Quote:
Originally Posted by Rajoo
I read your post including Trump's share of the blame, as you assigned.
Just that I totally disagree with you regarding the Keystone or suspending leases leading to spike in gasoline cost. This was mostly due to oil producing countries having gone through the Covid shutdown when their revenues dropped to nothing and now making up for lost time, along with the usual oil company gouging.
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Sure, the Keystone Pipeline cancellation - in a vacuum - had a very modest impact on futures prices. But taken in total with this administration's other actions involving the domestic oil/energy industry - some of which were mentioned in the prior post - the environment for energy companies to invest in new sources of domestic supply is pretty lousy right now.
If you're an oil company CEO, here's what you're seeing today:
- The guy who won the 2020 presidential election is the guy who, when asked a question during one of the debates about whether he'd
shut down the oil industry, said:
“I would transition from the oil industry, yes,” Biden said.
This response even seemed to perplex the debate moderator, who asked Biden, “Why would you do that?”
“The oil industry pollutes significantly,” he continued. “It has to be replaced by renewable energy over time.”
- Among the first things the new Prez does when he takes office is take significant actions to position the US Gov't as a barrier to increased supply. As a CEO, you can only read this as a signal of the new administration's priorities.
- Then, when faced with rising prices as the pump, and berating the industry for their profits, demand that the industry take immediate steps to increase supply. Production is already at or near capacity, so the Prez's public requests appear to you as political posturing rather than part of any serious effort to impact production or refining.
- The Prez's remarks also stand in stark contrast to what you believe to be a central goal of the administration. Biden campaigned on a promise to reduce dependence on fossil fuels. Therefore, how do you explain to your shareholders that 2021 - 2022 is the right time to invest in additional reduction and refining capacity, in a political climate that's hostile to your business?
- In fact, you have the ability under recently passed legislation, to access billions in government funds to develop alternative energy sources. How do you explain to shareholders that it's better to invest in fossil fuel energy capacity when you can get free money to do otherwise?
-While the Prez met personally with leaders of other industries last fall to identify ways to alleviate the supply chain crisis, neither you nor any representatives from your industry were invited to the meeting.
- When you and other industry CEO's did ask for a meeting at the White House, they got one, but they saw Brian Deese, who heads Biden's National Economic Council. Later, you get a meeting with Secretary Granholm, but nothing really results from those discussions.
Taken together, these actions speak volumes. There's no desire on the part of the industry - of which the US is still the largest market by far - to significantly invest and pursue increased production and refining capacity. In point of fact, demand is rising, but
production investment is below what it was 5 years ago, even amid rising production costs.