Tag Archives: markets

Yet Another Reason

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…to adjust our supply chains, especially the beginning points of them in this case.

Palladium and neon gas are seriously needed for chip production, and Russia’s invasion and attempt to conquer or destroy Ukraine is about to have a major effect on the supply of those items if nations and businesses don’t make the required adjustments.

Russia and Ukraine produce 40% to 50% of semiconductor-grade neon, according to market-research firm Techcet CA LLC. Largely derived from steel manufacturing, neon gas is used in lasers that help in the design of semiconductors.
Approximately 37% of the world’s palladium production comes from Russian mines, according to Techcet, and the metal is used in sensor chips and certain types of computing memory.

As a follow-on, palladium at least might be sourced from the People’s Republic of China, expanding that nation’s influence over the economies and national security of the US and the nations of Europe.

However expensive the shift will be, changing to other sources are critical to security. The PRC notwithstanding, South Africa is nearly as large a palladium producer as Russia. The US can produce our own neon gas either directly, or as a byproduct of steel production with further refinement for use in chip production.

It’s not only production of palladium and neon that matters, though. Currently, the PRC is the major producer of finished chip components and of finished chips themselves. That, also, needs to change, and other producers of chips and components need to be found, and producers need to be developed domestically.

In any event, there’s also little reason to go back to buying either of these from Russia, even if it is driven out of Ukraine. So long as the current men and women of the Russian government—at all levels—remain in place, that nation cannot be trusted with anything.

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.