Category Archives: markets

Yes, He Can

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Since Russia President Vladimir Putin—the man then-Presidential candidate Joe Biden (D) bragged was so afraid of him—invaded Ukraine, oil prices have gone up to levels not seen since the Obama years, even beyond the inflation levels Biden-Harris’ current war on our energy industry had already driven them: $105/barrel. Biden-Harris proclaimed last Thursday,

I know this is hard and that Americans are already hurting. I will do everything in my power to limit the pain the American people are feeling at the gas pump.

Jason Furman, one of ex-President Barack Obama’s (D) economic minions, claims—and he’s actually serious—

This is a world price and the president is largely powerless to do much[.]

Both men are being cynically disingenuous; Biden-Harris’ dissembling, though, given his position in our current government and on the world’s stage, is especially pernicious.

Our President actually could do quite a bit about oil prices for our nation and for our friends and allies; he could do quite a bit about energy prices generally, were he not in thrall to the “green” extreme Left.

He could, for instance, reopen the Keystone XL pipeline and work to get Canada to reopen oil flows from its end.

He could get out of the way of drilling leases on Federal land.

He could get out of the way of fracking for domestic oil and natural gas.

He could get out of the way of American exports of oil and liquid natural gas to Europe.

He could rescind the myriad anti-hydrocarbon regulations he enacted via Executive Order or that he had his several Cabinets enact through rules.

The list is really quite extensive.

Biden-Harris has moved to release oil from our strategic reserve, but that’s merely insulting in its puniness and in its use to distract from energy price inflation.

Instead, Biden-Harris is allowing energy prices, especially those for oil and natural gas, to rise rapidly, and that benefits no one more than it benefits Russia, which needs high oil prices to support its budget—especially during its assault on Ukraine.

I-Bonds

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For a partial solution to our nation’s high and growing inflation rate, Joshua Rauh and Kevin Warsh propose increasing the existing cap on I-Bonds that Treasury issues. Under the present cap, Americans are barred from buying more than $10,000 of I-Bonds per year plus committing up to $5,000 of a year’s tax refund to such purchases. Rauh and Warsh want to raise those caps.

However, the connection between this and inflation mitigation is at best tenuous. Selling more I-Bonds only gives the Federal government more money to spend, which is inflationary; it increases the interest payments that must be made annually, which is government spending and so inflationary; and it increases the national debt, which is future inflation.

It’s no solution at all.

Furthermore, given the Biden-Harris administration’s penchant for ever more, and acceleratingly more spending—and that of their cronies, the Progressive-Democratic Party in control of both the House and Senate—it’s not clear to me how raising, or even eliminating, the cap on I-Bond purchases by us citiens would have any material inflation-mitigating outcome.

On a larger matter regarding I-Bonds; TIPS; and other Treasury Bonds, and Bills, and Notes in general—I’m not sure why anyone would want to lend any money at all to a Biden-Harris-led US government. Maybe we should stop lending, and stop rolling existing loans. Collect on the bonds instead, and invest the proceeds in productive endeavors, like, say, the private economy where us average Americans conduct our commerce through our mom-and-pop enterprises and our businesses, small, medium, and large.

That and maybe Something Else

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Fracking-based energy production is not expanding at anything like a useful rate, even as oil approaches $100/barrel, which only benefits Russia while harming us American consumers.

America’s largest frackers are reporting huge profits but plan to keep oil production in low gear this year, adhering to an agreement with Wall Street, even as prices approach the $100-a-barrel mark for the first time since 2014.

That “agreement” consists of

commitments they made to limit production and return more cash to shareholders, an effort to win back investors who fled the industry after years of poor returns.

That’s certainly a factor. However, even as President Joe Biden (D) claims he wants these producers to produce more in the face of those rising costs, he’s also spending far more energy begging OPEC—and Russia!—to produce more.

There’s another factor that may be strongly informing these producers’ decisions, though.

Maybe these producers just don’t trust Biden, given his openly declared war on our hydrocarbon energy industry—on the frackers—and Biden’s refusal to undo all—any—of his anti-carbon regulations and his other bars aimed explicitly at limiting oil, natural gas, and coal production.

Maybe they think Biden would only resume his war against them once the present energy and resulting inflation crises pass.

They wouldn’t be far wrong.

What Happens When

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This is an example of what happens when President Joe Biden (D) presses his assault on our nation’s energy production industry, presses his enthusiastic destruction of our energy independence, and does his kowtowing to Russia (and to OPEC) regarding that nation’s and that cartel’s oil and natural gas production and sale.

He’s reduced the United States of America to begging other nations for energy, and those nations along with Russia are now showing their contempt for Biden’s obsequiousness.

The headline summarizes the matter.

As Oil Nears $100, Saudis Snub US, Stick to Russian Pact Amid Ukraine Crisis

And this:

Rising oil prices and fears of a Russian invasion of Ukraine have created a dilemma for Saudi Arabia: help the West by pumping more crude to tame the market, or stand by a five-year-old oil alliance that is helping Moscow at the expense of Washington.
For now, the world’s largest crude exporter is sticking with Russia.

And this:

President Biden has repeatedly called on Persian Gulf producers to pump more oil to reduce gasoline prices that, for Americans, are about twice as high as they were earlier in the pandemic. Those calls have grown more urgent as oil prices have risen toward $100 a barrel….
Instead, the Saudis have said they won’t pump more than they agreed to last year as part of a deal between the Organization of the Petroleum Exporting Countries and Russia[.]

It doesn’t matter a whit to Biden that this problem wouldn’t exist if he got his Biden-Harris administration out of the way of our domestic oil and natural gas production so we could go back to being independent of our enemies and acquaintances for our energy, our economic life.

It doesn’t matter a whit to Biden that European nations’ dependence on Russia for their energy wouldn’t exist if he got his Biden-Harris administration out of the way of our domestic oil and natural gas production so we could go back to supplying Europe with oil and natural gas.

A USPS “Upgrade”

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The USPS is being pressured by President Joe Biden (D) and his EPA to go greenie-er in its vehicle upgrade. So,

The proposed action, which we are evaluating under the National Environmental Policy Act (NEPA), includes an initial order plan for 5,000 electric vehicles, and the flexibility to increase the number of electric vehicles introduced should additional funding become available.

The US Postal Service wants to convert 10% of its 230,000 vehicle fleet to battery-operated “in the coming years,” but says going all electric would cost an additional $3.3 billion beyond its normal budget of $6.3 billion.

What jumped out at me, though, was this comparison between the replacement vehicles for which the USPS has contracted and its present fleet:

In response to a report that the NGDV [Next Generation Delivery Vehicle] only achieves a fuel efficiency of 8.6 mpg in typical use, compared to the Grumman’s 8.2 mpg, the USPS pointed out that the comparison was flawed because it was conducted with the NGDV using its air conditioning system, which the LLV [Long Live Vehicle] does not have. With it turned off, the NGDV achieves 14.7 mpg, according to the USPS.

A 70% increase in mileage with the a/c turned off? That seems to me a poorly designed air conditioning system, even with the windows open for mail delivery every few feet. That just means the compressor is running all the time; it shouldn’t be imposing that big a load on the engine. And: what’s that bump going to do to the battery in the electric NGDV, both its miles between charges and its charge-discharge lifetime?