Archive for March 4th, 2022

It’s time to reprioritize energy security and independence by unleashing U.S. oil & gas production!

March 4, 2022

Objectives: (1) Stop funding Putin’s aggression with Russian oil & gas revenues (2) Replace U.S. and European countries’ Russian purchases with U.S. oil & gas (3) Support the Canadian oil industry (4) Dampen domestic (and world markets) inflation rates

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A prior version of this post was published on February 22, 2022

Some necessary background …

Remember when Trump made the U.S. a net exporter of oil products?

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Focus on the dark line on the above chart … it depicts the U.S. trade deficit (or surplus) in crude oil & liquid fuels (mostly natural gas condensate, LNG).

Biden inherited a trade surplus … exports of crude oil & oil products exceeded the total imports of those goods. (Note that the dark line dipped below zero on the y-axis in 2020).

But, in 2021, imports of crude oil turned upward and the trade surplus evaporated.

Said differently, the U.S. was net energy independent in at the end of the Trump administration … but, thanks to Biden’s policies, we’re net energy dependent again.

How did Biden do it?

By signing executive orders aimed at crippling (and ultimately killing the domestic U.S. oil industry) by essentially stopping new oil exploration and shackling oil production and transport (e.g. the XL Canada to U.S. pipeline)

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Bottom line, Biden’s decision to curb U.S. oil drilling, production and transport has literally fueled inflation (<=pun intended) and, to a large extent, funded Putin’s war chest.

On the latter point, let’s run the numbers…

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In 2020, the U.S. produced 11.3 million barrels per day (MBPD) of crude oil and liquified natural gas (LNG).

But, the U.S. consumed 17.2  MBPD … and had to import 5.9 MPD (the red number above).

Note that Russia was the 2nd largest producer in the world @ 10.1 MBPD … and exported 70% of its production (6.9 MBPD).

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Let’s dissect the U.S. imports…

In 2021, U.S. oil imports increased to 8.5 MBPD.

Where is that oil coming from?

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About 1/2 comes from Canada … an ally that is close to the U.S. geographically and politically.

So what did Biden do to cause this unfortunate turnaround?

For openers, killing the XL pipeline project.

The implication: less oil from Canada … and higher costs (and environmental risk) by trucking the crude oil that is supplied to the U.S. by Canada.

Why screw our allied neighbors?

Even more important, the U.S. has been importing almost 600,000 barrels per day of oil from Russia.

Annualized at current rates, that’s 217 million barrels of oil bought from Russia each year.

What’s the dollar value of those purchases?

Let’s look at oil prices …

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Rounding up a bit to simplify the arithmetic, crude oil prices are now at about $100 per barrel.

So, 217 million barrels has a market value of over $21 billion each year. That’s money flowing into Putin’s coffers.

Note: That’s about $9 billion more than the oil would have been market valued on Biden’s inauguration day.

How’s Putin using that windfall?

It’s reasonable conjecture that a fair chunk of it is funding Russia’s aggression against Ukraine.

So, what to do?

If Biden wants to send a clear signal to Putin, he should “follow the data” and rescind his oil-crushing executive orders … TODAY.

While not immediate, that move can cut the flow of funds to Putin by reducing our direct oil purchases from Russia … and by, perhaps, depressing global oil prices.

It’s time for another Operation Warp Speed … one that unleashes the U.S. oil & gas industry.

There aren’t a lot of options, Joe.

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If you think that climate control should trump energy security, read Greater threat to the planet: Putin or climate change?

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Greater threat to the planet: Putin or climate change?

March 4, 2022

Putin is the clear & present danger … so, unleash our oil & gas industry, Joe.
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Analytically speaking, risk assessment boils down to a couple of decision criteria:

> How immediate is the threat?

> How severe are the potential consequences?

> How likely are the consequences?

> How might mitigation change the odds?

Applying these risk assessment criteria, the answer to the headlined question is pretty clear (to me).

Putin is demonstrably a clear, present, proven and potentially nuclear danger.

Just turn on your TV to watch the slaughter of innocent people and the destruction of a nation and a culture.

Putin is maniacal (and probably crazy), determined and has planet-destroying nuclear weapons that he might use if he’s cornered.

The climate change threat is murky (sorry, but the science is even more unsettled than it is on Covid) and prospective (decades off) … with asserted and uncertain long-term consequences.

Bottom line: If the choice is binary, Putin must be stopped ASAP.

If the Putin and climate threats need to be “balanced”, then the scale should be tilted to stopping Putin.

Putin is clearly the more immediate threat.

Climate control can wait.

Let’s go through the decision criteria…

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THREAT ASSESSMENT

Immediacy 

The Putin threat is happening now.  Just turn on your TV right and watch the slaughter of innocent people and the destruction of a nation and a culture.

Even climate control zealots concede that its potential “existential threat” from climate change is decades away.

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Severity

Climate control zealots say that, unchecked by draconian mitigation, the planet will be a degree or two warmer in 50 years … and that’s enough to end life as we know it.

Let’s assume that’s true.

Some might argue that the Putin threat is localized and contained.

The Ukraine invasion is tragic and sad, but c’mon man, it’s just Ukraine.

Once Putin gets to the Polish border, the U.N. and NATO will stop him in his tracks.

Might be true.

But, what if Putin is, in fact, crazy and, when cornered, he starts lobbing nukes.

Suddenly, we’re looking at a level of global destruction that gives climate change a run for its money.

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Likelihood

So, what is the likelihood that climate change puts planetary existence at risk?

Sure, clean energy beats dirty energy and a green mindset makes sense.

But, the case for climate change ending the planet’s existence is a reach.

It is disputable whether the “data is clear” and that “the science is settled” on the consequences of climate change.

For details, see 16 Reasons why I’m lukewarm on climate change

Personally, I’d score the likelihood of Putin unleashing planet-destroying nukes higher than a climate existential threat.

Update: Yesterday, Ukrainian President Volodymyr Zelensky issued a dire appeal for help as Russia’s attacks across the country intensified and the Russians set afire the largest nuclear power plant in Europe.

In Zelensky’s words: “The end of the world has arrived.” 

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Mitigation

This is where things get dicey.

I’m confident that the U.S. will become increasingly green.

That’s a good thing.

I believe that American ingenuity and technology will — sometime and somehow over the next 50 years — provide game-changing climate control remedies.

But, as Igor Sechin, CEO of Russia’s state-owned Rosneft, has warned

Some ecologists and politicians urge for a hasty energy transition, yet it requires an unrealistically fast launch of renewable energy sources and faces issues with storage, ensuring reliability and stability of power generation. WSJ

And, to this point, climate control initiatives in the U.S. and Europe have largely been virtue signaling … outsourcing fossil fuel production to other countries (most notably Russia!) … putting the U.S. and Europe in a vulnerable security position.

Question: Is Russian oil cleaner than U.S. or Canadian oil?

Answer: Nope!

So, the pivotal question is how to “mitigate” the Putin threat.

Well, maybe Putin can be jawboned and shunned … and will come to his senses and rein in  his destructive tendencies.

My opinion: Odds of that are essentially zero.

Maybe the rational Russian people will rise up and take him out.

I’m betting the under on that one, too

Let’s try diplomacy.

How’s then been working out?

Not to worry, NATO will ultimately use military force to contain the Putin risk at the Polish border.

English translation: NATO nations will encourage the U.S. to kick Putin’s ass when the time comes

Military containment might be doable … but, at a high cost with the incumbent risk that a crazy Putin starts a nuclear war.

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So what to do?

Oh yeah, there are other Putin-mitigating options.

How about draining his war-mongering financial resources with sanctions?

In logic-speak: necessary but not sufficient … especially since the current sanctions explicitly rule out any transactions related to the flow of Russian oil.

According to Biden’s Deputy National Security Advisor Daleep Singh:

“To be clear, our sanctions are not designed to cause any disruption to the current flow of energy from Russia to the world” Source

Say, what?

Bottom line: The only non-military way to cripple Putin’s war mongering is to use U.S. oil & gas production as a geo-political strategic tool … the geo-political strategic tool!

As one right-leaning pundit puts it:

Putin’s power comes from money, most of Putin’s money comes from oil and gas.

It stands to reason that if you’re trying to punish him, hitting him in the wallet is the most effective way to do it.

So why would our President specifically exempt what is the best, most effective, and really only significant way to hurt Putin in way that might impact his behavior?

Of course, there’s an explanation…

Biden is boxed by his party’s far left climate control zealots.

Nonetheless, as we’ve said before:

It’s time to reprioritize energy security and independence by unleashing U.S. oil & gas production!

He has to do an objective risk assessment (see above), stiff-arm his parity’s uber-left loons, restore U.S. energy superiority by unleashing our oil & gas industry.

It’s as simple as that!

 

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