The Oil Situation
We went from abundance to a train wreck in two years. The Ukraine invasion just made it more obvious. Oil shortages will cause other shortages. There’s little time left to get it right. Here’s what we know…
Oil Price Time Line
Less than two years ago, the US produced so much oil that there was no place to put it.
WTI Crude traded negative, closing at -$37.63 on April 20, 2020.
The contract would literally pay you to take the oil, if you could provide storage.
Here are some milestone oil prices since then…
- $37 per barrel when Biden was elected
- $90 before Ukraine was invaded
- $122.29, down from a high of $130.50 on March 7, 2022
We blew through our all-time high gas prices on March 8.
By the time you read this, prices will probably be higher, still.
AAA updates their surveys daily.
The Oil Industry acknowledges inadequate production. That’s why the price keeps going up. Demand was low during the COVID lockdown. And supply never fully returned, because Biden’s Presidential campaign aggressively threatened the oil and gas industry.
“Those fears were justified as President Biden shut down leasing activities on his first day in office, and his leasing moratorium continues, despite a judge indicating that only Congress had the authority to approve not holding lease sales since Federal laws required the lease sales.” — The Institute for Energy Research (IER), March 10, 2022
The Effect On Russia
On the face of it, Russia wins. If an attack on Ukraine drives up the price of oil, that works out pretty well for Russia.
However, that’s not the way it played out.
Banks, insurers, and shippers are uneasy about exposure to Russian oil. Urals crude is reportedly offered at a record $18 discount, but buyers won’t take the risk.
Broadly speaking, the Russians can’t sell most of their oil, even at a discount. And deliveries to key locations, including the U.S., have dropped to zero.
On Both Sides Of The Same War
The U.S. briefly found itself “…funding the Russian war effort by continuing to import over 650,000 barrels of oil from Russia every day (about 8 percent of U.S. oil imports and 3 percent of oil consumption). At $120 a barrel that equates to $78 million a day from the United States to Russia alone. As the world’s third-largest oil producer providing more than 10 percent of global supply, Russia raked in $119 billion in resource revenues last year.” — IER, March 10, 2022
On March 07, Congress agreed to move ahead with legislation to ban Russian energy imports. The Biden White House quickly got ahead of that action…
Biden Bans Russian Oil
The White House
March 08, 2022…
“Today, President Biden will sign an Executive Order (E.O.) to ban the import of Russian oil, liquefied natural gas, and coal to the United States – a significant action with widespread bipartisan support that will further deprive President Putin of the economic resources he uses to continue his needless war of choice.”
As if from a different world, Biden’s announcement stated that…
- “U.S. oil and gas production is approaching record highs…”
- “Federal policies are not limiting the production of oil and gas.”
And he closed with his real intent…
- “…this crisis reinforces our resolve to make America truly energy independent, which means reducing our dependence on fossil fuels.”
That would shift our dependency from oil to rare earth minerals controlled by communist China and communist Russia. Very nice.
Can You Say Fungible?
In an eye-watering twist of logic, Biden proposes to replace Russian oil by buying oil from Russian allies.
Sources would include…
- Iran, with it’s catchy “Death To America” jingle.
- Venezuela, whose dictator jailed six U.S. oil executives from Citgo.
- Saudi Arabia, where the plus in OPEC+ basically means Russia.
What could possibly go wrong with that?
Diversion #1 – Putin Goes Nuclear
Nothing says global warming like a nuclear disaster. While Putin merely threatened nuclear war, he did order strikes on Ukrainian nuclear power plants.
Radioactive debris was disturbed at the infamous Chernobyl site.
And Russian troops managed to start a fire at Zaporizhzhia, the largest nuclear power plant in Europe. (No radiation released.)
The Kharkiv facility was shelled. And the South Ukraine nuclear power plant in Yuzhnoukrainsk is bracing for attack. — The Times of Israel, March 09, 2022
Diversion #2 – Care For Another Pandemic?
Here’s a surprise…
- Does the U.S. fund even more creepy bio-labs in Ukraine?
- Did the U.S. leave those creepy bio-experiments unsecured, when a war broke out?
Victoria Nuland seemed to warn of that awkward situation during her Senate testimony on March 08, 2022.
She confirmed, under questioning by Sen. Marco Rubio (R-Fla.), that the United States is protecting “biological research facilities” in Ukraine from the Russian army.
Wait. The U.S. is doing what?
In separate statements, responsible government authorities assured us that we’re not up for another Wuhan virus. They say U.S.-funded laboratories in Ukraine are not developing biological warfare weapons.
These laboratories are simply looking to prevent bioweapons and pathogens.
A Refreshing Solution
So, here’s the point…
Things are only really bad now.
If they also get complicated, some solutions won’t be possible at all.
For a simple, simple example, just assume that oil supplies are already choked off.
Here’s a partial list of the 6,000 products made from petroleum.
Yeah. You might have to do without those.
Huge problems are brewing beyond that, and Americans know it.
70% Favor Increased U.S. Oil and Gas Production — Rasmussen, March 07, 2022
Polls show North American oil is preferred.
A direct and reliable strategy proposes that we keep our oil and gas producers safe and just let them go back to work.
My favorite quote of this entire struggle comes from Tim Stewart, president of the U.S. Oil and Gas Association.
His answer to Biden: “Cut the crap and approve our permits.”
We are literally in the Fog Of War. No story is completely trustworthy.
Every lie carries enormous consequences.
This Recruiter’s View is obscured, but there are still some bedrock principles we can depend on.
Finding people who live those principles with clarity and will power is imperative.