Not surprisingly, the theme and math of simple (as well as appalling) US debt levels makes such forward-thinking almost too simple.
The Oil Issue: Is Anti-Shale Anti-American?
Although not as fluent as others in the oil trade or the green politics of the extreme US left, I’ve argued in prior reports that the current administration’s anti-shale policies make for some good (debatable?) environmental chest-puffing while ignoring the math, history and science of sound national as well as well as global thinking.
(But then again, the entire woke fiasco of current US policy seems to be on a crusade to cancel such things as math, history and science; so, thinking contextually or globally is beyond their sound-bite-driven stump-speeches.)
Oil, however, still matters.
And when understood in the broader context of the macro-economic themes we’ve tracked for years–namely debt, currencies, inflation, gold, a cornered Fed and a weaponized USD–the current and future trends are already in motion.
And as for the endless debate as to global warming, butterfly-friendly energy policies and the simple reality of fossil fuels as a part of, rather than threat to, our planet, I’m certainly not here to answer or solve the same.
Certainly the Germans (and their solar powered ideas in a part of Europe with very little sun) are not getting it… In fact, they are getting much of their (nuclear) energy from France and are now forced to burn coal to get through the winter.
I am here, however, to lay down some objective facts and ask some blunt questions.
Oil Politics
Biden, it seems fairly clear to all, is not in charge of US policy.
That’s a scary fact. Even more scary, however, is determining who is in charge?
Again, not something I can answer.
But if he were in charge, we’d all be amused to ask how he expected Saudi Arabia to welcome him and his embarrassing pleas for Saudi production increases (to ostensibly ease inflated US fuel costs) after previously telling the world he considered Saudi Arabia a pariah state…
We all remember that embarrassing fist-pump with the Crown Prince.
Meanwhile, Saudi is now spending far more time with the Chinese and Iran…
We’d also love to hear the White House explain how it expects increased US shale production to reduce energy inflation when it has been simultaneously seeking to legislate oil off the American page.
Furthermore, it would be worth reminding Americans and politicians tired of inflated fuel prices that the vast majority of those inflated pump costs are due to US taxes per gallon, not Saudi production cuts.
But I digress.
Oil Math
At the current levels of US oil production and exploration, the US (according to its own Dallas Fed) will have to engage in annual energy price inflation levels of 8-10% just to keep the oil industry’s lights on at a breakeven price level.
Such conservative inflation figures for oil/fuel pricing, when seen in the context of over $31T in US Federal debt, basically means that Uncle Sam’s ability to cover his ever-increasing public debt burden will weaken by at least 8-10% per year at a moment in US history where Uncle Sam needs all the help, rather than weakness, he can get.
Fighting Inflation with Inflation, and Debt with Debt?
Needless to say, the only “solution” to these inflated debt burdens will be the monetary mouse-clicker at the Eccles Building, whose doom-loop (yet now ossified) “solution” to addressing inflated oil prices is the even more inflationary policy of printing more fake money to “fakely” cure an inflation crisis.
You really can’t make this stuff up.
Fed monetary policy, ever since patient-zero Greenspan sold his soul (and sound-money, gold-backed academic thesis) to Wall Street and Washington, boils down to this: We can solve a debt crisis with more debt, and an inflation crisis with more, well…inflation.
Does this seem like “sound monetary policy” to you?
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