Well good day folks! Apologies for being a day late. I hope everyone had a good week. I certainly did, helped along by last week’s cathartic rant about the absurd hypocrisy and hypocritical absurdity that is the COP26 gathering and the sanctimonious green puritans who attended it. Thankfully, it ended early so everyone got to go home and get back to the important work of, you know, actually reducing emissions.
What’s that you say? It went on for another week?
You. Have. Got. To. Be. Kidding. Me.
How does that happen? What do they have left to talk about? Phase out coal? Check. Get Trudeau to crap on the energy industry and propose a global carbon tax? Check. Have Greta announce you are all a bunch of liars and charlatans? Check. Propose and agree on methane reductions? Check. Watch Jeff Bezos’ girlfriend make googly eyes at Leonardo DiCaprio while waiting to board a cruise ship (WTAF?) for a party? Check. Meet Bono? Check. Complain about gas prices? Check. Fail to impress David Suzuki? Check.
Never mind that – how do these 30,000 people book that much time away from their families?
Alright, fine. I guess there was more important work to be done. But seriously, when does it end? Wait a second, let me check the internet. Yesterday! It finally ended yesterday! Whaddya know. I guess it’s time to move on to other things. Oh wait, it ran over. Because they can’t agree on the text of their agreements. I guess there was some disagreement to actually committing to reducing fossil fuel usage by China and India. And, of course, another scammy shakedown of rich countries.
Whatever. Speaking of scams, I had the strangest phone call this week that I feel I must share with you.
It happened mid-week. While I was at the office wondering why Elon Musk is such a weirdo and marveling at how he managed to play everyone yet again.
Anyhoo, the phone rings and the call display shows some random phone number and area code – 302 – which is Delaware. Weird I thought, I don’t know anyone in Delaware, although lots of American businesses register there for tax reasons so maybe it was a prospective client, which would be cool, because part of our strategy is to land more American clients.
On the other hand, it could be one of these scam fishing calls – you know the one where you are about to be arrested so you gotta hand over iTunes gift cards to the government in a parking lot somewhere.
Thinking it could go either way, I elected to answer. There was a clicking noise and then a pleasant voice said: “Please hold for the President.”
Right. Clearly a scam call. President of what? Stealing my money?
“Okay!” I said.
The voice put me on hold and I found myself listening to some old-timey big band music which I can only assume was the musical stylings of Mart Kenney. This went on for a few minutes and then there was some fumbling noises, what sounded like a dropped phone, a couple of words I can’t repeat in polite company, a cough and then a voice that sounded vaguely familiar said:
“Hi there, sorry for keeping you waiting, but at least you got to listen to the hep musical stylings of Mart Kenney, I love that guy. Sometimes I call myself to listen to that music, but people think I’m weird. So anyway, is this that Stormont outfit that publishes something called Lewd Observations or some other load of malarkey?”
“Hi, yes, that’s me. I call it Crude Observations though. It’s my weekly blog.”
“Crude, lewd. It’s all the same, right dude?” (sound of soft, self-satisfied chuckling)
“Whatever floats your boat I guess.” I answered, deciding to play the game a little longer. “Who am I speaking with? Why are you calling me?”
“Wait, didn’t they tell you? It’s me, Sleepy Joe Biden, President of the United States, except I’m pretty awake right now.”
“Oh, OK.” I said. “That makes sense. You know I just got off the phone with Boris Johnson – gave him some COP26 advice.”
“Really? That pompous gasbag? What did he have to say for himself?”
“Look, Joe, if that’s’ your real name, I don’t have a lot of time here. What can I do for you? I assume that you are going to shake me down for something.”
“Hey pal, that’s not fair – it’s OK if I call you pal, right?”
“Sure thing, Joe”
“That’s Mr. President to you, son” He snapped. “Just kidding pal, why so serious?”
“Anyway son,” he continued, “I’ve got a problem and some of my staff think that maybe you can help. I read your blog last week and you were killing me about gas prices and stuff.”
(note to readers, presidential blog reading is not as far-fetched as it seems, Mail chimp and our web service allows me to check where the clicks on my blog happen and for a while there was someone in Foggy Bottom (State Department) that was one of my more active readers.)
“I thought it was a bit of dirty pool, a whole lot of baloney and malarkey but man, I’m really worried about this gas price nonsense. Have you seen my approval rating? It’s almost as bad as Trump’s! A presidential rating that low means you get killed in mid term elections and I don’t want that. I still have a lot of policy to implement.”
“Sure,” I said, “But you know that you’re a major contributor to rising prices, right?”
“What’s that?”
“Well, aside from the massive carbon footprint you leave whenever you travel and the incredible amounts of fuel your fleet of planes, trains and automobiles use, your anti-carbon and anti-fossil fuel policy platform is helping to restrain investment in the energy industry in your own backyard and holding back production.”
“There’s oil in Delaware?”
“No, well maybe, but you’re missing my point. I meant it figuratively. Think of it this way, if the government is actively trying to discourage investment in and production of a certain commodity, it can’t then turn around and complain that the now undersupplied commodity is getting more expensive. That’s why I called you a hypocrite.”
“What? You called me a hypocrite? Why, if you were in front of me instead of on the phone, I’d crack you a good one, right in the noggin.”
“So you’re saying I’m wrong?”
“No, you’re right. Hunter was just in my office letting me know that some oil and gas company he started with Jeb Bush and Rick Perry wasn’t going to drill any more wells because no one would lend them money because of GSE or something and instead was going to use all their cash flow to buy something called Dog Coin. Anyway, these gas prices are killing me and I think you can help me figure out how to drop them. I’ve got a governor in Michigan and an Energy Secretary who tell me I have to shut down 5 lines, 5 guys, something like that. Whaddya think?”
“Line 5. It’s a pipeline from Western Canada that cuts through the US and ends up in Sarnia, Ontario. Supplies oil, propane. All the usual stuff.”
“So, it’s a Canadian pipeline. That means I can shut it down and not affect the United States. Hang on. (Yelling the background – can someone get that Trudeau whippersnapper on the phone?) That’s a great idea!
“Wait, wait. That’s a really bad idea. That pipeline supplies propane to Michigan, oil to a refinery down there and ultimately a lot of the jet fuel for the Toronto airport. Shutting it down would likely create a localized energy crisis and cause prices to skyrocket. And you’ll lose Michigan in the mid terms. Guaranteed.”
“Well that sounds bad. Maybe I’ll park that. (background yelling “kill that Trudeau thing ok? What? No, the call, not the guy. Sheesh.). Okay so shutting down a pipeline is a bad idea. How about a big release from that Strategic Petroleum Reserve? What do we have, like 600 million barrels of oil?”
“Yeah, I’ve heard that proposed. It’s an interesting idea, but it seems the timing is wrong. The point of the SPR is to address a short-term supply crisis, not mildy inconvenient high prices. And what happens when you do the release? You guys consume 16 million barrels a day. You have 600 million barrels in reserve. To make a dent in prices you need to go big. Release half. That’s awesome, and will drop prices until that is absorbed and then? You become a major buyer to load the SPR back up. What a waste of time and money. The SPR is there for a crisis, not a problem,”
“Fine, so the SPR won’t let me build back better. What else can I do? I made a call to the Saudis and said “hey, more oil or we are out!”. Isn’t that a good plan?”
“Sure, maybe. If you had any influence at all with Saudi Arabia. But you kind of gave that up a while ago. Like OPEC is a big deal and always will be but really, if America is really happy to sit on the sidelines while a journalist is mysteriously killed without consequences, do you really think the Saudis care about your domestic oil situation or are even remotely concerned about a no consequence threat of “or else”?”
“Well, what if I said that I would let Iran back in the mix?”
“Ha. Sure. Iran has a couple of million barrels of crappy heavy oil capacity. But come on, don’t you know that the “official” numbers are garbage? So much of that Iranian oil is gong to China. Opening up those export channels just makes those transactions official. The market will say thanks, we knew all about that, you still haven’t addressed supply. Prices will go up.”
“Wow, this is as tough as shoe leather. So it sounds to me like the best way to get prices down is to have more production. I know that Russia has great reserves. If we get them to increase production, we are good, right?”
“Sure. Russia has plentiful reserves. They haven’t significantly grown production in years, but hey, why not leverage your energy future to the whims of a dictatorship run by a bare-chested bear hunter. It’s worked wo well for Europe and natural gas. Seriously dude, get your head out of your ass. This is your biggest geopolitical foe, what scenario actually makes you think this is even remotely a good idea?”
“OK, don’t be stupid. Got it. Seems like a good plan. What about price controls?”
“Seriously?”
“OK, never mind. Hey, there’s a lot of people here who want me to outlaw exports. That’ll be good right? All that production will stay home! Genius!”
“No, not genius. Dumb. And not indicative of an understanding of why you have exports in the first place. OK, bear with me. US oil and gas production 101. America produces a bazillion barrels of light oil. Which is great. But Its refineries on the other hand are designed to process heavy oil. So because the US has excess light oil production, you are able to export a lot of it, which is a massive economic benefit, by the way. Cut off that avenue, and producers will just shut in production, because it has nowhere to go and no one is going to spend billions of dollars retrofitting refineries to process a fuel that you are actively trying to phase out. So prices don’t change, unless they go up, the industry is crippled, Texas is lost forever to the Democrats and your current account balance gets whacked. Oops!”
“OK, got it. Seems like I’m screwed no matter what I do. I guess I just need to suck it up and accept the fact that there is nowhere near enough oil in North America to moderate prices.”
“Exactly! Wait, what? No. That is absolutely wrong. There is loads of North American production. It just hasn’t grown at all in the last few years. You know, COVID, ESG, Fossil Fuel hate. All leading to a lack of investment, which holds back production.”
“Come on Man. This is the same tune you said at the beginning!”
“Of course. Because it’s all true. You have a production problem. Not an OPEC problem. Demand for oil is recovering faster than anyone expected. OPEC is actually producing as much as they can right now. Russian can’t grow production. Other places in the world are not investing. There are limited places where you can access more oil and gas.”
“What about California. I hear they are pretty flush with oil.”
“Sure. There’s lots of potential there and expanding drilling for sure will help with tourism. I’m kidding by the way – expand drilling in California and you’ll lose that state as well.”
“Yeah, but I can’t give anything to Texas. I hate those guys. And they can’t even get my name right. They keep calling me Brandon.”
“OK, dude. Joe. Whoever you are. I’m going to go out on a limb here and assume that you are actually the legitimate president of the United States of America. Here’s how your energy market works. You produce a massive amount of energy. A lot of it gets exported and creates value for you. The flip side is that you need to import oil to work your refineries. About 20% of your consumption comes from Canada. I know you don’t like to think of us. But let me repeat. Canada. Canada. Canada. As a nation, you have zero influence on oi prices. But you can get more volumes from us. We are actually pretty good at that. We’ve been supplying you for more than 50 years. Not that anyone seems to care, because, you know, “Middle East” “Influence” Global Hegemony”. But what do I know. Just a lonely industry guy.”
“That’s interesting. Canada, eh? So, what do you need to get us more oil? Seems like a pipeline might be a great idea. Where do you think it should run? I hear you have those oilsands things, where you dig up your country and squeeze oil out of dirt. Al Gore told me all about it once, or I watched a movie. Can you even pipe that? From like say wherever you do that oil processing stuff across the border through Nebraska to, like, Oklahoma? That seems like a pretty rational idea that would give us long term strategic and friendly access to a f-ton of oil pretty much into perpetuity!”
“You’re kidding right?”
“What do you mean?”
“We had that pipe under construction. You cancelled it.”
“Yeah, but that was just for show. Now that we need it, you can just build it right? As long as you buy American steel?”
“No. It doesn’t work that way. The company may not even want to risk it anymore.”
“But I’m the President. I can just issue a presidential permit or something.”
“Maybe, but pipelines take years to build.”
“Rats. Good point. So what do we do about high oil prices? And high gas prices?”
“Nothing dude. Unless you are willing to actively encourage production growth in Texas or figure out a way to increase volumes from Canada in the short to medium term, you’re hooped.”
“Well, I can’t do that. I’ll lose the support of AOC and all those squad people. They scare me way more than Bernie ever did.”
“I hear you. Politics is tough. But you seem like the kind of guy who can figure out how to drive up the middle.”
“Thanks. I appreciate that. You are clearly knowledgeable about the energy industry and your prescriptive solution to encourage production domestically and facilitate more imports from Canada is clearly the best way to manage prices and establish North American energy security for decades. Can you draft up a memo to that effect for me to attach a presidential seal to? My assistant will send you a link that you can click on to submit the file, it may ask you for a credit card number.”
Ha – I knew it! There’s always a hook and a scam. No way was I going to share my ideas with this crazy kook, let alone click on a mystery “link” to the “white house” to share ideas on how to address the gas price crisis. I ain’t no dummy.
So I hung up. Can’t be too careful out there!
