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Biden’s Latest Plan To Curb Soaring Gasoline Prices Angers Drillers

You know your going to have a bad day when you wake up with a tank in your front yard

U.S. President Joe Biden outlined a series of steps the White House is taking to reduce high prices at the pump. The U.S. President called on Congress on Thursday to make American oil companies pay fees on wells from leases they have not used in years and on acres “that they are hoarding without producing,” as part of a plan to respond to “Putin’s price hike at the pump.” While the Administration announced a massive release of 180 million barrels of oil from the Strategic Petroleum Reserve (SPR) over six months, the largest ever in history, it did not spare criticism toward the domestic producers. According to the U.S. Administration, oil firms are not ramping up production fast enough to fill the gap in global oil supply and ease the upward pressure on U.S. gasoline prices. “Still, too many companies aren’t doing their part and are choosing to make extraordinary profits and without making additional investment to help with supply. One CEO even acknowledged that, even if the price goes to $200 a barrel, they’re not going to step up production,” the White House said. U.S. shale producers, apart from keeping a capital discipline, are constrained by supply chain bottlenecks in ramping up production RIGHT NOW, as the Biden Administration wants.

For example, even if ConocoPhillips decided to pump more oil today, the first drop of new oil would come within eight to 12 months, CEO Ryan Lance told CNBC earlier this month. 

According to the U.S. Administration, however, the U.S. oil and gas industry “is sitting on more than 12 million acres of non-producing Federal land with 9,000 unused but already-approved permits for production.” “Companies that are producing from their leased acres and existing wells will not face higher fees. But companies that continue to sit on non-producing acres will have to choose whether to start producing or pay a fee for each idled well and unused acre,” the White House said today. The U.S. industry has already signaled its frustration with the talk of the leases and the pump-more-right-now calls. “The talk about price gouging is tiresome. Discussion of federal leases and those leases being unused without an honest discussion about all the constraints and regulatory issues to drill is also unhelpful,” an E&P executive said in the quarterly Dallas Fed Energy Survey earlier this month. “The regulatory environment is not friendly,” another executive noted. Biden also said he is calling on Congress “to pass his plan to speed the transition to clean energy that is made in America.” Biden will also issue a directive authorizing the use of the Defense Production Act “to secure American production of critical materials to bolster our clean energy economy.” NN: They would have you believe that the energy crises has been adverted and gasoline prices and crude oil prices will plunge. And other than the knee jerk reaction oil prices will hit $150 a barrel. Reality is the ha ha ha record breaking release of contaminated shit oil from the strategic stock pile is a sick joke. Its less than 1% of total global demand. And the market is now short 5 million barrels a day and ready inventories are at a 20 year low and sinking by the day… But enjoy their little ditty as long as it lasts… I give it 3 to 6 months……

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5-year to 30-year Treasury yield curve inverts

* U.S. 2/10 yield curve flattest in more than two years

* Other parts of Treasury yield curve are also inverted

* U.S. 2/10 OIS curve is also inverted

*The 5 year to 30 year yield cure inserted for the first time since 2006………

The U.S. Treasury yield curve, as measured by the gap between five and 30-year yields, briefly inverted on Monday for the first time since early 2006, as a sell-off in the bond market resumed, raising concerns about the risk of recession. Investors pay closer attention to the U.S. 2/10 year yield curve for recession signals, but the 5/30 inversion has increased the chances of the former inverting as well. The U.S. 2s/10s yield curve was last at 12.7 basis points , the flattest since March 2020. The 2/10 inversions have preceded the last eight recessions, including 10 of the last 13, according to BoFA Securities in a research note. U.S. five-year yields jumped to 2.673%, their highest since December 2018 and were last down 2 basis points at 2.5529%. U.S. 2-year yields, which are closely tied to the Federal Reserve’s rate outlook, also soared, rising to their strongest level since mid-April 2019. They were last up 2.7 basis points at 2.3256%. Yields on longer-dated maturities, on the other hand, such as those U.S. 10-year notes and 30-year bonds declined. While parts of the yield curve, namely U.S. 5/10 and U.S. 3/10 inverted last week, the slide of the gap between five- and 30-year maturities of the biggest bond market in the world into negative territory raised concerns the Fed’s hawkish approach to tackling inflation might hurt growth. NN: I have never ever seen the yield curve invert without a crashing stock market within 12 months and a full blown recession within 24 months…. All i can say is incoming.

 

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Biden Oil Plan Hinges on 1970s Reserve With Troubled History

Inside The Strategic Petroleum Reserve As U.S. Seeks Oil-Reserve Overhaul To Ease Mandatory Drawdowns
(Bloomberg) — The Biden administration’s mammoth drawdown of the Strategic Petroleum Reserve depends on an aging network of pipelines and oil storage tanks with a problematic past.The reserve, the world’s largest emergency supply, was created in the aftermath of the Arab oil embargo of the early 1970s, but its distribution system was designed with a 25-year lifespan in mind and previous test sales have revealed problems that could hinder the ability to move oil quickly.

Tanks have collapsed and pipes have corroded at the reserve, which holds 568 million barrels of oil in underground salt caverns at four storage sites in Texas and Louisiana.

“It is an aging facility, the government has undertaken some upgrades, some of them are still in process,” said Ron Minsk, a former energy aide to presidents Barack Obama and Bill Clinton. Minsk added that the reserve should be able to handle the 1 million barrels a day withdrawal that Biden is seeking. Congress in 2015 approved a $2 billion program to modernize the reserve, citing concerns about its age and condition. But a 2020 report by the Energy Department’s inspector general found that program “may not fully address” Congress’s concerns with the age and condition of the oil reserve. Specifically, the department canceled a plan to increase the reserve’s distribution capabilities out of concern it didn’t have the congressional funding authority, and instead opted to move forward with a life extension project. The Energy Department has estimated that project, which includes upgrading and replacing pumps, motors, piping, and and other major components, would be completed in 2025, the report said. A 2016 Energy Department analysis found the SPR could only effectively distribute, at most, 2.56 million barrels per day, and potentially as little as 280,000 barrels per day, depending on the scenario. The White House announced Thursday it would release roughly a million barrels of oil a day from the reserves over a six month period beginning in May, for a total of as much as 180 million barrels. It would be the largest drawdown in the history of the reserve, one that underscores White House concerns about rising gas prices and supply shortages following Russia’s invasion of Ukraine. “Given that there are four locations, I do not anticipate an issue,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. There are currently five oil terminals that handle the four caverns’ supply, so deliveries will be manageable, he added. While there is no question the Energy Department will be able to withdraw the oil, the wear and tear of the extraction process, which essentially involves injecting brine into the old salt domes to draw out the oil, could leave some of them unusable in the future, said Kevin Book, managing director of ClearView Energy Partners. “They can get it out. The question will be what can they use some of the caverns for when they are done,” Book said. “Every time you draw down there is wear and tear, and using it as hard as it’s been used recently means whatever plans they carried out from the modernization program may require additional modernization.” A 5 million barrel test sale in 2014 uncovered bottlenecks in the system, and in 2005, when the department sold 20.8 million barrels to cushion the market after Hurricanes Katrina and Rita, it took 20 days to start moving oil. But traders have said they haven’t seen any issue with previous releases ordered by the Biden administration to address high gas prices. It isn’t just logistical challenges that traders in the market are worried about. Buyers have reported quality issues with SPR oil in recent years. American energy giant Exxon Mobil Corp.’s purchase of reserve oil in 2018 “extremely high levels” of hydrogen sulfide. In some cases, the gas level was 250 times higher than government safety standards allow. Shell Plc, Macquarie Group Ltd and PetroChina Co. had similar complaints. While hydrogen sulfide occurs naturally in crude, producers often take pains to remove it because it can put workers at risk and corrode pipelines and refineries. Many pipelines have capped the permitted amount of hydrogen sulfide, or H2S, at 10 parts per million. NN: Its shit oil to begin with. A heavy crude full of sulpher. Add the Hydrogen sulfide contamination that exceeds refinery limits and its a pile of crap no one wants….Like so much in decaying America today its gives the illusion of a reserve…. What good does it do to supply crude that can not be refined????

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Russia’s Gazprombank to set up convenient payments for gas in roubles

(Reuters) – Russia’s Gazprombank on Thursday said it would provide conditions to allow convenient payments for Russian gas in roubles, Tass news agency said. Gazprombank told Tass it has the right technology and experience to quickly and expertly fulfill a state order to switch to roubles for gas payments which President Vladimir Putin signed earlier in the day. NN: this is not going to go away. And the EU is flirting with fire. If they keeppushing Putin will cut off their gas… Why should he supply Europe with gas for free,

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Russia sets deadline for rouble gas payments, Europe calls it ‘blackmail’

BERLIN/LONDON (Reuters) – Russian President Vladimir Putin is demanding foreign buyers pay for Russian gas in roubles from Friday or else have their supplies cut, a move European capitals rejected and which Berlin said amounted to “blackmail”. Putin’s move, via a decree signed on Thursday, leaves Europe facing the prospect of losing more than a third of its gas supply. Germany, the most heavily reliant on Russia, has already activated an emergency plan that could lead to rationing in Europe’s biggest economy. Energy exports are Putin’s most powerful lever as he tries to hit back against sweeping Western sanctions imposed on Russian banks, companies, businessmen and associates of the Kremlin in response to Russia’s invasion of Ukraine. Moscow calls its Ukraine action a “special military operation”. In televised remarks, Putin said buyers of Russian gas “must open rouble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered starting from tomorrow,” or April 1. “If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences. Nobody sells us anything for free, and we are not going to do charity either – that is, existing contracts will be stopped,” he said. It was not immediately clear whether in practice there might still be a way for foreign firms to continue payment without using roubles, which the European Union and G7 group of states have ruled out. His decision to enforce rouble payments has boosted the Russian currency, which fell to historic lows after the Feb. 24 invasion. The rouble has since recovered much lost ground. Western companies and governments have rejected any move to change their gas supply contracts to change the payment currency. Most European buyers use euros. Executives say it would take months or longer to renegotiate terms. Payment in roubles would also blunt the impact of Western curbs on Moscow’s access to its foreign exchange reserves. Meanwhile, European states have been racing to secure alternative supplies, but with the global market already tight, they have few options. The United States has offered more of its liquefied natural gas (LNG) but not enough to replace Russia. Germany Economy Minister Robert Habeck said Russia had not been able to divide Europe and said Western allies were determined to not be “blackmailed” by Russia. Berlin said it would continue paying for Russian energy imports in euros. France’s economy minister Bruno Le Maire said France and Germany were preparing for a possible scenario that Russian gas flows could be halted. Le Maire declined to comment on technical details linked to latest Russian demands for rouble payment. The order signed by Putin creates a mechanism for payments to be made via special foreign currency and rouble accounts at Gazprombank, with the foreign money to be converted into roubles via currency auctions on a Moscow exchange. Putin said the switch would strengthen Russia’s sovereignty, saying the Western countries were using the financial system as a weapon, and it made no sense for Russia to trade in dollars and euros when assets in those currencies were being frozen. “What is actually happening, what has already happened? We have supplied European consumers with our resources, in this case gas. They received it, paid us in euros, which they then froze themselves. In this regard, there is every reason to believe that we delivered part of the gas provided to Europe practically free of charge,” he said. “That, of course, cannot continue.” Putin said Russia still valued its business reputation. “We comply and will continue to comply with obligations under all contracts, including gas contracts, we will continue to supply gas in the prescribed volumes – I want to emphasise this – and at prices specified in existing, long-term contracts,” he said. Several European companies with Russian contracts had no immediate comment or did not immediately respond as Putin’s announcement sent further shivers through the market. European gas prices have rocketed higher in recent months on mounting tension with Russia raising the risk of recession. Soaring energy prices have already forced companies, including makers of steel and chemicals, to curtail production. Poland’s PGNiG, which has a long term contract with Russia’s gas pipeline export monopoly Gazprom that expires at the end of this year, had no immediate comment. The Polish Climate Ministry also had no immediate comment. The Polish contract with Gazprom is for 10.2 billion cubic metres of gas a year and is denominated in dollars. Italian energy firm Eni, another major European buyer of Russian gas, also had no comment. It bought around 22.5 bcm of Russian gas in 2020. Its contracts with Gazprom expire in 2035. Germany buyers of Russian gas – Uniper, RWE and EnBW’s and VNG – did not immediately respond to requests for comment. NN: The EU accuses Putin of blackmail because he wants to be paid for his oil and gas in his currency. Especially since the EU is practicing extortion by seizing sovereign assets. And is closing his payment facilities. This  will not end well?/

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Gazprom preps halt to Europe gas supplies: report

Russian energy giant Gazprom is looking at options for halting gas supplies to so-called “unfriendly” countries. That’s according to a report in Russia’s Kommersant newspaper. It says Gazprom is evaluating the consequences of a complete stoppage. The news comes after President Vladimir Putin said “unfriendly” nations would soon have to pay for gas in roubles. That’s raised fears of an energy supply crunch in the EU, which depends on Russia for about 40% of its gas. Thursday (March 31) is the deadline for Gazprom and Russia’s central bank to draw up plans for such payments. However, a Kremlin spokesman said this week that customers would not have to make the switch that day. Germany, Russia’s largest gas client, has said it will continue to pay in euros or dollars. Moscow’s list of “unfriendly” countries covers those that have imposed sanctions. However, some, including the U.S. and Norway, do not buy any Russian gas. A German government spokesman said this week that Berlin had received assurances it could still pay in currencies other than the rouble. NN: The anti keeps rising…. I think Europe forgets Biden’s promises of US gas to the rescue is a cruel joke. And Russia is willing to call their bluff and go all in. Their is no gas anywhere to replace Russian supplies to Europe….

 

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Ukraine Update: Zelenskiy Says Russia Is Targeting Agriculture….. Russia not retreating from Kiev, Chernihiv

TOPSHOT-UKRAINE-RUSSIA-CONFLICT

Russian forces are deliberately trying to damage Ukraine’s agriculture sector, a main source of income, President Volodymyr Zelensky told Dutch lawmakers. Troops have placed landmines in fields and agricultural equipment has been destroyed, he said.  Russians are “doing everything to ruin our agriculture potential and to provoke a food crisis not only in Ukraine but in the world,” Zelenskiy said.  Global food security faces “serious threats” including the potential loss of production in Ukraine, according to Syngenta, the Swiss seed and fertilizer business owned by ChemChina. Ukraine and Russia account for more than a quarter of the world’s annual wheat sales.

Russia not retreating from Kiev, Chernihiv

Ukrainian President Volodymyr Zelensky claimed on Thursday that the Russian troops are not withdrawing from Kiev and Chernihiv voluntarily but are being “pushed back” by his country’s defense forces.In a new video address, Zelensky warned that “we can see that, at the same time, there is an accumulation of the Russian troops for new strikes in the Donbass.” He also briefly spoke about the negotiations between Kiev and Moscow, saying that “yes, there is a negotiations process which is ongoing but these are still words so far. No specifics.” The talks between Kiev and Moscow should continue on April 1 via a video call. Meanwhile, earlier in the day, the United Kingdom accused Russia of the continued shelling of Chernihiv despite the Eurasian country’s claims it will reduce the number of its troops in that area. NN: their is no peace, their will be no piece until the Ukraine is bombed into the dark ages

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Oil prices tumble on reports U.S. will release reserves

Oil prices slumped early Thursday, as traders absorbed reports that the U.S. is planning a hefty release of crude reserves, hours ahead of an OPEC+ meeting outcome

WASHINGTON — President Joe Biden is preparing to order the release of up to 1 million barrels of oil per day from the nation’s strategic petroleum reserve, according to two people familiar with the decision, in a bid to control energy prices that have spiked as the U.S. and allies have imposed steep sanctions on Russia over its invasion of Ukraine The announcement could come as soon as Thursday, when the White House says Biden is planning to deliver remarks on his administration’s plans to combat rising gas prices. The duration of the release hasn’t been finalized but could last for several months. The people spoke on the condition of anonymity to preview the decision. High oil prices have not coaxed more production, creating a challenge for Biden. The president has seen his popularity sink as inflation reached a 40-year high in February and the cost of petroleum and gasoline climbed after Russia invaded Ukraine. Crude oil CLK22, -4.86% on Wednesday traded at nearly $105 a barrel, up from about $60 a year ago. Still, oil producers have been more focused on meeting the needs of investors, according to a survey released last week by the Dallas Federal Reserve. About 59% of the executives surveyed said investor pressure to preserve “capital discipline” amid high prices was the reason they weren’t pumping more, while fewer than 10% blamed government regulation. The steady release from the reserves would be a meaningful sum and come near to closing the domestic production gap relative to February 2020, before the coronavirus caused a steep decline in oil output. The Biden administration in November announced the release of 50 million barrels from the strategic reserve in coordination with other countries. And after the Ukrainian war began, the U.S. and 30 other countries agreed to an additional release of 60 million barrels from reserves, with half of the total coming from the U.S. According to the Department of Energy, which manages it, more than 568 million barrels of oil were held in the reserve as of Mar. 25. NN: A 1 million barrel a day release from the strategic stock pile is the wrong oil, in the wrong place, at the wrong amount. Instead of opening up US producers anti oil Biden administration is playing stupid. The oil market is short 3 to 5 million barrels per day. This is a nice publicity stunt but little else. It will not work for long…. not a lasting solution…… Buy the dip….

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Biden Administration Signals No Gulf Of Mexico Leases Through 2023

The Biden Administration appears not to plan to hold any lease sales for offshore oil and gas areas in the Gulf of Mexico, according to a draft budget proposal analyzed by Bloomberg. In the budget plan for the fiscal year 2023, the U.S. Administration expects oil and gas rents and bonuses of just $25 million in the fiscal year 2023, compared to $395.5 million for fiscal year 2022. The drop of $370 million, Bloomberg notes, is the typical haul for the government from two oil and gas lease auctions in the Gulf of Mexico. “Estimates related to future leasing are placeholders only, in recognition of the dynamics of pending litigation and appeals, as well as the Interior Department’s ongoing development of the five-year plan for the offshore program,” Interior spokeswoman Melissa Schwartz told Bloomberg. The Biden Administration has delayed or stopped work on federal oil and gas leases and permits following a court ruling that struck down the Administration’s “social cost of carbon” metric to account for climate risk when holding lease sales or issuing permits. On Tuesday, the American Petroleum Institute (API) and the National Ocean Industries Association (NOIA) released a new analysis outlining the potential economic consequences of delaying the Department of the Interior’s five-year program for leasing in the Gulf of Mexico. The next five-year offshore leasing program must be in place by July 1, 2022, but is well behind schedule, and no offshore lease sales can be held unless DOI implements a new program, the API and NOIA said. A delayed five-year program could jeopardize an average of $5 billion in U.S. GDP, they added. “A delay in the offshore oil and gas leasing program could mean nearly 500,000 barrels per day produced here in the US. At a time of geopolitical uncertainty and rapidly rising energy prices, Gulf of Mexico oil and gas production is more important than ever,” NOIA said. NN: Biden has been talking shit. They are not going to give up their antioil agenda,,, Look at what they do not what they say. People i have spoken to says the administration is slow walking any and all permits related to oil leases, drilling and pipelines….. Coupled with the barrels dropping out of the market on a daily bases i expect a big crunch in the next 6 months…

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EIA Weekly Petroleum Data for the week ending March 25

 

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.4 million barrels from the previous week. At 409.9 million barrels, U.S. crude oil inventories are about 14% below the five year average for this time of year. Total motor gasoline inventories increased by 0.8 million barrels last week and are about 0% above the five year average for this time of year. Finished gasoline and blending components inventories both increased last week. Distillate fuel inventories increased by 1.4 million barrels last week and are about 16% below the five year average for this time of year. Propane/propylene inventories increased by 0.1 million barrels last week and are about 23% below the five year average for this time of year. Total commercial petroleum inventories increased by 1.8 million barrels last week.

U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ending March 25, 2022 which was 35,000 barrels per day more than the previous week’s average. Refineries operated at 92.1% of their operable capacity last week. Gasoline production decreased last week, averaging 9.1 million barrels per day. Distillate fuel production increased last week, averaging 5.1 million barrels per day.U.S. crude oil imports averaged 6.3 million barrels per day last week, down by 227,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.4 million barrels per day, 11.9% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 656,000 barrels per day, and distillate fuel imports averaged 155,000 barrels per day.

Total products supplied over the last four-week period averaged 20.7 million barrels a day, up by 8.1% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.8 million barrels a day, up by 1.1% from the same period last year. Distillate fuel product supplied averaged 4.2 million barrels a day over the past four weeks, up by 2.4% from the same period last year. Jet fuel product supplied was up 39.1% compared with the same four-week period last year.