CPT Scott
Speak 0:18
And we’re off. This is just a fun reminder that the 150th running of the Kentucky Derby is coming up this Saturday, 6:45 p.m. Eastern Standard Time, May 4th. And the lead up to the race is a lot of fun. Pick a horse. Get the kids involved. Get your friends involved. But now we’re off to look at Biden nomics part two. Gas prices. Why? Because we read here silly things like Sure. Or high gas prices. But no mean tweet. That’s funny. It reveals the ignorance. And I don’t mean that in a mean way, but rather the precise meaning of the word lack of knowledge or information to assert such a thing indicates the person is unfamiliar with gas pricing, or it indicates willful intent to deceive either causes is not good. Having discussed supply and demand and Biden nomics Inflation podcast, we’re going to unwrap gas pricing myths. How much oil is there? Who owns the oil? What event event affect prices? And what is a president’s influence? A lot of these will be addressed, and I’ll share with you what I’ve learned and much of it you will not have to remember. I’ll leave you with words you can say in response to untrue things such as The U.S. is the world’s largest producer of crude oil. The oil does not belong to the United States.
There’s no such thing as, quote, our oil
markets, not presidents, set oil prices.
And so do winter and summer blends of gasoline. And that’s the podcast. Thanks for listening. Just kidding. A quick note on thinking is worth discussing before we proceed. A fallacy. Spell it f a. L. L. A. C. Y is an error in thinking and there are many fallacies and we all commit them probably daily thinking clearly requires effort, which explains the expression. It’s much easier to judge than it is to think.
The fallacy most commonly used in describing biodynamics follows this example
Biden became president. Inflation increased. Therefore, Biden caused inflation. Now, you don’t have to be a genius to figure that out. But you hear it with gas prices too. Gas increased after Patriotic Joe stole the election. You might hear it stated differently sometimes. I’d rather have a president who cheats on his wife than pay high gas prices, etc. It’s called a causal fallacy or incorrect blame. In other words, just because event a occurred first does not mean it caused event B to occur to occur afterwards. Now we do this too. Dems might say one causal fallacy would be like the stock market was never this high until Joe Biden took over the presidency. Chose the reason the stock market is high.
So look, look for this fallacy yourself throughout the day. See if you can spot it. You’ll have fun identifying it when you discover it and if you find a good one. Send me an email. CP Scott had dumped Dumpty Trump reorg. Now on to oil. Did you know? America has been the largest producer of oil for years, especially since we allowed hydraulic fracking. F r a cq cng fracking think frack cherien. They drill and then they shove high pressure water into the earth to fracture rocks to fracture rocks. Which in turn lets the oil or natural gas flow and this becomes easier to extract. Research by Valerie Jay Brown in 2014 documented adverse health effects for populations in the vicinity of fracking frackers. Keep that in mind if you think about relocating. However, in America, frackers have fracked a million natural gas and oil wells, according to data put together by the Society of Petroleum Engineers back in 2012. Author’s name was George King. but frackers point out that gas is cleaner than coal. So how much do we produce? Well, this number comes from the emergent the Energy Information Association, EIA. They are the number crunchers for the Department of Energy. In 2023, we produce. Listen to this.
19,187,000 more barrels of oil than we did in 2020 under Trump. See what I just did there? I implied because the president’s changed oil. Oil production went up. It’s not why at all. But Trumpers think that way and pointing out higher the higher production data under Biden backs them off their claims. They also believe that because Biden emphasizes renewable energy that gas prices go up. It’s just not true. Tell them more oil is being produced now than when Trump was president. Why are you still pushing us towards renewable energy? Tell them that on the EIA dot gov spreadsheets, charts and posts some of the pics from Dumpty Trump. Georgie on Facebook for those will be there on my website here shortly. The other thing you’ll hear is well, we were energy independent under Trump. This reminds me of Mark Twain. Get the facts first. You can distort them later. To them, energy independence means no imports needed. Wrong. Energy independence occurs when we produce more than we consume. Make sense. Right. We continue to meet that definition today. Now, energy is a broad category. Includes wind, natural gas, coal, etc.. But we’re going to stick with oil, trying to claim energy independence would be simpler if there were only one kind of crude oil. But guess what? There’s not. There are hundreds of different types of oil. And I don’t mean olive avocado or canola. I mean crude oil, not refined. I’m not a chemist, but I have learned that oil is a liquefied hydrocarbon. And check this out. Crude oil has different flavors. Yes, flavors really does. It’s called sweet or sour, depending on how much sulfur it contains.
Reminds me of the older the violin, the sweeter the music. So it goes. The less the sulfur, the sweeter the oil. Oil has another characteristic. It can also be light or heavy. Now, this is an exact, but generally the more sulfur there is in oil, the heavier it is. Other minerals also make it thicker, heavier.
American oil has mostly light sweet crude oil from Canada. OPEC think Iraq. Kingdom of Saudi Arabia. Kuwait. African nations, but not Venezuela. Half sour, heavier crude. Canada has the heaviest oil of them, all called tar sands and the largest supply of it called reserves.
Reserves is oil that’s still underground. Tar sands is oil that is sludgy. It’s the heaviest thickness.
Less heavy is just heavy sour oil. It’s more like molasses, tar sands is sort of like melted asphalt. Light sweet oil is thinner and floats much more easily on top of water compared to the other two. So who owns this oil? Great question. Right. In many countries, including the kingdom of Saudi Arabia, KSA for short, Venezuela, Iraq, Mexico and Iran, the government owns the oil and the companies that pull the oil from the earth. The profits belong to the government. Okay, now here’s a side note on Iran. Now, some people say I ran to the store. Iran. I think the proper is Iran. Back in the forties fifties. It wasn’t called that then, but British Petroleum, BP today was operating what at the time was the largest oil field in the world. 1950s in Iran. Their parliament suspected the Brits of not paying the government the agreed upon royalties.
Uranium parliament voted for an audit of the British company, but the Brits refused to cooperate. So the parliament said, Screw you, we’re going to nationalize the oil companies and make it ours. They took the oil companies over. In response, Britain asked the United States to overthrow the Iranian government in 1953 under Operation Ajax. And we did. America does not manage the oil companies or the oil. Generally, there is no such thing as, quote, our oil. In fact, we only own two types of oil. Oil the government has purchased and most of that goes in the Naval reserve and the oil underground below public government owned land. U.S. law is very clear. Whoever pulls the oil from the earth owns it. There are no government employees. Oil drillers, Exxon, Chevron, Shell, etc. etc. of Marathon, however, do. And the oil belongs to them. The corporations that got a huge Trump tax cut. They decide what kind of oil gets imported and how much of it. The drilling, transporting and refining of oil are corporate business decisions, not presidential policy decisions. You may have heard the media talk about oil leases. There’s such a thing as a mineral rights. There are mineral right leases from the government to oil drillers, and that gives the oil to the driller.
In turn, the government serves as landlord and collects rents or royalties. Biden has selling the poor leases that Trump at least more quickly than Trump. But presidents cannot order a company to drill. Many just sit on the lease to keep the competition from getting the right to drill and to buy time while they research how much oil is actually there, its quality, etc.. As of 2023, there are about 6700 active producing leases and hundreds of thousands of inactive leases. Now when the government leases leases it, it’s only on public land. Only 10% of the oil gets produced nationally yearly. Only 10% of that comes from public land leases. Oil drillers can buy the mineral rights from private landowners or own the land outright. Mineral rights have more authority than land. Surface rights.
Mineral rights have more authority than land surface rights. And if oil is found in your backyard, the driller has the right to come to your yard and start drilling. For me, I don’t own the mineral rights to my yard. There goes my azaleas.
America is also the largest consumer of energy. Roughly 20% of global oil production. We produce 20 million barrels a day. We consume 20 million barrels a day. Now that changes month to month. But that’s that’s at the ballpark right now. We export 9 million barrels a day and we import 8 million barrels a day. So we are a net exporter of oil or petroleum products. We export a million more barrels a day than we import. We are consuming what we produce and we still send oil and gas overseas and we still import oil. Why?
To the great question, why are we importing oil at all? Why is Biden doing that? The answer? Biden’s not doing it. There’s no we here. Remember, the question is, why are the oil companies importing and exporting products? Take a guess. Think money has anything to do with it? You bet it does. Back in the seventies, the USA relied on OPEC imports. We hadn’t yet discovered shale oil or fracking, which made us number one.
OPEC oil is heavier and more sour than our light sweet crude, and it’s more difficult to refine.
But the oil refineries during that period decided to design their refineries to process mostly heavy sour oil,
because that’s what we were refining the most of refineries in America are not outfitted to mostly process light sweet crude. The point here is that Trump admirers will point to point out that we still import oil, and under Trump, we were energy independent or oil independent. Let them know we still imported heavy sour oil when he was president, including from Russia. Now, listen to this nonsense from the deceitful Sean HANNITY
who asked does his research him? I doubt it. Just as there are different prices for pickup trucks or for purses, there are different prices for oil. The heavy sour oil from Canada often trades at a $4 to $28 cheaper discount per barrel compared to OPEC or U.S. oil prices. oil companies can pay less for heavy oil and have it delivered. Then it can buy and refine our own light sweet crude. You might ask, Well, why don’t our refineries retrofit upgrades themselves to process this vast American light, sweet, crude quantity? Guess what that answer is
on. Yep. Money. You guessed it. The retrofit upgrade would require shutting down and upgrading the equipment. And right now, it’s cheaper to buy heavy and refine it than it is to upgrade. I’m willing to bet that when and if the cost to refine heavy crude increases beyond the cost to refine light sweet crude, they’ll move in that direction.
President Biden approaching the oil company from the supply side. Remember, we talked about supply and demand. President Biden had asked the oil companies to build more refineries. But they don’t have to. That’s all he can do is ask. They’re enjoying an $80 a barrel oil. They know prices dropped during overproduction and they don’t really want that. What makes up the price at the pump? Well, you guessed it, the price per barrel is the most expensive part of gasoline prices. And today, it represents about $2 of the price that we pay per gallon.
$0.36 of that is the approximate cost to haul and advertise. Throw in another $0.65 to refine, add on generically, a 50 cent tax per gallon takes us to roughly 351. To break even selling gas at 3.65 generates a profit of about $0.14 a gallon, and that $0.14 gets shared with the gas station owner and the oil business. So my 15 gallon fill up, that’s a profit of $2.10. Now, another thing that affects prices is the blend of gasoline. There is a winter blend and a summer blend. Winter blend is cheaper than summer blend. Why do we have that? Because the summer blend is less prone to evaporate heat than the winter blend. So they refine gas to minimize evaporation. That costs more money. The law says all the stuff coming into the harbors and all that stuff in the tanks. By May 1st has to be summer blend ready. And the gas stations by June 1st have to start selling summer blend gasoline. So come June 1st, unless your stations have already switched over to the summer blend, and I don’t think you ever really know. You’d have to ask the owner because the clerk behind the counter certainly won’t know. But that explains part of the reason why gas prices increase in summer. It’s not just because of vacations that that coincides and that lasts until September 1st. When they start going back to the winter blend, the cheaper refinement.
At the end of 2023, British Petroleum reported a profit of $13 billion. They had been in the red previous to this. Shell reported 28 billion. Exxon reported 36 billion. And Chevron’s gross profit dropped? Yes, dropped to 77 billion. Clearly from discovering the oil, extracting it, refining and delivering it and sort of escalating a war. There’s no there is no point except taxes and leases where a president can influence oil or gas prices. During Biden’s presidency, oil production has increased compared to Trump’s The cost of a barrel of oil when Trump took over was $52 and it crept up to $53. By the time he left office in January of 2021. Now, that doesn’t tell the whole story because the whole oil market crashed during his era and it was like the biggest roller coaster ride ever. The biggest swings were under the Trump years, but policy did not affect that. Trump did not affect that. Blaming or crediting presidents with price changes is pointless. It’s market fluctuations, and any suggestion otherwise is silly. But ideologues, cultists don’t mind silliness and service to their agenda. Be careful, you don’t do it. It’s tempting to brag that U.S. oil production increased under patriotic Joe or their stock market record because Biden is President.
There is a huge difference in coincidence and cause. But now, when? And if you hear gas prices sure were better under Trump, you can reply with Do you really believe presidents that crude oil prices, you know, the price of crude oil determines gas prices? Usually what happens is they’ll say, Oh, I don’t believe that you can respond. Yeah, it’s not fun. Learning what you believe might need to be adjusted. Keep it going, though. Informed conversations are productive and your engagement, no matter how infrequent or small, impacts others. Next podcast will discover the will. To discover. We’ll discuss the Keystone pipeline and the existing media myths. Hey, the website is up Dumpty Trump Georgie It’s still not perfect, but it and it takes several days for my podcast and updates to the page to appear. But check that out. Please share it with your friends. I’m Captain Scott. CP Scott at Dumpty. Trump Georgie. You can contact me through our contact form. Thank you for your time this time. Until next time and have another great week.