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The Biden administration last week canceled 7 leases on ANWAR in Alaska. The administration is further proposing a rule that will protect an additional 13 million acres in Alaska from drilling. They also have stopped all LNG from being transported by train which leave the only mode of transportation by truck. All while one of the nations largest trucking companies, Yellow, went out of business 2 months ago. And our strategic reserves have been depleted. What now?
I can’t help but think of Warren Buffet’s purchases of OXY and Chevron a year ago.
Meanwhile China stockpiling crude with cheap Russian oil.
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I wish I could articulate our national energy policy. I don’t think it’s doable.
Canceling the leases in ANWAR doesn’t bother me too much depending on what else is available. I don’t see “protecting” land as a bad goal for the country. But when that is compounded by other hindrances, I do wonder whether we really WANT to be more independent on energy.
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Sic transit gloria mundi (so shut up and get back to work) -
[quote quote=7683]I wish I could articulate our national energy policy. I don’t think it’s doable.[/quote]
It’s not doable because we don’t have an energy policy.
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My understanding of these changes is that the canceling of the leases was anticipated however the western leases were not. That is where the National Petroleum Reserve of Alaska is located. Work was well under way to develop these leases and the infrastructure, pumping stations and transfer lines connecting to the existing infrastructure. Gigantic oil and gas reserves especially in an emergency.
To me our energy policy is to drive up energy and electrical prices and create a crisis. I can’t help to wonder who benefits from all this and how much they they paid for the result.
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Investments in shorter development lead time energy sources, see shale, are constrained by supply chain issues, capital constraints and acreage availability. Production from shale investments are short tail. As production declines from these sources, the government is using policy uncertainty to depress investment in long lead projects. Good luck with that approach to constrained supply.
Here's a toast with one last pour, may it last forever and a minute more;
Good fortune seems to you have sung, to live and love way past long -
The US Strategic Petroleum Reserves (SPR) now stand at their lowest since 1983.
However, the SPR now holds just 46 days of supply, by far the lowest on record.
In May 2020, before the SPR depletion began, it held a record 92 days of supply.
The historical average is 65 days of… pic.twitter.com/9YF4So3igb
— The Kobeissi Letter (@KobeissiLetter) September 8, 2023
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[quote quote=7689]Investments in shorter development lead time energy sources, see shale, are constrained by supply chain issues, capital constraints and acreage availability. Production from shale investments are short tail. As production declines from these sources, the government is using policy uncertainty to depress investment in long lead projects. Good luck with that approach to constrained supply.
That would seem like a good pathway to rationing and price controls. All you need is a trigger.
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I think our greatest energy challenge is the mismatch between the oil we’re producing and our processing capabilities. Prior to the shale revolution (1970s and 1980s), we evolved processing capabilities that was capable of refining the dirtiest, heaviest crude available…because we thought that was the future of oil.
What the shale revolution wrought was very light, sweet crude. We therefore import dirty, heavy oil to process, and export our light sweet crude for processing abroad.
The entire American oil industry needs to retool so we can refine our own oil.
Incidentally, as America weans itself off of China and re-shores and friend-shores manufacturing, we need a second industrialization policy to account for more processing, at least doubling the size of our industrial plant. Steel, copper, bauxite, aluminum, etc….
Audaces fortuna iuvat
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Mick, it might be a bit more complex than crude grades. Here are some “facts” for you to consider.
China makes $20,000 EV’s. US manufacturers make $50,000 EV’s.
The UAW knows this. Hence a bias to four day work weeks and outsized wage expectations.
EV’s require 40% less labor than internal combustion engines.
Biden’s energy policy has the potential to significantly hollow out living wage manufacturing employment. Perhaps like coal miners they can become programmers, design AI chips? Big problem for union support and the industrial Midwest voters.
EV sales are below expectations. What increases the adoption rate given the limited market for low range vehicles? Unlike Granholm, most don’t have staff to illegally park in charging spaces until they arrive.
And knowing this, our government voluntarily restricts our fossil fuel industry that offers competitive wage rates to domestic workers.
Personally I’m not a big believer in climate change. Presuming to understand change cycles that are tens even hundreds of millennia long with 150 years of data seems implausible. Hell we don’t understand the birth of the universe and we can actively observe events from millions of years ago. Instead I view it more as a global over population challenge. But that’s a discussion for another day.
Here's a toast with one last pour, may it last forever and a minute more;
Good fortune seems to you have sung, to live and love way past long -
What is going on in Alaska is political, not based on anything remotely economic in response to DC politicians and their donors. Domestic and foreign.
As I understand some of these moves, there is nothing that I can see that benefits the voters other than higher costs with no end in sight. Voters are required to accept green politics with no dissent. And the kicker is that there is no data on voter mandate. They are just doing it.
I also believe the Saudi’s want $100/barrel for the time being. So does the administration I guess.
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OPEC just said that global oil markets will face a massive supply shortfall next quarter.
They expect a supply shortfall of more than 3 million barrels per day.
If OPEC is correct, it would result in the biggest inventory drawdown since 2007.
Voluntary production cuts by OPEC… pic.twitter.com/9I1ZPWrzU8
— The Kobeissi Letter (@KobeissiLetter) September 13, 2023
For your consideration. American production can’t ramp up quickly.
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