterson 280 rig: here. All explained.

Active rigs:

$107.40	3/30/2022	03/30/2021	03/30/2020	03/30/2019	03/30/2018
Active Rigs	34	14	44	66	60

Three new permits, #38859 - #38861, inclusive:

• Operator: Petro-Hunt
• Field: East Tioga (Burke County); 
  
• Comments:
• Petro-Hunt has permits for three Setterlund wells in East Tioga, SESW 34-159-94, 
• to be sited between 30 FSL and  265 FSL and 1520 FWL;

One permit canceled:

• 35683, Liberty Resources, Albertson, in Mountrail County;

Seven permits renewed:

• Enerplus (4): an Addax, a Camel, a Genet and a GNU permit, all in Dunn County
• RimRock Oil & Gas (3): three Two Shields Butte permits in Dunn County;

North Carolina Certainly Looks Like Ground Zero For EV Production In The US -- March 30, 2022

Although it's difficult to keep up with new developments, and impossible to confirm everything's accurate, I do have a rudimentary "scorecard" keeping track of the the three major components for EVs. 

Today, it was announced that VinFast will be building EVs in North Carolina with first delivery scheduled for 2024. Links everywhere including: https://www.foxbusiness.com/markets/vietnamese-carmaker-to-build-electric-vehicles-in-north-carolina.

Elsewhere it is being reported that VinFast will use Nvidia chips. NVDA is well off its highs even as US Congress is going to lavish the semiconductor chip sector with financial incentives, yet to be finalized, but they're coming. 

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. 

For the record, I am diversifying out of fossil fuel. I am not selling my current holdings but will add very little new fossil fuel assets and will concentrate on technology.

RMDs

Updates

January 12, 2023: regional bank provides update. 

August 9, 2022: changing age to age 75 years old?

August 9, 2022: the "new" rules, still up in the air --

• Forbes: not yet finalized, but likely they will be;
• gobankingrates: "horribly complex"
• Yahoo!Finance: a real mess;

April 4, 2022: Investopedia -- the rules now.

December 14, 2021: Forbes -- the rules now.

March 30, 2021: tea leaves suggest the "72" age will be increased to 75. The only question is whether Congress will get it done this year or next. This year is mid-term elections; now or never.

RMDs

Original Post: April 7, 2019

Baby boomers. Richest generation in US history.

Greatest generation: the parents of the boomers. The greatest generation: the first generation to leave money to their children, the boomers.

The baby boomers: 1946 - 1964.

I was born very, very early in the boomer generation.

I will start taking RMDs from IRAs soon -- not this year, not next year, but soon. Once we start taking RMDs, we will take RMDs for 26 years. And I'm at the beginning of that bow wave of those taking RMDs; I was among the early boomers.

I will most likely re-invest those RMDs.

But Uncle Sam will start to collect taxes on those RMDs.

We don't hear much talk about that, but my hunch is that by the time the peak of that bow wave hits, let's say ten years from now, the amount of money Uncle Sam collects from taxes on RMDs will not be trivial.

I thought about that (RMDs) when I read the Barron's headline and part of the story: the bull market could last another decade. 

World's Best Surfing, 2017

NASCAR Wheel Changer -- How Hard Can It Be? March 30, 2022

You had one job. 

Bubba Wallace's NASCAR  crew suspended four races for loose wheel. 

Yes, I saw that live. There is one ... one, count them -- lug nut -- just one lug nut on a NASCAR wheel -- and one was not tightened, resulting in a wheel coming off Bubba Wallace's car last weekend, another DNF for the driver. 

Well, I suppose three out of four ain't bad. 

*************************
Biggest Story At The "Oscars"

Well, it would have been Apple. Financial Times, paywall.

But not to be. 

Top story stolen by "the slap."

Regardless, it's a huge story:

After a movie year often light on crowds, the Academy Awards named an unabashed crowd-pleaser, the deaf family drama “CODA,” best picture Sunday, handing Hollywood’s top award to a streaming service for the first time in a ceremony that saw the greatest drama when Will Smith strode onstage and slapped assaulted Chris Rock.

Sian Heder’s “CODA,” which first premiered at a virtual Sundance Film Festival in winter 2021, started out as an underdog but gradually emerged as the Oscars’ feel-good favorite. It also had one very deep-pocketed backer in Apple TV+, which scored its first best picture Academy Award on Sunday, less than three years after launching the service.

It also handed another near-miss defeat to Netflix, the veteran streamer that for years has tried vainly to score best picture. Its best chance, Jane Campion’s “The Power of the Dog,” came in with a leading 12 nominations. It won one, for Campion's direction.

Netflix has been around for decades: no "best picture Oscar."

Apple TV+: two, maybe three years: first "best picture Oscar."

 *****************************
The Movie Page

It is absolutely amazing how much content for so little money is now available. It blows me away.

Basic cable, no bundling. Hulu. Amazon Prime. Firestick. Apple TV+. And I guess we get some Disney with the Hulu subscription. 

My evening pretty much runs like this:

• 4:00 p.m. - 7:00 p.m.: with Sophia -- flashcards, Duolingo, biking, reading, some writing (journal), Legos, piano, Bat Cave, hoverboard, maybe an episode of Psyche with Sophia;
  
• 7:00 p.m. - 10:00 p.m. Perry Mason re-runs
• 10:00 p.m. -- 1:00 a.m. Movie night, every night -- last night, Midnight in Paris

Obviously the movies are in the background, while I'm blogging and/or reading.

Now today, over at Literary Hub, Beth Parker's 14-month-long communion with Robert Ebert. Takes two minutes to read and provides some nice movie suggestions. 

Another suggestion, just found it last night: Ramen Heads, Osamu Tomita -- ranked #1 ramen in Japan three years running. First question, how does one even top the list one time in all of Japan, not to mention three years running. This is my third "ramen movie." The Clint Eastwood spaghetti western ramen movie is still the best. I'm not sure where it streams; I wasn't on Hulu but easily found it again this morning, but forgot to note "network." Whatever. IMDB.

Can't remember where "unconditional love" showed up in one of the movies. I misheard "unconditional" and thought I heard something else. Unrequited love, unconditional love, uncompleted love, unknown love, unbelievable love, unquestionable love, unlikely love, unending love. Most interesting: uncompleted love.

Weekly EIA Petroleum Report -- March 30, 2022

Link here.

• US crude oil in storage decreased by a modest 3.4 million bbls last week.
• US crude oil in storage now stands at 409.9 million bbls, 14% below the five-year average and at least twice that amount needed in current environment based on days of supply in storage;
• US crude oil imports averaged 6.3 million bopd (yawn), down by 227,000 bopd from the previous week;
• US crude oil imports averaged 6.4 million bopd, 11.9% more than the same four-week period last year;
• US refiners are stepping up their game; now operating at 92.1% of their operable capacity
• distillate fuel inventories increased by 1.4 million bbls last week; still 16% below the five year average
• jet fuel supplied up was up 39.1% compared to same four-week period last year.

Finance -- Economy -- Rambling -- March 30, 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. 

Jobs:

• private payrolls rose by almost half a million; topped expectations --- yeah, that was the headline; LOL:
• estimate: 450,000 jobs
• actual: 455,000 jobs
• so, yes, headline technically correct; but more accurate, "in line"
• giving the Biden administration a little extra help with this headline
• perhaps this should be the headline:
• job growth in the U.S. private sector has decelerated in every month since December, when nearly 800,000 payrolls returned in a single month

GDP, 2021: story here.

• for all of 2021, the nation’s gross domestic product — its total output of goods and services — jumped by 5.7%, the fastest calendar-year growth since a 7.2% surge in 1984 in the aftermath of a brutal recession.
• previous estimate was a 7% jump
• the writer downplays it, but a drop from 7% to 5.7% is not trivial
• a 23% downgrade, as it were
• the "small" downgrade (23%) reflected a smaller increase in consumer spending and fewer exports, both of which could worse going forward
• this strengthens the argument for those who see stagflation around the corner
• but look at that: strongest calendar-year growth since 1984 when US coming out of a brutal recession
  
• having said that, the post-Covid surge has not yet begun

EU energy crisis: Germany warns of natural gas rationing

Proxies: developing a list of one ticker for each sector as a proxy of overall trend

• Big Oil: CVX
• shale: DVN
• rail: UNP
• auto/EV: F
• semiconductor: up for grabs; perhaps AMD by default;
  
• chip foundry: TSM
• graphic cards: NVDA
• midstream: SRE
• value: BRK-B
• wow factor: AAPL

Old people and Covid: okay to get additional booster. Starting to lose count, but those that need to know, know

More later: taking Olivia to school

Two Wells Coming Off Confidential List; What's Oil Doing? March 30, 2022

Watch this space: RMDs.

Essay: if you have time for just one essay today, read today's "Ross Rant" sent to me by a reader;

• pretty much something for everyone
• I think "Ross" was too "negative" on Biden; not "hard enough" on the EU
• I think he forgets that "no one" pays attention to Biden, except for the gaffes
• the gaffes telegraph what Biden is really thinking 
• as far as giving away classified information, the Russians already know
  
• humanitarian crisis already in Poland, next Germany; Macron watching

Bill Ackman:

• has annualized 17%, net of fees, over the last eighteen years - source;

Ukraine:

• food basket to much of Europe
• half of the food for the World Food Program comes from Ukraine
• 2022-2023: Ukraine will become a net importer of grain - source;

Sanctions starting to bite:

• first real signs of well-head production declines are starting to be seen; source;
  
• one-two punch:
• some countries will quit buying from Russia; others will take up some of that slack
• production in Russia: relies on foreign expertise, equipment: that's a much bigger obstacle
• analogy: US supply chain issues the past 24 months
• now Russia: the supply chain issues writ large
• we will soon see that Russia relies on rest of world much more than world relies on Russia
• unsold oil forces Russian operator to cap pipeline flows; source;  
• fields will start to cut back on production
• risk of losing shut-in wells;
  

Oil, data points:

• OPEC+ now forecasts 600,000 bopd surplus 1Q22; previously, one million
• first 27 days of March: OPEC crude oil exports fell on average 363,000 bopd; averaged 21.421 million bopd
• Saudi looking to raise May crude prices to Asia to new record levels;
• if so, OPEC basket record: $110 going back to 2012; OPEC Basket;
• this speaks volumes about all those stories about all that cheap Russian oil getting to China, India;
• my hunch: Saudi knows all about Russia's need for foreign investment to keep oil flowing
• proxy for US shale: DVN
• up 6 cents yesterday
• up 72 cents in pre-market trading today
  

Oil:

• Brent: up 2.8%; up $3.12; trading pre-market at $113.30;
• WTI: up 3.1%; up $3.23; trading pre-markeet at $107.50
• Note: what's "oil doing?"

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Back to the Bakken

Active rigs: 

$106.90	3/30/2022	03/30/2021	03/30/2020	03/30/2019	03/30/2018
Active Rigs	34	14	44	66	60

Thursday, March 31, 2022: 47 for the month, 156 for the quarter, 159 for the year

• None.

Wednesday, March 30, 2022: 50 for the month, 159 for the quarter, 159 for the year

• 38547, conf, Ovintiv, Wisness State 152-96-16-21-21H, Westberg, no production data,
• 38293, conf, CLR, Springfield 11-8HSL, Brooklyn, no production data,

Tuesday, March 29, 2022: 48 for the month, 157 for the quarter, 157 for the year

• 37860, conf-->loc/drl, CLR, Clear Creek Federal 10-35H2, Westberg, no production data,

RBN Energy: crude oil prices, drilling activity and the new energy-world order. 

Just a few years ago, when the Shale Revolution had matured into the Shale Era, the world settled into a nice groove, with crude prices generally rangebound between $40 and $70/bbl. As the U.S. looked to assume OPEC+’s role and evolve into the world’s swing supplier of oil, ramping up production when prices rose and slowing it down when they fell, it seemed reasonable to expect that market-driven responses would help maintain stability. Well, things haven’t turned out that way. 

COVID, the emphasis on ESG, a hydrocarbon-averse administration, and Russia’s war on Ukraine combined to put “reasonable expectations” in the trash. An entirely new set of expectations is emerging, and few metrics explain it better than today’s different-as-can-be relationship between crude oil prices and the U.S. rig count, as we discuss in today’s RBN blog.