Daily Energy Standup Episode #123 – EU Contemplates Russian Oil Ban, Africa Establishes Oil Bank, Biden EPA’s Tough Rules, and Strategic Petroleum Reserve Refill in Sight

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Daily Standup Top Stories

EU Considers Formally Banning Russian Oil Flows To Germany And Poland

Authored by Charles Kennedy via OilPrice.com, The European Union is considering formally banning Russian crude flows via the Druzhba pipeline to Germany and Poland, which have already stopped importing Russia’s crude, Bloomberg reported on Friday, […]

Africa is establishing its own oil bank to reduce dependence on foreign financiers

The African Petroleum Producers’ Organisation (APPO) is finalizing plans to establish the Africa Energy Bank, aimed at providing financing for oil and gas projects in Africa. The move comes as international financing institutions, including the […]

Biden EPA Announces Toughest-Ever Rules For Power Plant Emissions

Authored by Nathan Worcester via The Epoch Times (emphasis ours), After weeks of buildup, the Environmental Protection Agency (EPA) unveiled its strictest-ever rules for power produced using natural gas, coal, and oil that could spur […]

Energy Department will seek to refill Strategic Petroleum Reserve in June, Granholm says

Energy Secretary Jennifer Granholm said Thursday that the United States could begin purchasing oil to refill the Strategic Petroleum Reserve as early as June, offering the administration’s most optimistic timeline to date as to how soon it might begin […]

Highlights of the Podcast

00:00 – Intro
02:38 – EU Considers Formally Banning Russian Oil Flows To Germany And Poland
05:19 – Africa is establishing its own oil bank to reduce dependence on foreign financiers
08:34 – Biden EPA Announces Toughest-Ever Rules For Power Plant Emissions
13:19 – Energy Department will seek to refill Strategic Petroleum Reserve in June, Granholm says
17:22 – Market Updates
21:15 – Outro

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Michael Tanner: [00:00:14] What is going on. Everybody, welcome into another edition of the Daily Energy News Beat Stand Up here on this gorgeous Monday, May 15th, 2023. As always, I am your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas, joined by the executive producer of the show, the purveyor of the show and the director and publisher of the world’s greatest website, EnergyNewsBeat.com, Stuart Turley, my man, how you doing today? [00:00:36][22.4]

Stuart Turley: [00:00:37] It’s a beautiful day in the neighborhood and it’s a Monday. [00:00:39][2.0]

Michael Tanner: [00:00:40] It is a Monday, guys we hope to make yours just a little bit better before you get slaughtered by the onslaught that is coming your way. So stand strong. We’ll get you out of here quickly and off to your next battle. And we appreciate you tuning in. We have an absolutely crazy show lined up for you today. [00:00:56][16.5]

Michael Tanner: [00:00:57] First up on the menu, EU considers formally banning Russian oil flows to Germany in Poland. All I can say is wow. Stu will dive into that, that’s via oilprice.com we love them. Next up, Africa is establishing its own bank to reduce dependence on foreign financiers. I love this story. I’m glad Stu picked this out to cover what’s going on in the African natural gas markets. [00:01:20][23.0]

Michael Tanner: [00:01:20] Next Biden EPA Announces Toughest Ever Rules for Power Plant Emissions. I haven’t had a chance to read these yet, so Stu’s going to do a little education on me and and we’ll dive into what these rules, this latest set of rules are. [00:01:34][14.2]

Michael Tanner: [00:01:34] And then in in in our latest segment of Comedy Hour, the Energy Department claims it will seek to refill the Strategic Petroleum Reserve in June that’s according to Secretary Granholm. So we’ll have a good fun taking a crack at this one. Stu will kick it over to me. I’ll quickly cover what’s going on in the oil and natural gas markets. Crude took a little bit of a tumble on a Friday, mainly due to some dollar strength. Then we’ll quickly cover rig counts and then let you get out of here and on to your day. [00:02:00][25.1]

Michael Tanner: [00:02:00] Before we do that, guys, remember the stories you’re about to hear are courtesy the world’s greatest website. www.EnergyNewsBeat.com Stu does a great job of curating that website and really making it, in my opinion, the best energy news website on the market. You can hit the description below check out all the links to all the different articles that we cover the team does a great job of maintaining that. [00:02:19][19.4]

Michael Tanner: [00:02:19] You can check out our Dashboard at Dashboard.EnergyNewsBeat.com the best place for all data and energy news combo. Get it while you still can you never know where it might go. I’m out of breath though Stu, let’s kick this off where do you want to begin? [00:02:31][11.2]

Stuart Turley: [00:02:31] Hey, let’s start let’s go over the pond as we fly over the pond to the EU, we are going to EU considered formally banning a Russian oil flows to Germany and Poland. The European Union is considering formally banning Russian crude flows via the drugs pipeline. [00:02:53][22.1]

Stuart Turley: [00:02:55] Again, my butchering of that is probably what happened to Germany and Poland, which already stopped importing Russian crude, Bloomberg reported on Friday, citing documents it seen. So how is sanctions work for you, Michael? [00:03:09][14.1]

Michael Tanner: [00:03:09] Well, I mean, sanctions haven’t worked. I thought it was interesting flows through this drug pipeline are currently exempt from the EU embargo on imports of Russian crude oil by sea that came into effect on December 5th. So it’s already exempt. [00:03:24][14.9]

Stuart Turley: [00:03:25] Ding, ding, ding. So they’re trying to hurt Russia, but yet they don’t hurt Russia and this one is the pipeline has been exempt all along. So these pipelines move some product. Now, the EU is weighing extending the exemption for the northern branch, the drachma, to Poland and Germany as part of the next rounds of sanctions over the invasion of Ukraine. It flows through the Czech Republic, Slavic, Hungary and Croatia would be continued to be exempt from the EU embargo. [00:04:05][39.7]

Michael Tanner: [00:04:06] It’s all symbolic I think that’s the point. That is this is the point we’re at now with this Russian Ukraine war. Everything is posturing nobody really wants to solve the issues of dependency. I mean, and, you know, the issue that we all knew that that our you know, that President Trump in 2017 or whenever he made that speech to the EU pointed out you’re dependency on Russian gas will be a weakness if geopolitically anything ever goes south and we’ve seen that play out. [00:04:37][30.6]

Michael Tanner: [00:04:37] So anything that doesn’t address that issue specifically is just posturing and that this is the latest round of posturing from the EU I’m sure they’ll do it because again, it’s just it’s symbolic. They’re already importing via that pipeline. So they’re just it’s just a symbolic move it’s classic politics. [00:04:55][18.0]

Stuart Turley: [00:04:56] Its classic politics but what’s happening is the EU is losing power and so they’re it’s kind of like when a wolf is in the corner, they get even more weird and unpredictable well the EU is a wolf in the corner. [00:05:14][17.5]

Michael Tanner: [00:05:14] Absolutely [00:05:14][0.0]

Stuart Turley: [00:05:15] Africa. We’re going to spread our wings and as we go to Africa, Africa is establishing its own oil bank to reduce dependence on foreign financiers. I couldn’t like this story any more, Michael. I am tired of people taking advantage of Africa. I think that the West has taken advantage and I also think China and Russia have also taken advantage of Africa. And the African people need to be making money off of their own resources and finance is the way to do it. [00:05:49][34.5]

Stuart Turley: [00:05:50] First paragraph The African Petroleum Producers APPO is finalizing plans to establish the Africa Energy Bank aimed at providing financing for oil and gas projects in Africa. This is huge. [00:06:06][16.0]

Michael Tanner: [00:06:07] Yes. [00:06:07][0.0]

Stuart Turley: [00:06:08] The Africa Energy Bank aims to attract investments from countries such as Saudi Arabia, the United Arab Emirates, Qatar and Kuwait, while addressing the fundamental challenges faced by the national oil firms in Africa. [00:06:21][12.8]

Stuart Turley: [00:06:21] This made my day, actually, when I saw this, because the World Bank is just like we talked to about Pakistan. The World Bank is political, and this is a way for Africa to deal with countries like Saudi Arabia and Qatar and really start negotiating on their own behalf. They need to use natural gas and they can’t because all the money from the World Bank is tied to green energy. And you and I both know that that’s more expensive. [00:06:52][30.1]

Michael Tanner: [00:06:52] I think that’s absolutely the critical point to make in this story and why this Africa Energy Bank is not only necessary, but it’s going to really push projects in Africa forward because of the fact that traditional financing avenues arcview the World Bank, the large, large international consortiums of banks and stuff have all pulled out of financing. [00:07:18][25.5]

Michael Tanner: [00:07:19] Dr. Omar Farouk Ibrahim He’s like the World Bank secretary or not the World Bank secretary he’s the APO general secretary who’s basically in charge of attempting to create this Africa Energy Bank. He’s quoted in this article as saying that, quote, Strategic conditions on financing, which doesn’t make a lot of sense. [00:07:38][19.2]

Michael Tanner: [00:07:39] So he he sees that already. Hey, if the World Bank’s not going to give me money, if I can’t go to JPMorgan, maybe JPMorgan. JPMorgan’s a bad example because they’re there are a little bit more into oil and gas the same, actually. [00:07:52][13.1]

Michael Tanner: [00:07:52] But say, BlackRock, for example, or say any of these international monetary systems, they’re pulling out of oil and gas. How do we establish and continue to develop our own projects in house? We’ve got to do it ourselves. [00:08:04][11.8]

Stuart Turley: [00:08:05] Well, and the cost per kilowatt hour you put in a coal plant or you put in a natural gas plant and it is absolutely a fourth of the cost in order to do it, they’ve got to build out their grids. So we got to get them cheap power in order to build out their grids so we can elevate humanity out of poverty anyway, I love this story. Any way we can support Africa, I’m all in. [00:08:30][25.2]

Stuart Turley: [00:08:31] Hey, Michael we’re coming back around to the Biden EPA announces toughest ever Rules for Power plant emissions. Michael, this is critical because it really dumps into some serious meat in the grid. [00:08:46][15.3]

Stuart Turley: [00:08:47] The EPA unveiled its strictest ever rules for power producing, using natural gas, coal and oil that could spur the use of carbon capture technologies. Carbon capture CCUS is not a bad thing, but let’s come down to what some of it is. [00:09:02][15.7]

Stuart Turley: [00:09:03] It’s over 681 pages the agency argued that CO firing hydrogen as a substitute for natural gas can qualify as a system’s emission reduction. So what they’re wanting to do is they’re a carbon net zero using anything they can. [00:09:23][19.6]

Stuart Turley: [00:09:23] Michael, this one paragraph and then the following Under it, The EPA recognizes even though the combustion of hydrogen is near zero, its production entails a range of greenhouse gas emissions from low to high, depending on the method. [00:09:39][16.2]

Stuart Turley: [00:09:40] The technology used to capture 90% of carbon dioxide have become adequately demonstrated and cost reasonable while realizing substantial emission reductions. This is not true. This is 100% not true. Hydrogen In its creation, it uses about four times the amount of energy that is displaced when burned it also uses a lot of water. [00:10:08][28.3]

Stuart Turley: [00:10:10] Hydrogen unless it’s. Being made by natural gas is using a lot of water. So here’s this is just a total misnomer it’s going to drive the price for electricity even higher. And it yeah, it’ll be sustainable, but the price is not there. [00:10:32][22.1]

Michael Tanner: [00:10:33] Yeah. And I think this is where the fundamental disagreement is with industry and then the EPA. Here’s a quote from the EPA spokesperson the proposed limits and guidelines follow EPA’s traditional approach under the Clean Air Act to control pollution from stationary sources this is the important part by relying on controlled technologies that are cost-effective and can be applied directly to power plants to reduce CO2. That’s exactly what we’re talking about. Control technologies, Carbon Capture thats CCUS [00:11:02][29.3]

Michael Tanner: [00:11:03] So the question is, is that now cost effective? The EPA seems to think so. I don’t know if I necessarily agree with that, because I agree. They also claim in this report that technologies can capture 90% of carbon dioxide have become adequately demonstrated and cost-reasonable while realizing substantial emissions reductions. [00:11:23][20.3]

Michael Tanner: [00:11:24] I think that’s I mean, we will see all I know is oil and oxy, Exxon, Chevron, they’re gearing up for this. We saw in we saw in the latest offshore bid that came for offshore oil leasing, that Israel had some shallow, shallow stuff that was picked up in order to do some CCUS by both Exxon and Chevron. We know Oxy is big into that. [00:11:47][22.9]

Stuart Turley: [00:11:47] Oh, yes. [00:11:47][0.3]

Michael Tanner: [00:11:48] They saw this coming down the pike they’re not dumb. [00:11:50][2.2]

Stuart Turley: [00:11:51] No, it’s a multitrillion-dollar market and I’m all for it, Michael. The technology, just like in renewables, is not there yet. You know, natural gas is supposed to be the bridge fuel till we get there. 2030 is not that far off 2035 we’re still not. In fact, the EU. The EU Prime Minister said we’re stuck using fossil fuels for decades. He said that last week. So at least somebody is admitting it. [00:12:23][32.3]

Michael Tanner: [00:12:23] Yeah and, you know, unfortunately, the EPA has fairly unilateral authority to just announce these rules and put them into a and put them into existence. So it’ll be interesting to see how these things play out. I think it’s time we get to our common these segments Stu. [00:12:37][13.9]

Stuart Turley: [00:12:38] Oh, yeah. U.S. climate envoy John Kerry in 2021 said America simply won’t have coal on its grid by 2030. The man is a catch up magnet I mean, he can’t have a hamburger without having o. His family is from ha. It is all the hind. That’s where he’s got all of his money. What a knucklehead. You cannot pull coal off of the grid yet and if you’re going to not support natural gas, we won’t make it the man is a ketchup hound. [00:13:12][34.1]

Michael Tanner: [00:13:13] I’m a mustard guy myself. What’s next? [00:13:15][1.8]

Stuart Turley: [00:13:15] Oh, yeah. Well, I quit eating Heinz. Okay, we’re going to go to the Energy Department will seek to refill the Strategic Petroleum Reserve in June, Fetter Graham says I mean, Granholm says this is a Hoowoot. I think that was in Dennis Quaid. It was a Hoowoo no Randy Quaid. Anyway,. [00:13:39][23.8]

Stuart Turley: [00:13:40] Jennifer Granholm said Thursday that the United States could begin purchasing oil to refill the Strategic Petroleum Reserve as early as June. And it’s at that point we’ll flip the switch and then seek to purchase to refill the oil stockpile. [00:13:55][15.4]

Stuart Turley: [00:13:56] They’re missing a very big part out of here the White House had pledged to begin refilling the SPR when oil futures fell around 67 to 72. But Granholm’s remark suggests they will not begin to do so until summer at the earliest. You know, they don’t have the money. They have no Money to do it! [00:14:17][20.5]

Michael Tanner: [00:14:18] So they don’t have the money to do it. I don’t think they need the money I think it has more to do. They don’t have a strategy and they don’t necessarily want to be in the business of buy. They don’t think we should be buying oil they think it looks bad. I think personally they think it looks bad politically. People like AOC, the more liberal wing of their party, thinks we should we don’t need a strategic petroleum reserve because we have it all on electricity and right, wrong or indifferent that’s how they feel. [00:14:42][24.0]

Michael Tanner: [00:14:43] So when they when I hear this, this is they’re moving the goalposts for a third time so that they can put off having to actually purchase it because they understand that it doesn’t look good when the Wall Street Journal of The New York Times prints Biden administration purchases 80 million barrels of crude oil, that doesn’t look good politically for anybody. It’s we go back to the first article we talk about it’s all politics there’s no oh, what’s good for U.S. energy policy versus what’s key? Do we have the money? [00:15:12][29.5]

Stuart Turley: [00:15:13] You’re bring it up fantastic points, Michael but you can’t buy it even if you have it politically if there’s no money. [00:15:21][7.5]

Michael Tanner: [00:15:21] But Stu, What do you mean we have no money? [00:15:24][2.5]

Stuart Turley: [00:15:24] There’s no money in any budgets we’re about to go bankrupt next, if. [00:15:30][5.7]

Michael Tanner: [00:15:30] That’s the point so we’re not that’s the point that’s why that’s why when they say this stuff, they’re just moving the goalposts. But behind the man, behind the curtain, whoever it is, whoever’s running the politics back there is like, we’re not buying this because we don’t want it end up on a headline. And so they haven’t even put it into the budget yet. So this is all posturing. [00:15:49][19.1]

Stuart Turley: [00:15:50] Oh, it’s below posturing, if you want my opinion so anyway, no, we’re both saying the same thing in a roundabout way. [00:15:58][8.2]

Michael Tanner: [00:15:59] Yeah, I just, you know, I think you’re not going to purchase they’re going to, but they want it to drive lower. If anything, they’ll. They’ll try to drive it as low as they can by however, means. [00:16:10][11.0]

Stuart Turley: [00:16:11] You know, Michael, let me ask you this. That’s a bit of a difference because you’re a couple of years ago they were saying they want the oil as high as they can to make it more expensive so that everybody does go to EVs. [00:16:24][13.5]

Michael Tanner: [00:16:25] That is a shift in policy you can see how politics drives that discussion. Why did they go or why did they want to drive oil prices down? Because gas prices were high. What’s the one thing that people really that inflation is elections right away? Gas prices because everybody’s driving it hurts everybody it hurts the trucking industry it hurts people who have to commute. Not everybody just has a driver like Secretary Granholm, for you Im glad she got a driver. [00:16:51][25.2]

Stuart Turley: [00:16:52] She doesn’t have a Prius, though, [00:16:53][1.0]

Michael Tanner: [00:16:54] No, she does. She’s got four. You know, my point is that hurts people right away. So, again, it’s all it all comes back, unfortunately, to politics. And how do we how do we say the right thing? Keep the American people happy. But it’s a weird game it’s why politics annoys me. It’s but, you know, unfortunately, all of this stuff comes back to it. [00:17:18][23.8]

Stuart Turley: [00:17:18] I couldn’t agree more, Michael. Well-said. All right let’s go to finance. [00:17:21][3.0]

Michael Tanner: [00:17:22] Yeah, I mean, I think unfortunately, we’ve got a couple of things working against us here. The US dollar rose dramatically on Friday, mainly due to the hopes of of theoretically lower inflation. We saw core CPI drop this week that was lower than expectations. Obviously, we’re we’re still seeing we’re still seeing inflation I don’t think that’s that’s something that that you could argue is not there. [00:17:48][25.8]

Michael Tanner: [00:17:48] But in terms of that core CPI number relative to what traders thought and relative to what the the Fed will be looking at as they go to decide whether or not rates need to be increased or not. It’s my belief and really it’s the Street’s belief that they’ll probably going to hold off and not raise rates at least this next time around and maybe wait till the third, fourth quarter if they need to do it again, depending on what unemployment looks like. [00:18:14][25.8]

Michael Tanner: [00:18:14] Again, we’re still seeing very low unemployment right now under four and a half percent, which is a little bit strange relative to where we feel the economy is at now. Guys like Stu will argue that that that employment number is is filled with and I probably agree with you on some on some metric that that’s not a true what is it 3.9% unemployment It’s probably not 3.9%. It’s probably more like five. It’s probably more like five and a half. [00:18:40][26.3]

Stuart Turley: [00:18:41] It’s not taking into consideration multiple jobs, people having to work two jobs. [00:18:46][4.7]

Michael Tanner: [00:18:47] Yes. And then there’s there’s that. There’s that as well. But that goes into something a little bit different. Say all that to say the reason why we saw the dollar rise was due to that macroeconomic shift. [00:18:57][9.9]

Michael Tanner: [00:18:57] Obviously, as dollar rises, we’re going to see oil oil prices fall we started the day at about $72 on Friday, traded all the way down to where we’re sitting here before the market opened Sunday afternoon at about $70 oh $0.09 will open just a little bit, down 70.04 but, you know, hopefully we can sustain this $70 bench depending on , you know, we didn’t have any bank failures this weekend so dollar’s possibly going to be strong. [00:19:21][24.2]

Michael Tanner: [00:19:21] I wouldn’t doubt to wake up as you guys listen to this, seeing oil in the sixties but if we can see some overnight price action specifically from the European and Chinese market, we could see ourselves in a bullish run. [00:19:34][12.2]

Michael Tanner: [00:19:35] You know, Stu from an outlook this week on on on oil prices you know I the the problem is we’re so tied to what’s going on with really the dollar and how every week there is something absolutely new that’s dropping that’s impacting kind of the U.S. macro finance space that putting a pin on where I think prices are going are are tough because it’s really a it’s really a day to day cycle and ingesting the news again. [00:20:01][26.8]

Michael Tanner: [00:20:02] What’s happening in the Strategic Petroleum Reserve, what’s happening with supply and demand isn’t necessarily what’s driving prices right now. And I think that’s what’s what’s perplexing a lot of people. I think it’s also important to cover that we dropped 17 rigs week over week, right, courtesy of our friends over at Baker Hughes. I think this is. [00:20:20][17.7]

Stuart Turley: [00:20:21] Man’s. [00:20:21][0.0]

Michael Tanner: [00:20:21] This is I mean, it’s just one week, but I think it’s definitely indicative of people are beginning to pull back a little bit. Now a lot of those rigs are natural gas rigs let’s be clear, 80% of that is natural gas range, which makes sense. I mean, at some point, $2 and 20 cent natural gas, you can’t you can’t continue to trade or continue to drill. It’s it’s going to be tough to find places that have that. But, you know, in a roundabout ways, Stu, that’s really all I’ve got. Do you have anything more? What should people be worried about this week? [00:20:49][28.1]

Stuart Turley: [00:20:50] I was going to say the border, but I think that’s only covered by half the news. [00:20:54][4.0]

Michael Tanner: [00:20:58] Good point, guys. Stay safe out there! We’ll go and let you guys get out of here we appreciate you checking us out here on this Monday for Stuart Turley, I’m Michael Tanner we’ll see you tomorrow, guys. [00:20:58][0.0]