Not an Energy Shock.

There are gasoline stations running out of gasoline in the UK and there is competition to secure tight supplies of natural gas between Europe and China while Russia is being accused of manipulating supplies to drive up market prices in an attempt to show their influence on the global oil and natural gas market. Some might be worried about an energy shock but to be honest with you, they should not be shocked because the energy crisis that we are entering into has been a long time in the making.

Readers of The Energy Report have known for some time my concerns about the lack of investment in oil and natural gas and concerns about the great energy transition which is turning out to be nothing more than a great transition of wealth from the poor to the very wealthy. While the politicians fall over themselves saying they are trying to save the planet, some companies are making billions of dollars on this energy transition, and it is the citizens of these countries that are bearing the greatest brunt of this risk. This winter they are going to see their heating and electricity bills and their cost of living go through roof while governments spend billions to subsidize wind, solar and green energy technologies that may be decades away from providing any real relief for consumers.

The Biden administration seems to have no clue on how to handle this energy crisis. They continue to throw billions of dollars at the UN to win favor with the world trying to convince them that America is back but at the same time at home they face the type of energy crisis that we’re seeing in Europe.

The Biden administration continues to discourage U.S. energy production. U.S. Department of Energy Secretary Jennifer Granholm says our hair should be on fire with concerns about climate change while pushing for the administration’s quest for 273 billion dollars to spend on climate change. At the same time, the Energy Secretary seems to believe that the global energy crisis is transitory and driven by Hurricane Ida and other issues a that is beyond her control.

While we’re seeing a big jump up in rig counts, it is unclear that U.S. producers are going to respond to what could be a big crisis this winter. We are already seeing supplies of propane, heating oil and heating fuels below average for this time of year and this could create some real economic pain for the poor and underprivileged.

MarketWatch reported that Baker Hughes BKR, +0.75% on Friday reported that the number of active U.S. rigs drilling for oil climbed by 10 to 421 this week. That followed increases in each of the last two weeks as a recovery in Gulf of Mexico energy operations continues in the wake of Hurricane Ida, which made landfall on the Gulf Coast nearly four weeks ago. The total active U.S. rig count, which includes those drilling for natural gas, also climbed by nine to stand at 521, according to Baker Hughes.

With global supplies of oil and natural gas tightening due to concerns about fuel switching, I think the market is starting to wake up to the fact that we have a potential structural shortage for natural gas. We could see some significant upward price shots. Make sure that you re hedged. Something we’ve been telling people to do for many, many months.

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Call for the Phil Flynn Daily Trade Levels on all major futures markets for entry, exit and stop points at 888-264-5665 or email me at pfynn@pricegroup.com.

Thanks,

Phil Flynn