We Are Suffering the Consequences of Green Energy Policies Here and Abroad
https://youtu.be/gp2kpgm06lo Since the beginning of last year, I warned there was a great risk our energy prices would increase due
https://youtu.be/gp2kpgm06lo Since the beginning of last year, I warned there was a great risk our energy prices would increase due
Since the beginning of last year, I warned there was a great risk our energy prices would increase due to the present administration’s restrictive energy policies, aggressive fiscal spending, and quantitative easing by the Fed, leading to systemic inflation in the U.S.
In addition, in my Dec 7th, 2021, Energy Update, I said Europe’s Natural Gas supplies were at a 10-year low caused by their green energy policies, which increased the risk of higher prices not only this winter, but long-term since the polices leading to today’s high prices were not abating, they were becoming more entrenched here and abroad.
The following chart shows what has happened to Natural Gas prices since the Inauguration of the present administration on Jan 20th. 2021:
Natural Gas prices have doubled since Jan 20th, 2021, up approximately 100%, and since Natural Gas is the largest source of power for the generation of Electricity, utilities across America have passed on the higher cost to consumers.
And I am sure you are aware as you can see in the following chart since Jan 20th, 2021, the higher cost of energy is also being experienced at the pump:
Gasoline prices more than doubled with wholesale Gasoline prices up approximately 125% and there is no end in sight.
The present administration’s energy policies has led to decreased production and skyrocketing Natural Gas and Gasoline prices, but this is not the only casualty of high energy prices. A byproduct is since energy is the largest source of revenue for Russia, they have experienced an economic windfall helping them to fund their invasion of the Ukraine, and with America importing over 600,000 barrels a day from Russia, we are in essence supporting Russia’s war machine.
There is a consensus in America that Russia’s invasion needs to be resisted and we must place sanctions on Russia, but sadly we appear to be hesitant to stop importing Crude Oil from Russia. The present administration’s long-term commitment to green energy may be inhibiting their near-term sanctions of importing Crude Oil from Russia, and although I believe pressure from both parties will eventually result in America ending importing Crude Oil from Russia, I believe their long-term commitment to green energy has not changed.
The consequences of this policy clearly has had short-term consequences, but I am concerned the long-term consequences will be even greater. In the short-term, restrictive energy policies have resulted in decreased production.
But it does not appear our present administration has any interest in reversing their restrictions on production including new restrictions on building liquefied-natural-gas terminals in the United States that are needed to liquefy our abundant Natural Gas to be shipped to Europe and the rest of the world. The cancellation of oil and gas pipelines, such as the Keystone XL, and limiting gas-drilling permits in Alaska, Texas and other oil-rich state have also lowered our domestic production.
If these policies continue unabated how bad could things get here in America?
We only have to look at what is taking place in Europe. Their commitment to green energy led to their low Natural Gas supplies resulting to their Natural Gas prices skyrocketing in the fall of 2021, and with Russia invading the Ukraine as you can see in this chart prices continue to skyrocket:
Since Jan 20th, 2021, while Natural Gas prices in America doubled, in Europe prices increased 10-fold. While our prices increase 100%, Europe’s increased 1,000%!
I am not saying we will see 10-fold increases in America overnight, but I am sure consumers in Europe a little more than a year ago did not dream their cost of Natural Gas would be where it is today! As I have written in previous reports, we are entering a period filled with great uncertainly that will likely result in wild swings in energy prices, and four years from now, I believe you will realize there was only one cost of doing business you could have kept stable and avoided increased prices and volatility, your cost of energy for Natural Gas and Electricity.
Hopefully, today’s report helps you understand in these uncertain times, why protecting yourself against the risk of higher Natural Gas and Electricity prices long term is in your best interest.
Not every client’s risk tolerance and hedging strategy is the same, but the above report will help you put into perspective the risk/reward opportunities. I invite you to call one of our energy analysts to help you plan a hedging strategy appropriate for your situation.
Ray Franklin
Energy Professionals
Senior Commodity Analyst
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