More on the continuing energy crunch,... annotated cut n paste from J Pain's weekly report:
.... [W]e face a global food and energy crisis.
This, as I hope you know, began well before the war in Ukraine.
Clearly, however, the Russian invasion of Ukraine served to dramatically amplify and accelerate the global food and energy crisis.
So, let’s stop pretending. It’s time to face the facts.
The fact is that the world is not running out of crude oil.
The problem, however, is that you can’t put a barrel of crude oil in your tractor, combine harvester, excavator, truck, train, plane, barge or ship, to mention just a few.
To state the absolute bleeding obvious crude oil needs to be refined into the various ‘products’ such as diesel, aviation fuel or gasoline.
It is in this regard that I found the recent Bloomberg interview with Chevron CEO, Mike Wirth, fascinating.
“We haven’t had a refinery built in the United States since the 1970s. My personal view is that there will never be another one built in the United States.” "It takes a decade to build a refinery and billions of dollars and decades for the refiner to get back a return on their investment.” “When I started in this industry there were about 250 refineries and today there are less than half that number.”
When asked if he, Mike Wirth, had, had conversations with the U.S government about these issues, he replied.
“We receive mixed messages in these policy discussions. My message would be we need to sit down and have a honest conversation, a balanced and pragmatic conversation about the relationship between energy and economic prosperity, national security and environmental protection.
And we need to recognise that all of those matter and we can’t just over index on just one.”
Quick footnote: I’m pretty sure he said the words, ‘over index’ as I replayed that bit many times. Anyway, you know what he means.
An honest, balanced and pragmatic conversation!!
In this day and age!
The fact is that today diesel is the lifeblood of the global economy. This is an indisputable fact…even for you work from home Zoomers … every online shopping click you make sets off a chain reaction that radiates around the world and in that chain there will be diesel!
Record diesel prices are slamming consumers in hidden ways. That's because diesel drives the economy, fueling trucking, agriculture and other major industries.
and further in...
Joe Biden is going to Saudi Arabia in late June. The meeting with Saudi Crown Prince, Mohammed bin Salman (MBS), is going to be interesting to say the least, given everything Biden has previously said about him.
Incidentally, this meeting has required a lot of work by Brett McGurk who is National Security Adviser for the Middle East.
What will the Saudis get in return?
A revealing article in [a recent] Financial Times: ‘
Biden forced into Saudi thaw amid rising oil prices’, tells us all we need to know.
Helima Croft, global head of commodity strategies at RBC Capital Markets and a former CIA analyst, had this to say:
“The Saudis are looking for more defensive equipment, including Patriot anti-missile systems, new security guarantees and assistance on a civilian nuclear programme.
Helima Croft continues: “This was an administration that came into office talking about net zero, the age of oil being over, a new policy paradigm, a pivot to Asia-but in a crisis has now gone back to tried diplomacy. It’s a return to Realpolitik … in a crisis, you always pick up the phone and call Riyadh.”