It’s Electric!

Hey Influence Traders,

There’s a new COVID kid on the block, and his name is “anti-viral.”

It could be the turning point in the pandemic war … or not.

Congress continues to debate what will be in the boondoggle spending bill, but one thing is clear — it aims to revamp energy and transportation policy.

While the debate rages, energy prices continue to rise, which is impacting everything from the cost of filling up your car to the price of aluminum.

And it’s not just Feds getting into the energy game — Gov. Newsom of CA couldn’t help himself.

 

The Antivirals Are Coming!

Merck (Ticker: MRK) has submitted its Covid-19 antiviral for FDA approval.

The company claims the pill can reduce hospitalization by around 50%.

It’s intended to be used early in the infection cycle to stem viral replication.

The much-maligned ivermectin has been shown to have similar efficacy — but at a fraction of the cost, which is why it was thrown under the bus.

There’s no money to be made in generics!

AstraZeneca (Ticker: AZN) had an announcement of its own – its antibody treatment reduces the risk of developing severe Covid-19 or death by 67%.

This could be a revenue boost for AZN, whose COVID vaccine was not well received.

Green Energy Bills

The Biden administration wants to revamp America’s relationship with energy sources and transportation, and the boondoggle bill will take us in that direction.

Here are a few proposals on the table:

      • Power companies will be paid $150 per megawatt-hour to increase renewable electricity generation by at least 4% each year. Companies that don’t meet the mandate will be penalized $40 per megawatt-hour 
      • Known as the “Clean Electricity Performance Program,” it will reward utilities that generate an increasing amount of electricity from wind, solar, nuclear, or other clean energy sources.
      • The administration wants the United States to get 80% of its electricity from green sources by 2030.
      • The bill will expand tax credits for green energy technologies, fuels, and vehicles.
      • The bill has money to fund grants, loans, research and development, and demonstration of green energy projects.
      • The bill, a la AOC, will create a Climate Conservation Corps (think Brown Shirts).
      • The bill will ban oil production off the Atlantic and Pacific coasts, which should see little opposition after the recent Huntington Beach pipeline spill.
      • The bill will institute punitive fees on businesses that emit methane.

These provisions will transform Americans’ relationship with energy and transportation, and will touch a broad cross-section of life, from the kinds of cars that Americans drive, to the types of crops grown by farmers, to the way homes are heated and buildings are constructed.

But it’s not just the Feds pushing green policies.

California Governor Gavin Newsom just banned small gas power engines and the equipment they power in the state.

I guess he has the power to do so – only in California.

Gas-powered equipment includes generators, lawn equipment, pressure washers, chainsaws, weed trimmers and even golf carts.

Permissible machinery will have to be battery-powered or plug-in. 

How might that impact consumers?

One commentator noted that in CA a gas-powered riding lawn mower costs between $7,000 and $11,000, while the zero-emissions version costs more than twice that amount.

I’m thinking of going long on really, really long extension cords.

What About Oil?

Well, it continues to rise in price.

Oil peaked over $80 a barrel yesterday.

That has American shale producers pretty excited.

There’s a rumor that Biden will ask OPEC to increase production, which is ironic since he’s been trying to quash domestic production.

And the commensurate energy shortages are not just hitting the individual consumer but also impacting commodities.

Aluminum hasn’t been this pricey since 2008.

It is an energy intensive metal to produce and is used in just about everything.

One ton of aluminum takes roughly 14 megawatt hours of power to produce, enough to run an average U.K. home for more than three years.

EV Car Battle

The bills before congress will push electric vehicle adoption.

Some car manufactures are on board, but others are not.

What separates the two sides? UNIONS!

The proposed legislation provides a $7,500 tax credit for most EV vehicles.

But union-built EVs assembled in the U.S. get an additional $4,500 in credits.

That extra incentive benefits Ford (Ticker: F), General Motors (Ticker: GM), and Stellantis (Ticker: STLA), Chrysler’s parent company, since they’ve got unionized U.S. plants.

That leaves foreign manufacturers, such as Honda (Ticker: HMC) and Toyota (Ticker: TM), as well as leading EV manufacturer Tesla (Ticker: TSLA), at a $4,500 per vehicle disadvantage.

Naturally, the companies left in the cold are pissed.

But Biden is a big union advocate and the United Auto Workers (UAW) and others the car companies they work with have lobbied hard for these provisions (GM paid around $5.6 million to 82 lobbyists through the first half of 2021).

As UAW President Ray Curry stated, “we will ensure that subsidies for electric vehicles go to good union jobs here in the U.S.”

EVs make up only 2% of U.S. car sales, so the incentives are expected to boost sales.

Cutting Through the Noise for You.

Frank

 

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