Environment on My Mind

Hey Influence Traders:

 

The Vegas oddsmakers have passage of the Build Back Better plan at 60-40 sometime in January.

 

Personally, I’ve got Joe Manchin at 100% as Democrat Public Enemy No. 1.

 

He is a thorn in the side of progressives and Dem leadership.

 

Bernie Sanders is mad at him.

 

AOC forgot that he works for the people of West Virginia, not her.

 

And (former?) Hollywood A-lister Bette Midler lashed out via Twitter calling the state of West Virginia “Poor, illiterate and strung out.”

 

She later apologized in a follow-up tweet … before labeling the Manchin family a “criminal enterprise.”

 

Gas Prices

 

Prices at the pump are another thorn in the side of Democrats.

 

It’s turning into a regular briar patch out there for the Left.

 

Gas prices are one of the leading gauges of inflation for many Americans – and a driver of poll numbers.

 

Particularly going into an election year, gas prices can swing voters.

 

And they are not swinging toward Dems.

 

The national average for a gallon of gas is about $3.40.

 

That’s the highest level in seven years, and up 58% from this time last year.

 

California leads the way with an average price of $4.67, followed by Hawaii ($4.33) and Nevada ($3.88).

 

High prices are particularly noticeable during a busy holiday travel season, which will set a bad tone starting the new year. 

 

We Can Work Together

 

All it takes is a common enemy to bring warring factions together.

 

And today that enemy is … China.

 

No one likes forced labor.

 

In a rare bi-partisan move, both the House and Senate passed legislation banning imports from the Xianjiang region of China unless it can be demonstrated that the goods were not made through forced labor by the Uyghur minority population. 

 

Senator Marco Rubio fought to get the bill included in the final defense authorization legislation.

 

The House also introduced legislation to shorten the time period from three to two years for the SEC to delist Chinese companies that don’t meet US auditing requirements.

 

That bill was already passed by the Senate and endorsed by SEC Chair Gensler.

 

In that theme, the Biden administration announced last week that it was imposing trade restrictions on more than 30 Chinese research institutes and entities over human rights violations (and the alleged development of brain-control weapons, with no elaboration!).

 

Part of the issue is the theft of U.S. intellectual property by Chinese entities, which have done so in an unabashed fashion.

 

The Commerce Department maintains that many Chinese companies steal IP to help modernize China’s military.

 

Such action runs counter to U.S. national security and foreign policy interests.

 

They also cost the U.S. economy billions of dollars in revenue and thousands of jobs.

 

Environmental Policies on My Mind

 

The Biden admin unveiled a slew of environmental policies and goals this past week.

 

  • The Environmental Protection Agency (EPA) will require cars and other light-duty vehicles to achieve a 40 miles per gallon standard over the next five years.

      • The EPA will require “100 percent of lead service line removal as quickly as is feasible.”
      • The EPA will allocate $1 billion in the Infrastructure Bill to address the backlog of Superfund cleanup sites, including waste disposal contaminated local soil, sediment and groundwater with substances ranging from arsenic, lead and copper to exposed asbestos. Forty-nine Superfund sites are currently unfunded in 17 states and Puerto Rico.
      • The Office of the Comptroller of the Currency proposed the first-ever federal climate guidance for banks for the purpose of identifying and managing risks relating to climate change or ecological disaster at any OCC-governed institution with more than $100 billion in assets. (No word yet if that will apply to Crypto trading platforms.)
      • The Energy Department reinstituted regulations restricting shower head flow to 2.5 gallons per minute.
      • The Biden administration concluded that offshore wind farms near New Jersey and New York would not pose a major disruption to the local environment, clearing a key hurdle for lease sales in the region. The Bureau of Ocean Energy Management announcement could impact 800,000 acres between Cape May in New Jersey and Montauk Point in Long Island and increase renewable energy development in those federal waters. (There are going to be some pissed off rich people!)

 

Fossil Fuel Gone?

 

Green energy regulations are great, but weaning off fossil fuels is tough.

 

Coal demand is approaching an all-time high.

 

A recent International Energy Agency report noted that such increases endanger international promises to cut greenhouse gas emissions.

 

The agency noted that global coal demand may be “set to reach an all-time high next year.”

 

The agency’s report highlighted that while the pandemic was expected to drive down the use of coal-fired power, the decline that happened turned out to be far more muted than initial expectations.

 

Wait, there was a goal to the pandemic?

 

And here my wife was called a conspiracy theorist.

 

And it is not much different at home.

 

The President’s recent executive order setting a goal for the government to reach net-zero emissions by 2050 faces a daunting challenge … getting the entire federal workforce on board.

 

You see, the federal government is the largest single consumer of energy in the country.

 

Achieving carbon neutrality in all of its buildings and fleet vehicles in the next 30 years will not be an easy task. 

 

One official noted that the rulemaking process alone will take years and that “we’ll spend over a trillion dollars on procurement before that happens.”

 

And thanks to Joe Manchin, a provision to permanently ban new offshore drilling along the Atlantic and Pacific coasts was stripped from BBB.

 

That irked environmentalists who argue that Manchin is weakening a robust response to climate change.

 

Bernie Sanders called Manchin “dead wrong” on the issue.

 

Ironically, it’s one provision that has some key Republicans support.

 

Some coastal Republicans are concerned about the potential for oil spills that could damage their tourism and fishing industries.

 

Florida Senators Marco Rubio and Rick Scott have both argued for permanent drilling bans off the coast of their state.

 

Bodes Well for the Fossil Fuel Industry

 

The continued use and need for fossil fuels bodes well for coal and oil companies. Almost every lump of coal that U.S. miners will dig out of the ground next year has already been sold.

 

Peabody Energy Corp. (Ticker: BTU), the top American supplier, has contracts for more than 90% of its coal from the Powder River Basin region and all of the power-plant fuel from its other US mines.

 

BTU Chief Executive Officer Jim Grech said on a recent conference call that, “We only have a small portion left to be sold for 2022 and for 2023.”

 

Arch Resources Inc. (Ticker: Arch), the No. 2 producer, has deals with utilities for all of its 2022 output at an average price that’s 20% higher than current spot prices. 

 

Major oil producers continue to bid on oil drilling rights in the gulf and other areas, including ExxonMobil (Ticker: XOM), British Petroleum (Ticker: BP), Shell (Ticker: RDS.A), and Chevron (Ticker: CVX).

 

You may not like it, but the world runs on things dug or drilled from the ground.

 

Cutting through the noise for you,

 

Frank

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