Christy Goldfuss, an energy and environment policy expert at the liberal Center for American Progress in Washington said it best in an interview with Reuters. She said that a major part of the Biden administration’s climate strategy is to avoid building new long-lasting oil and gas projects such as the Keystone XL pipeline. “The more we invest in fossil fuel infrastructure, the harder it is to transition to the investments we need to make for clean energy,” said Goldfuss. So clearly what she is saying is that the Biden administration plan is to transition off fossil fuels and make them prohibitively expensive, forcing us to change our ways. That policy means that the US had better brace for a new era of higher energy prices.

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The U.S. energy policy under the Biden administration is to surrender our energy independence and instead put our energy future into a global body as part of the Paris climate accord. That will bring down a huge burden on the US as we will be expected to subsidize countries like China that will be able to continue to pollute at the expense of the US taxpayer. Paris is looking to the US to foot most of the bill to move the globe to a carbon-free future. Biden says he wants to lead and by leading that means having the US taxpayer pick up the tab for other countries' carbon waste. The world wants us to pay their fair share.

Of course, the cause of higher energy costs that we are sowing the seeds of will become the Biden recession. It will be only a matter of time before these policies get in place and will drag growth and cost the U.S. jobs. And I am not just talking about jobs in the energy sector but jobs across the spectrum that will be forced to not hire U.S. workers because of higher energy costs. In the meantime, the Biden administration hopes to replace those jobs by spending trillions of dollars of taxpayer money on green projects. That is unlike the investment in Keystone that was being built with private sector money. The problem is that what we found under the Obama administration is that the government did a horrible and inefficient job in spending money on green energy projects and other projects as well. Do you remember Solyndra? Do you remember "shovel ready projects”?

In fact, the private sector in the US energy space has already made huge strides in getting cleaner. The US has reduced its carbon emissions by replacing coal with natural gas. Private companies are working to be more carbon neutral and that may be derailed if the government's hand of heavy regulation leads us down a path of unintended consequences. The US economy is already fragile and by composing an extra heavy burden on US companies, it could further hurt the economy and the most vulnerable in it because of higher energy costs.  

According to the Heritage Foundation, the Paris Agreement is highly expensive and would do nothing to address climate change. It will cost millions of jobs and destroy $2.5 trillion in the gross domestic product by the year 2035. In terms of climate benefits produced by Paris, there are practically none. The Paris accord has the U.S. investing in a global Green Climate Fund that will collect billions and the US is expected to be the largest contributor percentage-wise as the U.S. taxpayer is expected to cover the subsidization of green energy and pay for other climate adaptation and mitigation programs in poorer nations. The Heritage Foundation said that the Obama administration ended up shipping $1 billion in taxpayer dollars to this fund without authorization from congress. Some of the top recipients of these government-funded climate programs have in the past been some of the most corrupt, which means corrupt governments collect the funds, not those who need it.

In the meantime, private sector investment in fossil fuels is being demonized which is creating a huge underinvestment gap. Even the most optimistic people surrounding alternative fuels realize that we are going to see a growing demand for oil for years. They also will have to acknowledge that we are not investing enough money now to meet those future demand needs.

The International Energy Forum said in a Dec.10 report, as reported by S&P Global Platts, the oil and gas industry will have to overcome its pandemic-induced retrenchment and boost investment by at least 25% annually over the next three years to prevent a severe supply crunch that could send prices skyrocketing and tip the global economy back into crisis. S&P Global writes that even with the possibility of peak demand nearing, the world will lack enough production capacity to meet its projected needs if oil companies do not urgently replace depleted reserves and develop new fields, the International Energy Forum said in a Dec. 10 report. "Without sufficient investment, a reduced supply of oil and gas could lead to greater market volatility and higher prices, slowing the global economic recovery and jeopardizing energy security and international goals," said the IEF, which collaborated with Boston Consulting Group on the study. 

Warnings of a looming supply gap are not new, and indeed, both producing and consuming countries are largely united on the issue. Dating back to the oil price slump that began in 2014, the International Energy Agency and OPEC have both sounded the alarm that upstream Capex in the industry was insufficient to meet future demand.

In the meantime, oil is taking a pause as prices for Brent crude are a dollar higher now than one year ago and that was pre covid. That also suggests that oil prices are not only trending up but breaking out. Whether we will go straight up may depend on today’s Energy Information Administration (EIA) report. One sign that they may be bullish is what we saw in the American Petroleum Institute (API) report. The API reported a major 4.285 million barrels drawdown in Cushing, Oklahoma. While the API still reported an overall build of 2.562 million barrels, one might expect a more bullish draw because the API was probably making up for past underreporting.

The API reported a slight build in products suggesting improving demand. The API reported gasoline supply up 1.129 million barrels and distillates up only 816,000 barrels. The EIA is out at 10a because of the Martin Luther King holiday and we get the natural gas storage at 9:30a. Natural gas continues to get whipsawed on weather reports. January temperatures has been well above average in the US.

The AP reports that there were twin suicide bombings ripped through a busy market in the Iraqi capital Thursday.