June 24th, 2022

• American natural gas is the world’s most affordable & reliable green energy. TEA
• European countries are restarting coal power plants to meet base load energy demand now that Russian energy supplies are reduced and solar and wind can’t cover the base. Reuters
• President Biden’s Energy Secretary met with oil company CEOs to question them about gas prices. The Hill
• CA residents vote against enviro regs that would have restricted oil and gas development. WSJ

Over the last few decades, Europe has been a world leader in installing solar panels and wind turbines while meeting their base load demand through imported fuels from Russia. This allowed political leaders across the continent to pat themselves on the back and say, ‘We reduced our emissions.’ (and disregard the realities of global emission levels). President Biden is leading America to follow that model of giving up base load reliability for a feel good political moment.

But what does that European model look like today?

Russia is choking off the base load energy supply to Europe and demand isn’t disappearing so consumer prices are predictably skyrocketing. How are European leaders reacting? Rather than turning to natural gas, European countries are restarting coal power plants (the lowest cost fuel source).

How could this have been avoided?

A little planning and forethought from political leaders to recognize that base load energy supply has to be covered. This would’ve resulted in a greater investment behind reliable energy infrastructure like pipelines, processing facilities or import terminals.

After a year of President Biden’s attacks on natural gas including canceling or delaying numerous pipelines, natural gas use decreased and coal use rose. Rather than vilifying the natural gas industry the Administration should be embracing it as a solution to meet base load demand while reducing emissions to meet climate targets.

Bottom line: The energy crisis in Europe is a forewarning of what’s to come if President Biden continues to restrict American oil and gas production and jeopardize our energy security.

Energy Secretary Granholm met with oil company CEOs this week to discuss oil prices. Ahead of the meeting President Biden proposed several nonsense ideas that would potentially address symptoms but not the root cause of these record high energy prices. In other words, they would not actually solve anything.

One such proposal was that the President asked gas stations to lower their prices. In short, political interference in a competitive market is not a recipe for economic success.

Earlier in the week, the President also announced that he is considering sending gas cards to American families. Sounds enticing. After all, who doesn’t want “free” money? But will it actually solve anything? No. Likewise, a gas tax holiday would be nice in the short run but lowering the cost by $0.18 isn’t much when the national average rose by $2.61 since he took office. Neither proposal would address the policies causing the price increases.

Finally, President Biden called on oil companies to “justify their profits“, which is just another way of saying “government will do everything in its power to bankrupt you if you don’t do what we want.” Not a very friendly way to ask the industry for more investment, if you ask us.

To lower gas prices, one of two things needs to happen: supply increases, or demand decreases. Gas cards will not have any effect on supply, and will theoretically increase demand as people have extra money to gas up, take trips, etc. So this proposal from President Biden will likely increase demand causing prices to rise further. Just ask California Governor Newsom who is still struggling to implement a similar plan in his state from back in March.

Bottom line: President Biden’s gas tax holiday is a bandaid on a wound that needs stitches. And no, asking gas stations to lower their prices isn’t an effective strategy either.

California is commonly known for being on the progressive side of politics and generally being supportive of green-new-deal style policies. For example in 2020, nearly 60% of voters in Ventura County voted for President Biden.

So, it must have been a huge shock when well over 50% of voters in the county rejected the progressive initiative to restrict oil and gas development.

“The new rules would have threatened 2,000 or so workers whose jobs depend on the oil and gas industry. They also could have cost mineral rights owners up to $50 million in royalty and leasing payments, and local schools and public safety tens of millions of dollars in tax revenue.”

Once again this provides an example of people loudly talking about green-at-all-costs initiatives but when that cost is losing a job, paying higher prices, or reducing funding for their schools that support quickly evaporates.

Bottom line: The American people care about their jobs and their money more than paying the outrageous costs to support “green” policies.

After a seemingly endless climb, gas prices have finally started to stabilize and even decrease in some areas across the nation, as crude oil prices took a dip on the news that the federal reserve would be raising interest rates.

The national average currently sits at $4.92, down 8 cents from the $5 point we hit last week. Prices are expected to continue to slowly fall over the coming weeks, as gas stations sell the product they purchased a a higher price, replacing it with cheaper product being purchased now. Regardless, it’s important to remember that this relief is relatively minimal, and gas prices have climbed more than $2.50 since President Biden took office.

Nothing on the calendar for next week!