Reply to $7/gallon gas is coming

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][twitter]https://twitter.com/tomselliott/status/1500808667100286979[/twitter][/quote]

Domestic Producers have no plans to invest in domestic capacity, even at these high prices. They know the long term trends - move to electric vehicles, better efficiency in ICE, big leaps in battery tech - make their domestic investments moot in a couple years. It’s not enough time to recover the CapEx.

Further, a huge number federal land leases for drilling are not being used by the industry. They are just sitting on them, doing squat.

Time for Biden to grab the bully pulpit.[/quote]

Gasoline prices are based on futures - which is sentiment. The broad forward-looking sentiment under Biden is negative for gasoline. Despite available capacity, the expectation is that Democrats will continue to place additional restrictions to reduce domestic supply capacity in order to pursue green energy policies. [b]The current unwillingness for US to stop the importation of Russian oil[/b] is a very strong signal that Biden will continue down this path and therefore the market is reacting by bidding up the cost of oil. [/quote]

That decision would have huge implications and the Biden admin is unlikely to make that decision impulsively. I think they are trying to line up options to stabilize the market and US prices short term as they think of mid term and long term implications.  As someone upthread noted, we are past the inflection point, the technology is there (and economics viable) for alternative energy to take off. [b]It will take some time, but there is no going back to oil no matter who is elected[/b].[/quote]

And here’s the rub - oil companies and the banks who cover that market all agree on this. The US military also agrees. All these entities are already pivoting their companies and operations to a future that is less dominated by fossil fuels. None of this is shocking. They know it’s an incremental process.

That said, it creates a weird tension during the transition - why continue investing in fossil fuel projects when you know that will end up being retired in a generation or two?

Frankly, the best person to handle US energy policy was Obama. He took an “all of the above” approach when it came to energy security. Shale flourished under Obama and made (dirty) coal unviable. While at the same time he invested heavily in green and battery tech.

US energy companies don’t need more federal leases when they have so many going unused right now that we’re granted to them by the Trump administration for fire sale prices. That’s a red herring. The bigger problem is getting them to maintain investments for a form of energy that they admit will eventually be replaced. [/quote]

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