I've been reading up on our energy situation. As a gig economy restaurant food delivery driver who pays for my own gas, skyrocketing energy prices hit me hard.I wanted to understand what the hell's going on. We have huge amounts of fossil fuels in the ground in America. So why can't we just get it on the market?
Of course there's two standard answers. Depending on which side you're on it's the fault of two of the most powerful leaders on the planet. It's either Biden or Putin. But I've found it's a lot more complex than that. There's more forces at work here.
It's quite true that Biden's war on the oil, gas and coal industries has been a major factor in rising energy prices. Dems have openly admitted their agenda is to push up energy prices to force Americans to switch to renewables and electric cars. One of the big reasons that drillers don't want to sink money into new wells is that the future of the industry is in doubt because of this. The constant stream of new regulations creates extreme uncertainty on whether such an investment would pay off. As a result our energy companies are holding huge new leases allowing drilling of new wells that they're not using. New well creation levels have plummeted. This doesn't bode well for future energy prices. And this is exactly what the Dems planned.
And then there's Vlad The Invader. Energy commodities markets run on fear. It's not hard to understand the impact that the prospect of Russian oil being removed from western oil markets has had. While oil is a fungible commodity, Russia doesn't have a lot of huge oil export terminals in it's ports to fill up supertankers. Russia relies upon pipelines to the west to sell its oil and gas to European and west Asian nations. People say the Russians can sell their energy to China instead. Yes, they can... after they build the necessary pipeline capacity. That'll take years. In the meantime Russia will not be able to export a lot of it's energy, which impacts world supply.
Okay, so there's problems in the world supply. Biden begged the OPECkers to ramp up production. They refused. Then why can't American frackers come to the rescue? It's not all because of Biden and his stupid 'green' energy policies. Or because of Putin's war in Ukraine.
American frackers are facing a number of problems in the industry. There's a shortage of workers. In spite of the high pay workers have disappeared from the fields. Nobody's quite sure where they went. Even higher pay, bonuses and better bennies haven't lured them back.
The worker shortage has created other problems. There's a shortage of fracking sand because the companies that mine and process it are also facing a critical worker shortage. Without fracking sand wells can't produce. This is another reason for the drop in new wells.
There's other shortages affecting the industry thanks to supply chain issues. The shortage in the supply of steel has driven the price of drilling pipe and wellheads to astronomical levels. The same is true of all the other associated drilling supplies and equipment. That makes new wells a far less attractive investment prospect.
Another one is vehicles. Drilling requires all sorts of vehicles. Trucks deliver everything to the site. Construction equipment is needed to prep the sites, dig catchment basins for used fracking fluid and many other tasks. Vehicles are needed for exploration, maintenance crews, inspectors, etc. Due to the chip shortage there's a severe vehicle shortage which includes trucks, construction equipment and other work vehicles.
Yet another factor is Wall Street. Not long ago investment firms were throwing money at frackers. There was no fiscal responsibility either with investors or fracking companies. That led to some ugly results for both. A lot of drilling companies went under. A lot of investors took heavy losses. Nowdays investors in drilling companies are far more conservative. They're a lot less likely to invest in small startup drillers. With the companies they have invested in they're demanding strict fiscal reporting and cost cutting. This makes it extremely difficult for both the startup drilling companies that are so important to the industry and existing companies that produce most of our energy.
This is the perfect storm of hits on American energy production that's preventing our energy industry from filling the gap. Unwinding all this wouldn't be easy even for an American president with real business savvy like Trump. For an idiot who's at war with our energy industry like Biden it's impossible. This seems to indicate that things aren't going to get better anytime soon. But the demand for energy is there, and the market always provides. Perhaps state governors can find workarounds to help the energy sector. Maybe creative Wall Street investors will find ways to improve the situation so they can make more money.
We shouldn't sell American ingenuity short. We may yet be able to save ourselves from ourselves. If we don't the consequences will be severe. High energy prices affect every aspect of our economy in very negative ways. If anything could push us into a severe economic crisis, this would be it. Let's pray for Americans to come through, conquer the challenges and fix it.
I have absolutely no sympathy for anyone that voted for Biden who complains about the price of fuel. They got what they voted for.
Yes, the market provides -- assuming of course it isn't regulated to death.