Biden’s Big Plan To Crush Oil Prices…Won’t Work!

So President Biden is back with another Plan to bring down oil prices but I must Say that this is a Twilight Zone idea That won't work and you quickly see it Is more of an attempt than a real Strategy to bring down the price now you Have to understand why Biden has come Out of this three-part plan to Strengthen U.S energy security and Courage production and lower cost now Firstly inflation in the U.S is still Insanely High Yes Energy prices have Come down with the CPI for guests Dropping to 18 but that is still very High especially when we are already in The midst of a recession second OPEC Plus isn't playing ball and they have Cut oil production so they have lost Control of the supply side overseas now Thirdly the mid-term elections are Coming guys and Biden's approval ratings Are in the toilet and according to the Peel Research Center he's pulling 38 Which is one of the lowest in history Leading up to the midterms so he needs To pull out a in and this video really Isn't a review it's a post-mortem of a Plan that probably isn't well thought Out it won't be effective enough to Bring down oil prices in the long term Now the plan comes in three parts the First is the Department of energy Selling off 15 million barrels from the Strategic petroleum reserves or the spr

They are draining away 15 million Barrels to push down the price of oil And the second is the administration's Plan to repurchase crude oil for the spr When oil prices are around 70 dollars or Below they plan to entice oil companies To pump more oil by reassuring Big Oil That the government will be there to buy Oil at 70 dollars now thirdly Biden is Calling for oil companies to pass lower Energy costs to Consumers right away he Wants big oil to use their profits to Subsidize prices at a pump now on the Surface all these sounds like reasonable Steps to push down the price of all oil You flood the markets with 15 million Barrels you commit to buying oil down The road and you get oil companies to Share the wealth but when we dig deeper We'll quickly realize that the plan is Doing too little too late and at many Points very contradictory I'm not Blaming President Biden for doing a Hail Mary pass and taking a spin at a Roulette table but this is a truly Bizarre plan now let's address the Selling of the spr first Biden has Announced a sale of 15 million barrels Of Reserve oil but the impact this will Have on oil prices will be minuscule now The big issue is the sale of the spr is A one-time event you are not selling off 50 million barrels a day it is just a One-time release and if you compare this

With Saudi Arabia's crude oil exports Which is around 7.6 million barrels per Day in August the 15 million barrels Number from the SPL accounts for only Two days of Saudi oil exports it is a Drop in the ocean we can also compare Directed or OPEC cards of 2 million Barrels a day now the 50 million barrels Account for only 7.5 days of the Production card from OPEC plus sure the Release might affect the immediate price But it won't have a lasting effect all OPEC needs to do is to cut production a Bit more and this move is counted within Days and according to Goldman Sachs the SBR sales will only have a modest Influence on oil prices dropping them by Less than five dollars a barrel and the Former hit of the eia America's own Energy agency when on record saying we Are talking about fairly small potatoes Here we're putting 15 million barrels Into the market and the problem with Selling the svr is that it opens the US To oil shocks we can see that the SPL is Now at 405 million barrels nearly half Has been drained away from its peak of 726 million barrels back in 2011. this Is dangerous business because reserves Are meant to be utilized during times of Crisis and not really to try and move The prices of the oil market right the Oil Market is too big to be influenced In such a way and let's have a flashback

To the oil shock in 1973 America Experienced an oil embargo by Arab Producers now the OA pack which included Saudi Arabia actually stopped exporting Oil to the United States now this caused The price of oil to go from three Dollars a barrel to over 11 in just Three months and this was one of the Core reasons that spr came to existence Right just in case oil producers decide To embargo the U.S again so releasing The reserves to push down the price of Oil might not be the best idea it should Be a last resort when there can be no Other option available now the second Part of the plan filling up the SPO at 70 dollars is also an issue Biden has Promised oil companies that he will buy Their oil at 70 in the future so the Idea is if you're an oil producer you'll Get you to pump more oil them because There will be domestic demand in the Future if the price Falls too low and President Biden said refining and Refilling The Reserve at 70 dollars a Barrel is a good price for companies and It is a good price for taxpayers and it Is critical to all national security so That technically sets a floor at 70 Dollars for oil so that local oil Companies can sell to the government now That is a good move but it probably Isn't enough because American oil Production prices are just too high and

Let's take a look at the break-even Price of oil wells and I want us to Focus on a break even value for the new Wells which is colored in blue because Biden's agenda with this plan after all Is to encourage new oil production and We can see the price of oil for a lot of The new oil wells in the US have break Even prices of over 50 dollars Especially Shale oil which sits at 69 And this means if the price of oil Collapses again to under 70 dollars many American companies will just stop Production because either the profit is Too little or they could go bankrupt They could go under and this means that Spr could very well be refueled at 70 or Below but it'll be from overseas Imported oil and a better move would be To guarantee oil companies that the U.S Government will refuel up the SPO at a Premium from U.S producers yes the Subsidies will probably be the taxpayer Dollars but it will give oil companies In the U.S a greater incentive and Better reassurance but there's another Big assumption how long will it take for Oil to drop below 70 dollars right what If it doesn't drop for the next two or Three years what if OPEC or Russia Decides to cut production even more now Biden here is trying to time the price Of oil he is betting that the oil price Will crash soon enough because the

Longer high oil prices drag out the more Empty the spls will be which is bad for Energy security but the faster oil Prices do crash down the less incentive Oil companies have to start drilling and Producing new oil but I think the one Thing that boggles my mind the most is Telling oil companies to pass savings Onto consumers but there are no Reassurance given to them now Biden Still at war with fossil fuels what Happens to oil companies two or three Years down the road right and according To the president he told all companies You should not be using your profits to Buy back stock for dividends not water Was raging you should use those Record-breaking profits to increase Production and refining but he went on To say our country needs to pass Permitting reform to accelerate the Development of clean energy so there's Really no incentive for oil companies to Reinvest back into American Energy on One hand you want their profits to Subsidize prices at the Palm but on the Other you want to give special treatment To Green energy there's really some Serious disconnect here it's like he's Trying to hang on to the green energy Dream while giving a subpar due to the Oil and industry and they won't buy it The cost of producing oil in the United States is already some of the highest in

The world and at the very least you need To give them some guarantees because if All they hear is green energy these Renewable energy debt what's the point Of pouring billions into building Refineries pipelines and other energy Infrastructure and this is the exact Reason why oil companies have been so Aggressive their stock BuyBacks we are Seeing Big Oil dumping their money into BuyBacks because there's nowhere else to Put their Capital to work without Getting burned the risk is just too high We can see a clear trend of big oil Companies cutting back on their Capital Investments year after year in 2013 they Spent over 150 billion dollars but in 2022 they have only pledged 81 billion Dollars when the price of oil was the Same at around 100 bucks so without the Right incentives trying to increase Production won't really work and when it Comes to incentives it doesn't have to Listen to what the experts in the oil Industries are saying now the American Petroleum Institute or the API has come Up with a 10 point plan to unlock American Energy and it tackles the core Issues for example one of the points is To dismantle Supply Chain bottlenecks by Removing tariffs on Commodities such as Steel which the oil industry needs they Desperately need it to build refineries And infrastructure and even today

There's still a 25 tariff on structural Steel imported from China which is the Biggest exporter of Steel by huge margin You cannot expect to buy cheaper steel When you make over 50 percent of the World's Supply more expensive to import To the United States it's a really basic Idea if the input costs are too high it Increases The Upfront cost of The Upfront risk for building any new Refineries especially when there are no Guarantees for oil in the future and There are many others including making It easier to obtain financing and Lifting the developing restrictions of Federal lands and Waters right but I Don't have to make it easier to develop Oil rigs on U.S soil and all this won't Instantly help increase the oil supply But it will help ramp up production Levels over time so the entire strategy Biden has to increase oil production Really doesn't make sense some parts Like refueling the spr at 70 dollars Isn't attractive enough selling the SPO Itself won't push prices down for long And the oil industry isn't given any Concrete guarantees this is why I Believe the oil plant isn't going to Work out as well as the administration Thinks so we are still going to have Higher prices for quite some time to Come and I think the only path left is Demand destruction and that is perhaps

The only way I can see Energy prices Coming down when you crush demand to the Point heavy one's two poor to spend Because OPEC isn't playing ball and it Just isn't enough it's Centered for American companies to pump more oil so Let me know what you think can Biden's Plan really lower prices at Palm or is It just a nothing Burger let me know in The comments below stay safe be sure to Smash the like button and subscribe as We navigate through these crazy times