Living in the age of “politucion”
In the refining calendar there are two seasons.
The first is late spring, early summer when facilities crank up production of gasoline for the upcoming driving season. The second is early to late fall when the emphasis is on distillates (diesel and heating oil) for the winter heating period.
These seasons though, are when consumers and manufacturing are functioning in normal times.
Those times are in the past.
Forecasting prices of any or all refined petroleum products was difficult when we were in the best of times. We are now dealing with the day-to-day – or week-to-week uncertainty of a pricing factor that is a moving target. A target that is there one day, and morphed or completely gone the next.
The same goes for the tried-and-true arithmetic of supply and demand both of which are struggling to recover from the global viral ambush. The critical inventory levels are 8% below the 5-year average while demand for gasoline is up 9%. This imbalance would point to higher prices in the immediate future because there is too much teeter and not a lot of totter. Prices are falling at the gas pumps along with loading racks for diesel because – fact or rumor indicates – the virus is mutating, which has triggered a drop in demand.
This, in turn, has led to a serious case of “politucion,” which is when politics dictates or interferes with the orderly recovery of supply, demand and prices.
As mentioned in earlier reports, the Biden administration is theoretically anti-fossil, but only takes this position when its political future is not in danger of becoming a fossil itself.
An imaginary phone call with President Biden would go something like this:
Mr. President, may I ask you, if 25% of all fossil fuel emissions in the U.S. come from oil and gas development on Federal lands then why not just shut those projects down?
Mr. President, are you still on the line?
How about discouraging fossil fuel consumption with a carbon tax like we have in Canada?
Even with his very own carbon tax, Prime Minster Trudeau still owns the 590,000 b/d TransMountain pipeline, has not resisted the soon to be opened Enbridge Line 3, which together with the TransMountain will add over 900,000 bpd of crude heading south to the US of A.
Now that’s “politucion” for you from the Master of “politucion” himself.
– Roger McKnight – B.Sc., Senior Petroleum Analyst