Your Economy (No Politics)

[al44]

Washington Update From the US Oil and Gas Association - 5.24.2024

David Blackmon
May 25, 2024

Let's Get This Party Started...

May 24, 2024

Memorial Day Weekend – Let’s Make This Short….

Summer Driving: Think CNN wants to hear about the 200+ things the Biden administration has done to increase the price at the pump?

Congressional Democrats are trying to get the pressure off President Biden and his attack on the oil industry and instead are trying to blame oil companies for higher gasoline prices. CNN reports:

Congressional Democrats are investigating whether leading U.S. oil companies have illegally colluded with one another and with OPEC to inflate prices at the pump, CNN has learned.

Rep. Frank Pallone Jr., the ranking member of the House Committee on Energy and Commerce, sent a letter Tuesday night to ExxonMobil, Chevron, Hess, BP America and three other fossil fuel companies demanding a trove of documents and communications.

Just wait until they learn about Joe Biden. Bet they will be cheesed to hear what he has done to try to reduce oil and gas production in the United States and make it more expensive. But then again, probably not…


Numerous stories this week trumpeted that the Biden Administration was working to lower gasoline prices. For example, a headline from the AP stated, “Biden releasing 1 million barrels of gasoline from Northeast reserve in bid to lower prices at pump.” This headline is only true in an aspirational/marketing sense.

The article itself contains all of the important information. First, Biden is selling off the Northeast gasoline reserve because he was mandated by Congress. In the article, the AP explains, that the mandate to close the gasoline reserve "was included in a spending deal Congress approved in March to avert a partial government shutdown.” That sounds a bit different than Biden is doing this because of gasoline prices.

This is especially true because 1 million barrels of gasoline is not that much. At the end of the article, the AP states:

Patrick De Haan, an analyst for GasBuddy, said sale of the Northeast reserve would have little impact on gasoline prices nationally, although there “may be a slight downward pressure on prices” in the Northeast. The million-barrel reserve only amounts to about 2.7 hours of total U.S. gasoline consumption, he said.

This is one more example of Biden trying to say he is trying to reduce the price at the pump when, in reality, there are hundreds of examples of him working to increase the price at the pump.

Ford apparently enjoys losing $100k per EV sold but as a shareholder – I can’t say that I enjoy it as much as they do….

Last week the news reported that Ford lost over $100,000 per EV it sold in Q1 and that it was cutting battery orders. You might think that would mean that Ford would say publicly that maybe this forced transition to EVs is not something American consumers really want—but you would be completely wrong. Here’s Reuters explaining why Ford wants to continue to lose billions of dollars on a forced transition to EVs by supporting Biden's EV mandate:

Ford Motor Co, opens new tab said on Monday it backs the Biden administration's moves to dramatically cut vehicle emissions through 2032, rejecting Republican arguments the new climate rules are bad for business.

The second largest U.S. automaker said it supports the Environmental Protection Agency's regulations announced in March to cut passenger vehicle fleetwide tailpipe emissions by nearly 50% by 2032 over 2027 levels.

"Complying with emissions regulations requires lengthy advance planning, and Ford has taken steps to transform its business to ensure compliance with stricter emissions standards," the Dearborn-based automaker said.

Why would Ford support regulations which are costing it billions of dollars a year? I think there are two reasons. The first possible reason is that Ford knows the majority of car buyers don’t want EVs, but Ford believes EVs are the future, so it’s good to have the federal government harm consumers by limiting the choices of the car-buying public. Then it’s not Ford’s fault it is losing billions on switching to EVs too quickly.

The second possible reason is power politics. The Biden administration likely told the Detroit car companies that if the car companies supported Biden’s regulations, Biden would impose massive tariffs on Chinese EV imports to protect American car companies—which Biden did.

Regardless of what is motivating Ford, supporting Biden’s forced transition to EV is bad for their business and bad for America. The majority of Americans do not want to buy EVs. According to a recent Gallup poll, in 2023 43% of people said they might consider buying an EV, but that number fell to 35% this year. Just as Biden is starting to mandate EV sales, fewer people want to buy EVs.

Ford needs to get on the side of the American people. Until then they will continue to lose billions of dollars a year on an attempted forced transition to EVs.

Now start your weekend a bit early. Happy Memorial Day!

https://blackmon.substack.com/p/washington-update-from-the-us-oil-d20?publication_id=712558&post_id=144958008&isFreemail=true&r=rd9j8&triedRedirect=true