BloggeRhythms

As good an explanation as one is likely to find regarding the nation’s currently unmanageable economic morass can be found in two well-researched, well-documented and well-written articles found on-line today.

The first is by Larry Bell, an endowed professor of space architecture at the University of Houston where he founded the Sasakawa International Center for Space Architecture (SICSA) and the graduate program in space architecture.

Bell begins: “President Joe Biden is correct in assessing climate change as the greatest global threat ... but for the wrong reason.

“It's only because our most dangerous adversaries are weaponizing his administration's energy policies driven by climate obsession to advance their territorial aggressions.

“Moscow is playing upon Biden's release of sanctions against its Nord Stream 2 natural gas pipeline to forestall NATO resistance to its threatened Ukraine offensive; Beijing is using greenhouse emission compliance promises as Communist Party favors amidst Taiwan provocations; and Tehran mullahs are bargaining oil export sanction relief against a White House desperation for a renewed "nuclear deal."

Bell then puts the combined strategy’s into a perfectly logical explanation for how and why the inflationary spiral began, writing: “All three adversaries [Russia, China, Iran] are collaborating to exploit U.S. abandonment of fossil energy independence and global market leverage which commenced on Biden's first day in office cancellation of America's Keystone XL pipeline and drilling permits on public lands and waters.”

As posted here from the start, the Keystone cancellation was most likely the primary cause of inflation in the U.S. and the stimulus for all that followed like links in a chain. Higher fuel costs lead to higher costs of transportation, leading to higher prices that  increase demand for higher wages that lead to higher production costs and further upward pressure on prices creating a conceptual spiral.

How the spiral works specifically in the U.S. comes from Phil Flynn, a senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. “He is one of the world's leading market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets.”

Flynn writes: “Joe Biden was inaugurated on Jan. 20, 2021, and within hours the new president could not wait to sign a slew of executive orders. Yet the one that has set the tone for his presidency and perhaps laid the groundwork for his plunging popularity and surging inflation was canceling the permit for the Keystone XL Pipeline. 

“The Biden administration thought the cancellation was a way to get back at the previous administration that approved it after the Obama administration killed it and was a signal about its commitment to the environment. Yet it was read by the industry and those that invest in the sector as a knock on America’s oil and gas industry. It also created a domino effect across the fossil fuel space that helped a massive surge in the price of oil and gasoline we are seeing today. 

“The energy industry saw this as a political attack on fossil fuels, and it feared that this arbitrary and political decision was only the beginning because studies found the pipeline would not add to greenhouse gas emissions. In fact, it can be argued that the cancellation may actually add to emissions. The oil that would have been moved through the pipeline from Canada will now be transported instead by rail and truck and other means that are not as safe as pipeline transportation.”

Furthermore, and a little-known consideration unmentioned in the mainstream media: “Biden wants to take away a tax credit that would allow oil companies to reduce their tax liability by 15% of the qualified costs associated with enhanced oil recovery projects. That is killing the technology that allowed the U.S. fracking revolution and allowed the U.S. to lessen its dependence on foreign oil. The Biden administration also wants to take away the industry's ability to deduct 10% of gross income instead of the cost of resources depleted in a given year which would further restrict U.S. oil output and innovation.  The Biden administration has also pressured banks and endowment funds to stop investing in fossil fuels.”

“The policies have helped restrict U.S. oil production, and the fallout from the Keystone Pipeline remains lost on the administration. The current cost of oil takes partly into account the availability of supply that is expected to come on in the future. The markets had already priced in more supply in regard to the Keystone XL, but now that supply will be harder to get and will be more expensive. The current price of oil also takes into account current investments in oil and gas exploration and drilling. Under Biden, new oil discoveries have fallen to a 75-year low. Research firm Rystad Energy said that the oil and gas industry had only discovered 4.7 billion barrels of oil equivalent by the end of 2021, the lowest amount in 75 years. 

“The crude oil once used has to be replaced. Just like when you drive for a while, you will eventually have to refuel your gas tank. If supply is expected to be more abundant in the future, then current prices should remain somewhat subdued. If there is an expectation that replacement cost in the future is higher, then current prices must be higher to make affordable supplies for people in the future. Not only did the cancellation of the Keystone Pipeline set the stage for higher energy prices. It also helped raise fears of inflation that are plaguing the U.S. and global economy.”

What’s most amazing about the detailed analyses above is that they illustrate as a practical reality the nation’s horrendous economic conditions are fundamentally simple. The nation’s oil production was intentionally shut off, spurring the inflation to follow. Which means that if the administration truly wished to resolve the strangling effects of that inflation, all it has to do is permit that production again.

That’s it for today folks.

Adios  

Here’s a link to the Bell article: https://www.newsmax.com/larrybell/biden-energy-russia-china/2022/01/26/id/1054081/

Ps: For our “climate-change” friends: “Chris Oberholtz writes @foxweather.com, “The mild air across the eastern half of the country on Friday will be short-lived as another blast of arctic air will drop out of Canada behind the nor’easter. Freezing temperatures will be felt as far south as Orlando Sunday morning. The coldest air in more than a decade is forecast across south Florida where temperatures will dip into the 30s.”