The Phil Flynn Energy Report
Russian Oil Rush
Oil prices are on a tear, with gasoline prices going up every week since President Joe Biden took office. Despite his vision of a green planet, the rest of the world isn’t slowing oil production. Under the Biden Administration, it’s less friendly to invest in U.S. oil and gas, so the world’s biggest polluters will likely begin to pick up oil production while the U.S. is left out. Among these polluters is Russia, who’s already a direct beneficiary of Biden's green energy push.
Bloomberg reports the following:
“U.S. President Joe Biden’s push to slash carbon emissions may inadvertently give a short-term boost to energy companies in one of the world’s biggest polluters. Investors are betting that Russian oil giants such as Lukoil PJSC, Rosneft PJSC, and Statnett PJSC will rally as they mop up market share from rivals in the U.S. and other countries seeking to switch to clean energy.
An index of Russian energy stocks has returned 8% in dollar terms so far this year as crude prices rallied, compared with 2% for European oil and gas companies.
‘Governments will likely limit global companies’ capacities to drill and extract resources,’ said Eduard Karin, who helps oversee $1 billion of assets at Alfa Capital Asset Management in Moscow. ‘The global majors are entering a new market, a new industry where there are a lot of unknowns, and the return on capital is unclear.’”
Bloomberg says that Russia is the world’s 4th largest carbon emitter, but unlike other major polluters, their government doesn’t have a plan to transition away from fossil fuels. Instead, its state-owned energy companies benefit from some of the world’s lowest production costs and tax breaks, making them well-placed to gain in the short-term.
Of course, we predicted that this would happen, and we’re predicting more pain for U.S. consumers as we continue to see the impact of President Biden's green dreams. Bloomberg states that it’s only a short-term boost for Russia, but if Biden's policies aren’t changed, we at The Energy Report believe the loss of U.S. oil market share will be permanent. That means that we drivers will up the tab in a big way as we start to consume more Russian oil.
Take a look at gas prices. Our friends at Gas Buddy report that, "For the fifth consecutive week, the national average has increased, rising 3.7 cents per gallon over the last week to $2.45 today according to GasBuddy data compiled from more than 11 million individual price reports covering over 150,000 gas stations across the country. The national average price of diesel has risen 3.8 cents in the last week and stands at $2.68 per gallon.”
While the price increase can't fully be blamed on Biden, the reality is that it seems he’s done nothing to bring those prices down. By killing pipelines and drilling pauses and reviews, he’s already installing an invisible tax on all Americans, a tax that’ll be paid in large part to foreign oil producers who will prosper off the backs of working Americans.
Oil’s also getting a nudge from the stimulus push by the Democrats. If they can get it through, it’ll give oil and production a big reflationary boost. Stay tuned.
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