Manchin's walking around money

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DAILY ENERGY NEWS | 08/04/2022

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More money, more problems (for everyone else).

Wall Street Journal (8/3/22) editorial: "West Virginia Sen. Joe Manchin last fall sharply and rightly criticized a bonus tax credit for union-made electric vehicles in the Build Back Better bill. 'We shouldn’t use everyone’s tax dollars to pick winners and losers,' he said. Yet that’s exactly what his tax and climate deal with Senate Majority Leader Chuck Schumer does. The 725-page bill is riddled with green goodies that favor unions and projects located in specific regions. Most tax credits for renewable energy projects are five times more generous if contractors pay “prevailing wages”—that is, union-scale wages—and employ workers participating in apprenticeship programs. These are usually run by unions. The new base tax credit for solar and wind production would be $5.2 per megawatt hour (MWh), which is less than the existing $26 MWh subsidy. However, investors in projects that meet the bill’s labor specification would be able to claim $26 MWh and $28.6 MWh if 100% of their steel is made in the U.S. Didn’t President Biden antagonize steel-exporting Canada enough by canceling the Keystone XL pipeline? Another example of union favoritism is the tax credit for carbon sequestration from manufacturing or fossil-fuel combustion. This credit is currently $35 per ton of CO2 captured and stored, which is about half the break-even cost for most projects. The Manchin-Schumer deal cuts the base credit to $17 per ton but increases it to $85 per ton for projects that meet its labor standards."

"Every American should be very clear on what the so-called Inflation Reduction Act will and will not do. It will line the pockets of special interests, it will advance a radical leftist agenda, and it will make Americans poorer and give them fewer energy choices."

– Jack Spencer,
The Heritage Foundation

Anyone else getting Ancien Régime vibes from the administration lately?

Forbes (8/2/22) reports: "Good news seems hard to come by these days, so here’s a kernel of it, free of charge: Gas prices may finally, impossibly, remarkably be on the decline. Months of cringe-inducing trips to the gas station are fading into the rearview mirror, with AAA announcing this week that the price of a gallon of gas has now fallen every day since its peak on June 14. How long and how far this decline continues remains to be seen, but the record prices at the pump were enough to force nearly two-thirds of consumers to change their driving habits or lifestyle since March, AAA says. We drove less, ran more errands at once, cut back on shopping and eating out, and put off major purchases and vacations to compensate. One thing we didn’t do? Buy more electric vehicles. Autolist.com conducted its annual Electric Vehicle Consumer Survey right in the middle of the surge in gas prices, and asked nearly 2,000 current car shoppers a multitude of questions regarding EVs. This 2022 iteration of the study found that the upfront cost of EVs remains the biggest reason people aren’t buying them yet. Shoppers were asked to list the top three reasons they wouldn’t buy an EV; 48 percent of respondents said electric vehicles were too expensive, 44 percent said they had concerns about EVs’ range, and 36 percent said they had concerns about where to charge the vehicle."

The war on reality is going to be a bit harder than Biden and company were hoping for. It turns out you can't overrule economic law by changing the name of a multi-billion spending package.

Bloomberg (7/29/22) reports: "The Inflation Reduction Act of 2022, the breakthrough US legislative deal on key parts of President Joe Biden’s agenda, likely won’t reduce inflation at all, according to a study. And that’s coming from researchers influential with the senator whose vote was crucial to sealing the deal, Joe Manchin of West Virginia. The study, from the Penn Wharton Budget Model, estimates the act would cause inflation to 'very slightly' rise until 2024 then slide after that. Overall, the researchers said in the report Friday, there’s 'low confidence that the legislation will have any impact on inflation.' The surprise deal late Wednesday, hammered out between Manchin and Majority Leader Chuck Schumer, hinged partly on Manchin’s demands that it not add to inflation. 'Reduction' in the title is also a bit of branding aimed at one of the biggest concerns among voters heading into the November midterms. Republicans may capitalize on public angst over consumer prices cruising at 40-year highs, the economy contracting and, according to a recent Census Bureau survey, four in 10 Americans saying it’s somewhat or very difficult to cover usual household expenses. Manchin in the past has leaned on the economists and data scientists at the University of Pennsylvania’s Wharton school rather than using the government’s own estimates, including from the nonpartisan Congressional Budget Office."

All Joe's groveling got us was international embarrassment.

CNN (8/3/22) reports: "Candidate Joe Biden promised in 2019 to make Saudi Arabia a "pariah" over the kingdom's human rights record. President Biden, confronted by economic reality, reversed himself. With gasoline prices near record highs and inflation fears mounting, Biden visited OPEC kingpin Saudi Arabia last month. Biden even fist-bumped Saudi Crown Prince Mohammed bin Salman, who US intelligence directly linked to the murder of Washington Post journalist Jamal Khashoggi in 2018. The President left Saudi Arabia without a public agreement from the kingdom to help out on gas prices, but White House officials expressed optimism that help was indeed on the way. Now, it's clear that Biden's political gamble to make nice with MBS has not paid off in a significant way that Americans will feel at the gas pump, at least not yet. OPEC+ announced Wednesday a deal to increase oil production, but only by a token amount of 100,000 barrels per day. That is not nearly enough to move the needle in a world that consumes 100 million barrels of oil every single day...'OPEC+ did the absolute minimum. The market is interpreting this as just short of a rebuff,' he said. 'It's a purely symbolic gesture.' Others go even further, describing the OPEC+ move as an insult given Biden's journey to Saudi Arabia, the de facto leader of the producer group. 'It's a slap in the face for the Biden administration. This trip, meeting with MBS, just didn't work,' Matt Smith, lead oil analyst Americas at Kpler, told CNN. Robert Yawger, vice president of energy futures at Mizuho Securities, similarly described the OPEC+ decision as a 'slap in the face.'"

Energy Markets

WTI Crude Oil: ↓ $89.61
Natural Gas: ↓ $8.09
Gasoline: ↓ $4.13

Diesel: ↓ $5.21
Heating Oil: ↓ $337.45
Brent Crude Oil: ↓ $95.37
US Rig Count: ↑ 825

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