Prepare Yourselves for $5 per Gallon Gasoline

The thing that is so entertaining about Joe Biden are the things he will say once he gets off the teleprompter; things a politician with a fully functioning brain just would never say. For example, today he indeed confirmed the narrative that he wants to stop all oil drilling on federal lands in the United States. An act that would greatly increase the price of gasoline to the American consumer.

www.washingtonexaminer.com/restoring-america/courage-strength-optimism/biden-promises-no-more-drilling-two-days-before-crucial-midterm-elections

From the article:

"President Joe Biden made an apparently unscripted remark Sunday night that there will be "no more drilling" under his watch in response to someone in the crowd at his rally with Gov. Kathy Hochul (D-NY).

“No more drilling,” he said, waving his hand with a back-and-forth motion. “There is no more drilling. I haven’t formed any new drilling.”

The person was holding up a sign that read, "5 more years of drilling is a lose lose!" and could be heard yelling back at Biden about offshore leases. He responded, “That was before I was president. We’re trying to work on that to get that done. Thank you.”

All that work trying to convince the American public he actually was trying to lower the price of gasoline undone. All the work of releasing oil from the SPR to lower the price of gasoline before the November mid-terms and he lets this slip out.

But actions speak louder than words. Here is what he has done to the flow of federal leases to the oil industry:


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Note that tiny 0.13 million acres bar at the bottom of the graph. That's the amount of Federal acres leased for oil and gas production during the first 19 months of Joe Biden's presidential term. The previous low was 1.79 million acres under Johnson. Compare that to Trump at 4.4 million acres or the high of 47.58 million acres under Reagan. I would argue the energy crisis that confronted Reagan during his first term in office is similar to what Biden is confronted with now. That's the type of access to Federal acreage that is needed to provide more crude oil and lower the price of gasoline to the American consumer.

And let's look again at how the SPR oil releases have masked the upcoming energy crisis. 


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Commercial crude oil inventories have seen a build of approximately  25 million barrels over the first 10 months of 2022 at the expense of drawing 194 million barrels of oil from the SPR. In other words, without the SPR withdrawals commercial crude oil inventories in the US would have fallen by about 170 million barrels. How significant is 170 million barrels?


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Well, US commercial inventories are currently around 430 million barrels which is barely withing the 5-year range. Take 170 million barrels off that (a 40% reduction) and you have 260 million barrels. And that's exactly what is going to happen if demand in 2023 is the same as 2022 without additional SPR releases.  I would assume Biden will save the remaining 400 million barrels in the SPR for his 2024 re-election run. That leaves the Federal Reserve to create a deep enough recession to lower 2023 demand by at least 170 million barrels. That's going to be ugly!