Bidenomics and Oil and Natural Gas

Why You Are Paying Higher Prices

We hear a lot about Bidenomics. It has produced a massive amount of inflation far above the reported amounts by the government. Refer to Shadow Inflation numbers that run 8 to 14% over the past couple of years. Compounded for two years real inflation exceeds 20%. Anyone shopping for groceries, eating at a restaurant or buying a house all have seen inflation far in excess of the official numbers.

Bidenomics seems to be detached from facts and entirely related to spin. In other words if I tell you enough times that the economy is doing great you will believe it. Remember, though, factually energy primarily that from oil and natural gas is the significant driver of the economy.

Such is the case with the spin of climate change and the necessity to move to electric powered cars (EVs). We have heard that climate change is an “existential threat to mankind” so many times without any science to prove it. All we get are manipulated research projects that the Government funds only if the answer they want is published as the research conclusions. As a side note, ironically we now have an autoworkers strike that has occurred because a lot of the EV work has gone to red states like Texas. Facts were ignored and spin believed by the Bidenomics team.

To facilitate the push for EVs, Bidenomics has cancelled oil and gas leases, demanded Wall Street not fund oil and gas drilling and delayed permitting drilling on active leases. Additionally, The Biden Administration has pumped millions of barrels of oil out of the SPR to keep oil prices down. This has caused the number of rigs drilling in the U. S. to drop from 763 rigs last year at this time to 641 running this week. Some companies are deferring completion of drilled and cased wells until economics improve with higher prices. A company has to recover their investment and make an acceptable profit from drilling wells or they will stop drilling the wells.

Most wells drilled for oil in the U. S. are horizontal wells reaching out 1 to 2 miles from the surface location. When completed they notoriously come in at high production levels but usually drop rapidly. So overall supply of oil and natural gas can drop rapidly as fewer wells are brought on line due to fewer drilling rigs running and deferred completions.

The U. S. produces about 13 million barrels per day but consumes about 19 million barrels per day. The 6 million barrel shortfall comes from foreign sources. Consequently, The production cuts from Saudi Arabia and those allege to be cut by Russia effect the prices in the U. S. Oil sells into a global market.

So Bidenomics has created a nice trap. By discouraging production in the U. S. and significantly reducing oil held in the SPR, the U. S. becomes susceptible to cuts made by Saudi Arabia and Russia. As supply drops and demand remains constant, walla prices increase.

So, in conclusion, when you go to the gasoline pump to fill your tank and you see the prices are climbing, just remember, “Biden Did That”. And Bidenomics is not the success story they spin it to be.