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Oil prices are fundamental

Oil prices are fundamental

Based on the reporting, there is a lot of interest in oil prices – as there should be.

Oil is at the foundation of the American economy – actually, the world economy.  Like it or not, the modern civilized world runs on oil – and that is not likely to change for a looong time.  President Biden and his anti-oil supporters on the left are pushing a vision of America that will soon end the use of oil as a primary – or even a significant –source of energy.

If you believe that America — and the world – can one day be totally free of the need for oil it will not be in the near future.  It will not be in 2035 or 2050 – and not even in the Twenty-First Century.

Let me be very clear.  I do believe that we do need to shift from oil to other energy sources for a lot of good reasons – not the least of which is that we are using fossil fuel to an eventual point of depletion.  To the extent that we can introduce – over time – efficient and dependable alternative energy sources, we should do so.  It could be wind or solar – although they are not nearly developed to the stage of replacing oil. Widespread use today would drive consumer costs for energy through the roof.   It could recommit to building more nuclear energy plants – which is the best alternative to oil.  But that runs into a lot of political opposition and concerns over atomic waste.

Science is currently working on dynamic potential energy sources that could develop to become the alternative to the current alternative sources.  There is an enormous number of exotic energy sources in the world, but we are still on the drawing board in terms of efficiently and safe access to them.

The reasons oil production and pricing are so important is because EVERYTHING we do depends on oil.  If the use of oil were to end today, the world would be pushed back to the Neanderthal period.  Name anything you have … anything you want … anything you wish to do … and it will go back to the use of oil and oil derivatives.

Some folks take pride over “being off the grid.”  In the extreme, they claim to be “energy independent.”  That is not true if they like to eat and buy things – virtually anything.

We pay attention to the pump price for gasoline because it stares in our face.  We see it every time we “fill ‘er up.”  I am up approximately $7 per tank full since the recent inflationary increases.

But gasoline is not the only impact oil has on our budgets.  Think about all those trucks delivering the goods to every store – or directly to our home.  They arrive by boat, plane, train and truck – all of which travel on oil.  When that price per barrel increases, the cost flows through the entire commercial market like a gusher.

It is not only goods, but also services.  When you pay your doctors, you are paying the impact oil has on their rent, utilities and the cost of all those wonderful medical supplies and very expensive diagnostic machines.

Of course, when we consider oil – or wind, solar or nuclear – we are looking at sources to supply … electricity.  That is the energy we observe most in our daily lives.  It seems to power damn near everything.  But it is oil that is the primary producer of electricity.

There is a lot of movement toward electric cars, but to have an adequate source of energy to produce them, we need massive amounts of fossil fuel – and we will for the foreseeable future.

While the world runs on oil, it is also a commodity that has great competition in the global marketplace.  So, when we consider the reliance on oil energy, we must consider the situation in America.  We need to protect our national interests in the Great Oil War – figuratively speaking.

Approximately one year ago, the United States was oil independent.  We were such a significant producer that we were actually an oil exporting nation.  Thanks to the Biden administration’s so-called green energy policy, we are no long independent – and longer exporting.

Biden has put America in the unfortunate position of having to buy oil on the international market – and beg other nations – friendly and some adversarial, such as Russia, China, Venezuela and the international oil cabal, OPEC – to increase production to stave off the Biden-launched inflation.  The reason we are going hat-in-hand to the world oil producers is because Biden has declared a war on American oil – reducing supply and creating uncertainty that disrupts future planning.

Biden policy has also diminished America’s international leverage.  The White House has given the Russia/German pipeline a seal of approval – greatly helping the Russian economy.  We lost the opportunity to use American oil resources to sell to Germany as an alternative to Putin’s Pipeline.

While it is not the only thing, oil prices are fueling the inflation.  The reduction in oil supply has been met with increasing demand.  That is why Biden is operating from a position of weakness – his own self-inflicted weakness.

Ironically, Biden & Co. may have engineered their own downfall.  There is less than one year before the 2022 midterm elections.  Biden’s foreign diplomacy failures – Afghanistan, China, Russia, Iran, North Korea, Venezuela – are not likely to reverse or even improve in 11 months.  In fact, we are more likely than not to see Russian and Chinese aggressiveness increase.

The Covid may slowly dissipate, but it is not likely that all the fearmongering policies will be gone.

And in terms of the economy, I believe inflation will be a problem.  

The only chance Democrats have in 2022 – and it requires desperate tactics – is to engage in meaningless symbolic action … blame the failures on “messaging” … and try to convince the American public that every Republican is evil in every regard – and poses a threat to the future of the Republic.  That is a lot of bull stuff for we the people to swallow, however.

And in the final analysis, it may be oil that lubricates the political slippery slope upon which Biden has trodded.

So, there ‘tis.

About The Author

Larry Horist

So,there‘tis… The opinions, perspectives and analyses of Larry HoristLarry Horist is a businessman, conservative writer and political strategist with an extensive background in economics and public policy. Clients of his consulting firm have included such conservative icons as Steve Forbes and Milton Friedman. He has served as a consultant to the Nixon White House and travelled the country as a spokesman for President Reagan’s economic reforms. He has testified as an expert witness before numerous legislative bodies, including the U. S. Congress. Horist has lectured and taught courses at numerous colleges and universities, including Harvard, Northwestern, DePaul universities, Hope College and his alma mater, Knox College. He has been a guest on hundreds of public affairs talk shows, and hosted his own program, “Chicago In Sight,” on WIND radio. Horist was a one-time candidate for mayor of Chicago and served as Executive Director of the City Club of Chicago, where he led a successful two-year campaign to save the historic Chicago Theatre from the wrecking ball. An award-winning debater, his insightful and sometimes controversial commentaries appear frequently on the editorial pages of newspapers across the nation. He is praised by readers for his style, substance and sense of humor. According to one reader, Horist is the “new Charles Krauthammer.” He is actively semi-retired in Boca Raton, Florida where he devotes his time to writing. So, there ‘tis is Horist’s signature sign off.

21 Comments

  1. frank stetson

    I dunno Larry, it must be my long, ramblings cuz you sure ain’t getting it and keep riding the same ole dead horse while looking it in the mouth for your gift…..

    You say: “Approximately one year ago, the United States was oil independent. We were such a significant producer that we were actually an oil exporting nation. Thanks to the Biden administration’s so-called green energy policy, we are no long independent – and longer exporting. Biden has put America in the unfortunate position of having to buy oil on the international market – and beg other nations – friendly and some adversarial, such as Russia, China, Venezuela and the international oil cabal, OPEC – to increase production to stave off the Biden-launched inflation. The reason we are going hat-in-hand to the world oil producers is because Biden has declared a war on American oil – reducing supply and creating uncertainty that disrupts future planning.”

    First Larry, the US has NEVER really been really oil independent. Interdependent would be more like it. North America has been independent, the US has not. Why Republicans keep annexing Canada is beyond me…. But the EIA does it to using the phrase “net importer” to spin er up. Did you toss in Mexico’s contribution as well :>) Yes, we are a net exporter since 2020, and that’s a fantastic accomplishment on Trump’s watch. But we still import, mostly from North America, 62% of which comes from Canada and Mexico, and in 2020 was over 3M barrels each day, NET import.

    Why we would ask China, Russia, and even OPEC to product more oil for us is beyond me? Got facts? Because I can see asking them to product more for the world, but we have more to drill NOW — just need to resume the production we had in 2019. No existing leases have been terminated I believe, there are no restrictions that I know of on existing fields that I can find. But OPEC, for example, can’t meet world demands and is responding with higher prices, not more oil. And US producers, with no new costs, are jacking prices up in the face of higher demand mostly because they can. Probably hoping to export more too given the even higher prices overseas.

    Larry, can you be more specific about exactly what polices are stopping the US oil industry to return to 2020 production levels? Where is the “begging” documented? Where has Biden reduced current oil supply? As far as I can see, Biden EO’s stop future drilling on new leases on National Lands, it does not stop agreements made during the Trump Fire Sale of our National Parks, Wildlife Refuges, and other National Lands.

    But indeed, the US oil industry produces less today than in 2020 and certainly, 2019. IOW, they appropriately matched production to pandemic demands and now can’t get back up to speed again to normal, much less a post-pandemic spike (which they may not need to worry about soon, sad to say)

    And your comment about oil imports seems bogus given the EIA readout for first half 2021 stating: “The United States exports more refined petroleum products than it does crude oil. Petroleum product exports averaged 5.5 million b/d in the first half of 2021, up from 5.3 million b/d in the first half of last year. Exports of petroleum products include motor gasoline, distillate, and propane exports. Both imports and exports of select petroleum products mainly consumed as transportation fuels—distillate fuel oil, motor gasoline, and jet fuel—altogether decreased in 2020 compared with 2019.”

    Now, granted it was getting closer in the 1H21: “The United States was a net importer of crude oil and petroleum products (imported more than it exported) in the first of half of each year until the first half of 2020, when the United States became a net exporter (exported more than it imported) by 432,000 b/d of crude oil and petroleum products. This year marks only the second time the United States has been a net total petroleum exporter in the first half of the year. The United States has been a net exporter of petroleum products alone since 2011.”

    https://www.eia.gov/todayinenergy/detail.php?id=49596

    Also Larry, you keep saying: “We lost the opportunity to use American oil resources to sell to Germany as an alternative to Putin’s Pipeline.” Exactly who, what and where did you expect the US to ship Germany oil? Sounds like an Enron deal to me :>) Bogus concept I think
    Instead of opinions backed by allegations, a few links, sources, and statistics might help you make your point, or better decide what that point is because on this one, you may have the right idea, but certainly don’t support it with facts; quite the opposite, disproving your statements is all to easy because you seem to support an idea, not based in the facts on the ground, or in the ground in this case :>)
    And no Larry, I do not blame the failures on messaging; I blamed the messaging for being a failure. There were better ways to says things, and better things to say — double bogy, and Biden should avoid the firing line, he needs to exercise more patience and less pushback, especially against the stupid questions.

    • larry Horist

      Not about to get into a point by point on your oil terms paper, but over all, I give you a D+ But on the major point … according tot he official government report, the United States became a net oil exporter in 2020 for the first time since 1949. That is a fact. U.S. production is being hindered by Biden policies — including denial of licensing for explorational and drilling. So, we are now a net importer again.

  2. Ben

    Larry say we were oil independent and were exporting oil to others.
    *neglects to mention trump’s lockdowns and poor handling of the Coronavirus made it so we had no need for oil and could sell it off.

    But I digress. This is a prime time to switch to renewable energy. Solar, hydro, and wind offer unlimited potential and untold numbers of potential jobs, but the republicans ( and Manchin) are so indebted to the oil and coal lobbies, that it’s going to take forever to get up and going.

    • Harry griffith

      Thanks Joe. You idiot

    • Tony blevins

      The oil and coal companies are the strength of this country. You tree huggers and cricket lovers don’t know a damned thing about science.

      • frank stetson

        Oil maybe, but coal? From WIKI: “Coal mining in the United States is an industry in transition. Production in 2019 was down 40% from the peak production of 1,171.8 million short tons (1,063 million metric tons) in 2008. Employment of 43,000 coal miners is down from a peak of 883,000 in 1923. Generation of electricity is the largest user of coal, being used to produce 50% of electric power in 2005 and 27% in 2018. The U.S. is a net exporter of coal. U.S. coal exports, for which Europe is the largest customer, peaked in 2012. In 2015, the U.S. exported 7.0 percent of mined coal.”

        10% of the States, five that is, produce 71% of this ever shrinking strength, not exactly an economic powerhouse or GDP producer for the United States.

        Half BUSTED.

        That is the “science” of economics.

        Almost all major oil producers are heavily invested in alternative energy forms. That’s the science they know and you should attempt to learn.

        • Henry brunty

          Yes. Coal mining is down. Thanks to the save the earth freaks trying to get rid of jobs and bring in socialism

        • Clifford Mckinney

          By producing millions of tons of coal every year. Fool!!!!

      • Ben

        Tony,
        Coal accounts for roughly 50,000 jobs. Or .04% of our work force. Over 1,000 coal miners lost their job while trump was in office.

        Tell me again how coal is the strength of our Country… fool

  3. Ben

    Larry, as usual you take a partisan stance that lacks nuance. I’m not surprised I have to point this out… again!
    The reason that oil prices are up is because last year, with trump’s lock downs and travel bans, we had no use for oil. We were able to sell off excess and the price per barrel was at an all time low. In fact, it cost more to store oil than it was worth. So if you like the buy high, sell low mantra, you were in business. With the cost of oil being negative dollars, there was NO need for new wells or further exploration, it was not financially viable endeavor.

    Now that Biden has opened the Country back up for business, adding jobs and getting our lives back to normal, there is more need for oil. You know, the whole supply and demand thingy that most “economists” know about.

    I mean, I know you know all of this, so ignorance is no excuse, so it has to just be deliberately misleading your readers, pure partisan rhetoric, to gets clicks from the Cult’s base. Understandable that you would resort to such tactics for financial gain.

    • Joseph bruder

      The old fool shouldn’t have shut down the Alaska pipeline

      • Ben

        Joey,
        Good grief, let me educate you old man.
        Obviously you did not read my post.

        The pipe line does nothing for our gas prices. The pipe line was simply to make CANADIAN OIL easier to ship over seas. It has NOTHING to do with American oil prices.

        Goddamn, it’s better to keep quiet and let everyone think you’re a fool than to post and remove all doubt.

        • Wayne franklin

          Asshole

          • Ben

            Wayne, great retort.
            You added valuable insight to the conversation.

            You represent the conservative movement well

        • Joseph S. Bruder

          Ben, the “Joseph bruder” above is an imposter. He apparently gets his jollies by pretending he’s me. And I guess Larry and PBP are getting a good laugh because they’re not doing anything about it.

          Usually, it’s pretty easy to tell the difference. I always punctuate, almost always spell words correctly (except for the stray typo), and generally I don’t write one-liners unless it’s a smart-ass reply to a one-liner. And you and I generally agree.

          • Ben

            Ah, my sincere apologies Joe. I guess the imposter managed to trick me. As republicans always say, if you can’t win fair and square, cheat. This isn’t even a debate worthy of time, but here we are debating Internet strangers that are only capable of regurgitating faux talking points.

  4. frank stetson

    Larry: you whine about being picked upon while you hit the “D+ term paper” comedy sketch of snarky? I keep singing this song, hoping for change. I believe next I might try “turnabout is fair play.” In my onerous ten paragraph term paper, the longest ponderosity of a paragraph being skippable, is yours, so nine really. You still choose to respond to one point and not answer any direct questions.

    Previously, I linked the article, “The U.S. exported slightly more petroleum than it imported in the first half of 2021, a point apparently you overlooked. It was the title.

    You use the term “oil,” the EIA, the fountainhead for your data, terms it crude oil and petroleum products. I take it you include both, just mislabeling. If that’s the case, the EIA, in the report I provided, states: “The U.S. exported slightly more petroleum than it imported in the first half of 2021.”

    For further un-edification, the EIA states: “Our Petroleum Supply Monthly trade data show that the United States exported more crude oil and petroleum products than it imported during the first half of 2021 by 120,000 barrels per day, or less than 1% of combined crude oil and petroleum product exports and imports.” That’s the report Larry.

    Now the monthly market provided updates provide a glimpse of the 2nd half, but it is all estimates and, yes, if the estimates turn out to be valid, we will be a net importer by the end of this year, by a nit, totally driven by one HUGE September which was over ten times the normal import amount for a month. Ten times the estimates for Oct imports too. Four out the ten months of reporting are net exporting months. So, what does it look like when US oil producers/refiners suddenly spike a giant import for one month? A trend or an anomaly. Production driven or demand driven? Especially when the following month looks back to normal. Can’t tell without more data. And how much total importing we doing this year? Right now, it’s like to the right of the decimal point. A nit. You are declaring the sky is falling over a nit. Net imports are .58% of total usage for the ten months reviewed, 1H locked in, next four months being market estimates. And you say, without a source, that we are asking Russia and China to send us a nit of oil? No wonder you can’t source this nit shit.

    “Please, Sir, can I have a nit?”

    I can see where you don’t want to address other comments on your article’s lack of facts. This one was not a show stopper. Spin at best.

    I can see where you don’t want to discuss Biden policies that cause this, because all his EO’s do is stop future exploration on National Lands; no current leases have been broken. All the wells there in 2019, 2020, 2021, are still there. Any work underway on National Lands is still underway. Devil’s in the details and there’s no details. No sourcing, no links, not even an attribution. Hack partisan attacks.

    Asking Russia and China for oil. Would love to see the liar who said that…..

    Weak Texas tea. Partisan black gold.

  5. Joseph S. Bruder

    Hmmm…. who else has helped the Russians in recent times? Trump invited Putin onto the world stage, stood there smiling with him and shaking hands… and waving across the room at him at the G7 dinner… Invited Putin’s Foreign Minister Sergei Lavrov and Russian Ambassador Sergei Kislyak into the Oval office… Handed Ukraine to the Russians, then gave him Syria… Created chaos in NATO and alienated our allies while still kissing up to Putin…

    Oh, sure, we tossed Russia a bone, to help out Germany… It’s not like we’re going to ship natural gas all the way to Germany… we sell a little bit of crude oil, but use all the NG we can. But it’s also something that can be held over Putin’s head – dick around with Ukraine again and your new toy gets taken away. It’s amazing how fast oligarchs get used to new sources of income – it’s like a teen from a rich family getting a super-hot car, and then pulling it away when he flunks a class – it hurts twice as much.

    One thing Larry didn’t note is that gasoline prices have just recently started to decline, but wholesale prices have been dropping for a while. It’s not illegal, but there’s some monopoly price gouging going on. Gas prices have very little to do with what Biden is doing.

    COVID will have more control over the economy than anything. That’s why Republicans are encouraging people to play Russian Roulette with their health. What’s bad for the economy is good for Republicans. If Trump hadn’t screwed up his response to the pandemic, and then poisoned the well about wearing masks and getting vaccinations, it would have saved hundreds of thousands of lives in this country.

    • frank stetson

      Can only go one of two ways: get injected or get infected. If you reject the inject you are easily selected to be infected. When infected without injected, you may be dejected but can rejected that fact that you are 5 times more likely to die. Sure, lower numbers this wave than past, but at over 1,000 dead or higher per day, those are some real numbers and not just the old folk many have written off.

      • Larry kuhn

        You’re a poet and don’t know it. You can make a rhyme anytime I’m not injected and I won’t get infected.

        • frank stetson

          how could you ever know that given the facts being so overwhelmingly against that outcome.

          Red regions get infected and die at a much higher rate that Blue regions. In Blue states, the Red regions provide the biggest number even bringing down states with high vax rates.

          Stay the course, best luck cuz that’s all you go, and we need every voter we can get in 2022 and I am afraid your numbers are going to be seriously impacted.

          This has been proven since late Fall, over and over. https://www.nytimes.com/2021/12/17/briefing/omicron-spread-red-america.html

          It’s just the way it is: cause and effect. The virus only acts one way; we have a choice. Your choice potentially affects others so I pray you are right. Because if you are wrong, your actions will harm, potentially kill, other Americans. Thanks for your support and allegiance to your country, community, and close associates.