The now mercifully concluded US presidential election offered up a cornucopia of personal observations, which I will now observate on.
President-elect Donald Trump is a 70 storey tower of speculation – his policies based on showmanship rather than thought-out, achievable agendas.
Trump is not alone in this trait. In order to achieve your political license, and of course an indexed pension, you often have to become an expert on topics you are at best distantly familiar with! The trick to teach any political pony is to know when to realize the astounding amount that he doesn’t know about an electorate enthused topic.
Let’s take Trump’s position on energy (at least this week!). I believe an accurate platform précis would be that he wants US energy independence from its enemies and cartel. While certainly a headline grabber, it lacks the ‘do’ in do-able and the ‘cents’ in centsible (not a typo, my word). The cartel referred to is OPEC as a whole, but aimed at Saudi Arabia as a unit.
If the plan is to cut off the Saudi supply of crude, and if Trump does this, what happens then?
As the US today imports 7 million bpd of crude from mainly Canada, Saudi prices will spike virtually overnight. This immediately increases gasoline pump and on road transport diesel prices, driving up overall energy costs and deflating electorate enthusiasm for the new administration.
Aha! But higher WTI prices will increase production from the dormant US shale fields and Canadian Oil Sands, won’t they?
This would be true except, Aha! There’s currently a crude oil glut, so more North American production just adds to it and lowers domestic crude prices, not increases them.
The new president will then realize that even if the Saudis are cut off, the US does not set the price of its own American crude oil, it is set on the global markets, which are in more ways than one foreign to Washington influence.
Let’s say hypothetically that the US becomes overnight crude oil self-sufficient. Shale oil crude is extremely light, so much so that no US refinery can process it on its own. It has to be balanced with heavy sour crude from Canada, Mexico, and you guessed it… Saudi Arabia.
Cutting off the Saudis will mean a refinery slow down due to an inadequate supply of heavy sour crude, which will increase pump prices.
This could be solved if more oil sands crude could reach the Gulf tide water. This would mean reversal of the Obamafied Keystone XL pipeline decision and approval of the Dakota Access line. These projects are the Gold Medal Games of the environmental activists to say nothing of the predominantly left leaning US media networks led by CNN, aka Clinton News Network.
If Mr. Trump ever wanted a demonstration of the effects of a Saudi crude oil cut off, I suggest he find a comfortable seat and watch what happens if OPEC decides to freeze or even cut back on production following their November 30 meeting.
It may give him a reason to reconsider his position as the landlord of his Tower of Babble.
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