As the 30,000 attendees heading home from the COP26 “gatherathon” hopped on various fossil fueled jets, the skies must have taken on a hue of disappointment.
Colour me cynical but little, if anything, appears to have been accomplished other than the familiar hollow echoes of political ranting and posturing, which sounded to many like, “Oh yeah? Well my planet saving promises are better than yours are!”
What may have been agreed upon is that the transition from fossil to renewables will happen… but not anytime soon.
As the leaders of the U.S. and Canada touched down on the runways of north America everything looked familiar, especially the energy landscape.
The environmental “crisis” is still being trumped by the energy crisis. And this is being fueled by consumer demand for refined products, which is eviscerating supply.
As the U.S. heads into their Thanksgiving weekend, the traditional running start to the holiday shopping season, gasoline demand is up 10% while supply is down 4%.
This is not a good political visual for President Joe Biden as he heads home from the Glasgow “yawnathon.”
Crude oil inventories continue to fall, now 7% below the 5-year average. To make matters worse, the first blast of winter is forecast for next week, which will further draw down distillate levels that are already 13% below the 5-year average.
With all the energy dominoes beginning to fall, the president will find himself in a corner in a round room.
Prices for all refined products will continue to rise unabated unless the traders see any hope of increasing crude supply. Twisting OPEC’s arm in an effort to convince them to increase production didn’t work out as they expected.
The next move would be to access the Strategic Petroleum Reserve (SPR) or get a boost in crude supply from somewhere.
Canada is the largest provider of crude, so one would think they could be relied upon to meet the increased need, right?
Yes, in fact, the Canadians are really our back up SPR, and they would have been able to increase supply and lower gas prices, but the first thing President Joe Biden did when elected was cancel the KeystoneXL!
So, there is no relief there.
The only near term and temporary relief of high pump prices is for the U.S. to release crude from the SPR.
This should happen sooner rather than later.
Obviously this was not one of the items on the agenda at COP26.
This is what happens when ambition is slowed by a jet stream of reality.
– Roger McKnight – B.Sc., Senior Petroleum Analyst