Drill Man, Drill: Biden’s Broken Promise

Our aim is to add in these segments to tackle more timely and newsworthy events that either relate to previous Unf*cking narratives or to set up future episodes. Our inaugural Cream finds us back in the world of crude oil and commodities with the recent capitulation on the part of the Biden administration to the oil and gas industry.

To set up the most recent news from the Biden White House, let’s first talk about the big, bold move by the Biden administration at the end of March.

Not an actual quote, but the facts and intent are real:

“Ahem. By presidential order, I shall hereby decree that on this day and every day for the next six months, we, the United States, shall release 1 million barrels per day from the strategic oil reserve in order to calm prices in the market. As of today, the price for a barrel of crude is $100 a barrel, so we’ve finally come to the rescue of the good people of the United States.”

Yay us.

And as of this writing, the price of a barrel of oil is $108.

Awwww. Oh well. Thanks for playing.

The White House touted the release as, “unprecedented: the world has never had a release of oil reserves at this 1 million per day rate for this length of time. This record release will provide a historic amount of supply to serve as a bridge until the end of the year when domestic production ramps up.”

So the brain trust in the White House, after getting pummeled in conservative outlets for allowing gas prices to get out of hand, decided to release historic amounts of crude from the strategic reserve, intended for release during periods of extreme supply disruptions. The hope was that an abundance of supply would send a signal to the markets that would cool oil prices. And, to no one’s surprise that follows the industry closely, it didn’t fucking work. Because, as we’ve covered before, the markets are driven almost entirely by speculators who don’t give a flying fuck about core economic principles.

The oil and gas companies have entire trading desks dedicated to driving the price of commodities up and down, depending upon the bets they themselves have made. Think of it this way: We, the consumers, are sitting down at a blackjack table in a casino where the dealer, the pit boss, the house and the players at the table alongside us all know what card is coming up next. The only one who doesn’t is you. That’s the modern commodities game.

That’s why a release of supply was met with a shrug and a ‘go-fuck-yourself’ by the oil barons that control the pricing and have the ability to utilize the war in Ukraine as a convenient backdrop.

So, after only two weeks of seeing their big wonderful plan go up in smoke, what did Biden do? He doubled down. Before we cover how, let’s go back to the Joe Biden who seemed to understand the stakes of climate change and what needs to be done to curtail our fossil fuel dependence:

“Today’s executive order directs the Secretary of the Interior to stop issuing new oil and gas leases on public lands and offshore waters wherever possible. We’re going to review and reset the oil and gas leasing program. [Unlike] the previous administration, we’ll start to properly manage lands and waterways in ways that allow us to protect, preserve the full value they provide for us for future generations.”

Okay. So that was one year ago when President Biden talked about his commitment to future generations and how the Department of the Interior was going to chart a new path forward with respect to drilling on public lands and waterways. So, let’s hear from the great Native hope, Deb Haaland, the Secretary of the Interior, on this issue:

“First, I am revoking a series of secretarial orders in recent years that are inconsistent with our commitment to protect public health, conserve land, water and wildlife and elevate science. Those previous orders unfairly tilted the balance of public land and ocean management toward extractive uses without regard for climate change, equity or community engagement.”

Climate change, equity and community engagement. Got it. So Deb Haaland had our backs and, like many in the Native community, I was hopeful that she would indeed be empowered to embark on this path and have the resolve to buck the forces of the fossil fuel industry when tested.

Which brings us to the right here and now. Here’s an excerpt from a New York Times article on April 15:

“The Interior Department said in a statement that it planned next week to auction off leases to drill on 145,000 acres of public lands in nine states. They would be the first new fossil fuel leases to be offered on public lands since President Biden took office.

 

“The move comes as President Biden seeks to show voters that he is working to increase the domestic oil supply as prices surge in the wake of the Russian invasion of Ukraine. But it also violates a signature campaign pledge made by Mr. Biden, as he sought to assure climate activists that he would prioritize reducing the use of fossil fuels.

 

“‘And, by the way, no more drilling on federal lands, period. Period, period, period,’ Mr. Biden told voters in New Hampshire in February 2020.”

This is a purely political move. But to please who? Let’s just review the economics of this for a moment. The article rightly notes in the lede that any new drilling will take years to commence.

And this flies in the face of Joe Biden’s own fucking remarks just two weeks prior, where he claimed that oil and gas companies were already sitting on more than 9,000 approved leases to drill on federal and Native lands. In fact, a Poynter article confirms that, “there were 9,173 approved and available permits” as of the end of 2021.

So new leases won’t accomplish a thing. That’s why this is a purely political move, and a cynical one at that, considering he’s literally going back on his own statements within weeks of making them.

The bottom line in this whole system is that there have only been a handful of years since the 1970s when demand was level with supply. Outside of these few years, production and capacity, both domestically and globally, has always outpaced demand. And, even despite recent inventory draws around the world, including the U.S. draw on strategic reserves, we’re flush with oil.

Moving product is another story, as evidenced by the current issues in places like Ireland. Countries without a mature pipeline infrastructure are having a more difficult time contracting with tankers to move oil, but that has nothing to do with the abundance of supply around the world.

The issue goes back to the simple fact that oil and gas companies and their financial trading arms—along with the oil and gas desks at the large institutional investment banks—are leveraging the current situation in Ukraine and the inflation crisis driven by corporate greed as cover for outrageous prices.

Is it possible that the Biden administration economists don’t fucking understand this? I doubt it. Seriously. Again, it’s all so cynical, because even the political gambit here is ludicrous. Think about it. What does Biden have to possibly gain with these maneuvers? We know it’s not going to work to lower prices. So there’s no win there. Is he trying to woo conservative voters and middle of the road Democrats frustrated with prices at the pump? If it doesn’t work to bring down prices—which it won’t, and they should fucking know that—then that’s not going to work on the moderate Democrats. And conservatives aren’t coming over to his side no matter what.

So, all he’s accomplished is to further piss off those on the left who care about the planet, and apparently understand economics better than his advisers. Congratulations to the Biden team for effectively alienating everyone.

As we covered in our oil and gas episode, if you want to get control of this situation, you have to treat oil like Eisenhower treated onions.

Catch you this weekend, Subf*ckers, as we head to the left coast to look at the Hollywood war machine.