The President's Daily Brief - October 19th, 2022. Biden is Still Searching for A Gas Price Scapegoat

Episode Date: October 19, 2022

It’s October 19th. You’re listening to the President’s Daily Brief. Your morning intel starts now. ------ Joe Biden is taking aim at the oil and gas industry today because the price of gas and diesel are going up. But is he right to blame them? We’ll discuss that, plus whether there are any good solutions towards lowering those gas prices. And folks, that will be our sole focus for today’s podcast. And, then, to wrap up later this morning, I’ve got a request. It’s for prayer. Not for me, but for a listener. A good man who’s battling pancreatic cancer. He’s doing alright but I think he could use some prayers and good cheer. ------ Please remember to subscribe if you enjoyed this episode of the President's Daily Brief. Email: [e-mail] Learn more about your ad choices. Visit megaphone.fm/adchoices

It's October 19th. You're listening to the President's Daily Brief. I'm your host and former CIA officer Brian Dean Wright. Your morning intel starts now. First up, Joe Biden is taking aim at the oil and gas industry today because the price of gas and diesel are going up. But is he right to blame them? We'll discuss that. Plus, whether there are any good solutions towards lowering those gas prices. And folks, that will be the sole focus for today's podcast. And then, to wrap up later this morning, I've got a request. It's for prayer, not for me, but for a listener, a good man who's battling pancreatic cancer. He's doing all right, but I think that he could use some prayer and good cheer. In the meantime, let's get started with today's main brief.

Joe Biden and his team at the White House have signaled that starting today, they are taking special aim at the oil and gas industry for what they say is the real reason for increasing gas prices. And that real reason is greed. Now, to be clear, Biden's allegations are not new. We heard this last summer when he first blamed greedy gas stations, then greedy refineries, and of course greedy oil and gas companies. But is he right? Or are there other factors at play?

Well, today we are going to fact-check those claims and let you decide. And so to do that, I want us to imagine that we are at a gas station this morning, staring up at that Texaco sign that says, well, how much we're about to fork out for a gallon of gas. According to data from AAA and gas buddy, the average price right now for a gallon of gas in this country is $3.86 a gallon. The question that we should ask ourselves first is, how much are those greedy gas stations making off of a gallon of gas? Because if you listen to Joe Biden today, here's what he's going to tell you based on a tweet from early July when he said virtually the same thing. So here's the exact quote from July. My message to the companies running gas

stations and setting prices at the pump is simple. This is a time of war and global peril. Bring down the price you're charging at the pump to reflect the cost that you're paying for the product and do it now. End quote. So is Joe Biden right on this one about gas stations being greedy? Well, no. He's spreading fake news. And here is why. Over 60% of gas stations in this country are owned by an individual or a family that owns one single store. Another 30% or so are owned by independent chains or grocery stores like Costco or Kroger. The remaining 5% of gas stations in this country are owned by a large corporate oil or refining company. In other words, over 90% of America's gas stations are either mom and pop outfits or their chains independent of big oil companies.

That's all based on data from the National Association of Convenience Stores, Bloomberg, and the Wall Street Journal. Regardless, what we know from these sources is that a gas station typically makes two to five cents a profit per gallon, depending, of course, on the station. So that means that Joe Biden is just wrong on this one. Those gas stations aren't corporate and they're not price gouging us. However, maybe Joe Biden might say we can throw some responsibility at that, say, fuel truck. that we see pumping gas into the underground tanks,

maybe they're responsible for these big prices, the greedy part. Well, those companies, which the Energy Information Administration describes as the wholesale distribution and marketing process, they make up about 5% of the total price that you see on that sign for the price of gas. So we're ballparking around 10 to 30 cents a gallon for this particular expense, depending on the price, of course. not exactly the villain that we're looking for. But perhaps the villain is to be found in the refining companies.

Those, of course, are the folks that take the raw oil and turn it into all sorts of petroleum products, like gas and diesel. And in fact, it's these refineries that Joe Biden will take aim at today. In fact, he's already done so back in June when he wrote a letter to refining companies demanding that they lower gas prices. So here's a quote from that letter.

at a time of war, refinery profit margins well above normal and being passed directly onto American families, those profits are not acceptable, end quote. So folks, is Biden right to blame refineries for high gas prices? Well, the answer, again, is no. It's fake news and here's why. Back in 1980, America had 250 refineries nationwide. Today, we've got about 125 refineries nationwide. Today, we've got about 124. That's about half. In the New England states, that number was 24 refineries back in 1980, and today it's seven. And that's a problem. Fewer domestic refineries means ultimately less refining supply from refineries that either we control or have influence over. And that can and does lead to higher prices, as we have to import from abroad when we have low supply. There's, in other words, less slack in the

system to squeeze out more product. Still, it's not as though refineries aren't trying to give us more gas and diesel. American refineries are running at 95 to 99% capacity. That's according to the Energy Information Administration. Plus, we've had some major refineries go offline these past months due to fires and accidents and routine maintenance. That means even less capacity and even ultimately higher prices. So the headline here, folks, is Not that refineries are somehow setting a high price and pumping out their product to make a killing. Rather, if they're making record profits, and some are, that's because the base price for a barrel of oil is so high that they're running at full capacity. And that takes us to our final gas price boogeyman as we're standing at that gas station looking at our gas bill and, well, honestly hoping that it's not true.

Well, as Joe Biden will say today, we should ultimately blame the oil and gas companies, the folks pumping the oil out of the ground. As Biden has said correctly, they're making record profits. And maybe that means that they're somehow colluding on the price of oil and making lots of money from it. But is that true? Are they colluding to set the price of oil? The answer is no, they are not. But they are absolutely profiting from market. conditions, like the after effects of the war in Ukraine. And to be honest, they are profiting from the

countries who are in turn colluding to set the price of oil. So let's talk about that last piece, the actual colluding. To refresh our memories on this one, I briefed you all on the oil cartel that's called OPEC and OPEC Plus. These are countries that belong to a group of oil producing nations that have long coordinated their production numbers to either increase or decrease the price of oil. And that continues to be true. A few days ago, I shared news that OPEC Plus is cutting oil production to boost the price of oil probably closer to 90 to maybe $100 a barrel. Now, if you recall, Joe Biden tried to stop that decision. He actually asked Saudi Arabia not to cut production, but, well, they ignored him. And now we have less oil. And America is in a big fight with the Saudis.

Anyway, the bottom line is that absolutely not. American oil and gas companies are not setting the price that they have received and are receiving for their product. They are, of course, benefiting from higher prices. That's true. Record profits in some cases. But all of that is because of market conditions. Now, the interesting point to this story, folks, is that the market price has gone up, certainly over the past nine months, all because of the war in Ukraine and restrictions on the exports of Russian or.

oil and gas. That's, of course, squeeze supply and prices have gone up. And it's that part that, well, more or less, Biden shares some of that burden and some of that responsibility. Now, ultimately, it belongs to Putin. But the war continues, and we are escalating sanctions. Now, maybe you and I are okay with that, with us continuing the fight. But to be very clear, there are consequences for doing so, and we are feeling it at the gas pump. So there you have it, folks. Those are your facts for when Joe Biden blames either gas stations or refineries or America's oil and gas companies for the pain that we are all feeling at the pump. But we are not done because today the White House will also announce that they are going to release a bunch of oil from America's emergency reserves.

And the hope is that that will lower the price of gas. But will it? And even if it does, is that smart to use those emergency reserves? serves. Maybe there are other solutions to this problem. All that is coming up next after this quick break. Own it all. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Buckslot machine by Aristocrat Gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package. The biggest prize in Yamaba's history. Club Serrano members can earn daily instant prizes and secure a spot in the finale May 29th. Don't

pass go and own it all only at Yamava celebrating its 40th anniversary you win details at yamava dot come must be 21-20 please gamble responsibly monopoly is a trademark of hasbro has bro is not a sponsor of this promotion this is a boz moment your 10 boring blocks from home until the beat drops in bows clarity and the baseline transforms boring into maybe the best part of your day your life deserves music your music deserves boz find your perfect product at bows.com Welcome back to the PDB. We're talking this morning about the day's headlines of Joe Biden announcing how he plans to attack high gas prices. And unfortunately, that means in part he intends to attack gas stations and refineries and the oil and gas industry. But as we've just discussed,

well, the facts don't really support that charge. So putting all of that aside, the question before us is what can Joe Biden reasonably do to lower gas prices and how long will it take? So let's start with what the White House has announced. They plan to release an additional 15 million barrels of oil from the Strategic Petroleum Reserve, which is our emergency national supply. Now, that amount is actually part of the 180 million barrel release that they announced last March as prices were spiking because of the war in Ukraine. So these 15 million new barrels, not really new per se, they're just unsold,

but will now be sold on the international. market. But did you catch that? The international market. You see, the sale of this emergency oil is not just for American companies or American refineries to buy for American consumers. Instead, we can think of it as, say, trickle-down oil. And here's what I mean by that. The sale of this emergency oil goes to the highest bidder. It could be a company from China or maybe France, and then eventually maybe it'll get refined somewhere in the world and perhaps trickle back to America. Of course, depending on the market conditions at the time. And then maybe that could lower the price of gas here or maybe not.

So I think that you can see then why it's not really fair to say that this sale of emergency oil will lower your gas bill, either at all or any time soon. Meanwhile, some folks are appropriately asking, should we be selling this emergency oil? Because what the Department of Energy has confirmed is that these special oil reserves are now at a 40-year low. And that means if we have a crisis, say a declared war with Russia or China invades Taiwan, we are going to be in a real pickle. Now, I'll let you debate if the risk of selling our emergency supplies is worth the reward based on this idea. of trickle-down oil that I just described. Plus, I think it's fair to ask why the sale right now? Because maybe it has something to do with midterm elections a couple weeks away. Anyway, that's a little too much opinion. I'll move on. Instead, I want us to focus on some real

solutions here, assuming, of course, that's what everybody wants. Because every single oil and gas analysts that I've spoken with or I've read, well, they say that we could do a couple things if we really wanted to solve this problem. First and fundamentally, America needs more refineries. Just a little bit ago before the break, I said that we are down to about half of the refineries that we once had back in 1980. Well, that needs to be fixed. So what would it take to do that? Well, oil and gas companies would have to believe that the billions of dollars that it would take to build one would be worth the investment. And then second, it would have to be permitted and supported by local communities and states and the federal government. But we've got problems on all counts.

First, oil and gas companies aren't interested in doing this. To understand why, let's imagine a scenario. Let's say that you and I have some extra money and we want to build a new house. It's a big undertaking, very expensive and time consuming. So imagine you take your architect's plans to the permitting office in town and they say, yeah, you can build it, but you're going to have to tear it down and about 10 years and you're going to get nothing for it. Well, most of us would, well, not build that house because, well, obviously. In effect, that's the scenario that oil and gas companies face. Let me explain. Our current government believes that climate change is real. It's an emergency and we must replace oil and gas with solar and wind. In other words, we need more dirty green

energy and a whole lot less of fossil fuel energy. Now, if you don't believe me, if you don't believe that assessment, listen to the words of Joe Biden, words that he spoke in 2020 as he outlined his energy policies and whether he would close down the oil and gas industry all to fight climate change. He said, quote, I would transition away from the oil and gas industry, yes, end quote. And we've seen that borne out these past few years, especially with the big inflation. Production Act, which was really a climate change bill with hundreds of billions of dollars to encourage dirty green energy. So with that in mind, put yourself in the place of a refining company or investors thinking about building a refinery. Would you spend billions of dollars

knowing that the whole thing is going to get shut down probably sooner rather than later as the American government transitions away from oil and gas? Well, of course you wouldn't do that. It'd be a silly use of your money. Now, to be fair, there could be some unique exceptions here. For instance, some refineries can be converted into making biodiesel. But largely speaking, investing in a billion dollar refinery is just a financial non-starter right now, all because of climate change politics. And that leaves us with one final quick issue before we wrap up with our brief today. And that is this issue of permitting and leasing of new ground for oil and gas. Because energy experts have made very clear that if we really want solutions here,

if America permitted and leased more tracks of ground for oil and gas, well, then we could drill more wells and obviously produce more oil and gas. Now, honestly, to properly explain this issue, we'd maybe need 10, 15 more minutes, and our eyes would at some point roll into the back of our heads from too much information. So instead, I'll just say this for why permissible. and leasing just isn't going to happen, not at the scale that we need. From Joe Biden's perspective, why should the government issue more permits and leases for oil and gas if in fact climate change is real and we have to stop it? And that means that we have to transition away from the entire

oil and gas industry and we got to do it right now. Meanwhile, from the oil and gas perspective, Why would you try to get permits and leases or spend money on creating new wells and pipelines, knowing that your industry has a target on its back and your government wants to put you out of business because your product causes climate change? The point is that everybody has an incentive to not create more oil and gas. And by default, that means that America has to go out into international markets to supply us with the oil and gas for, well, for however long it takes. And then someday, the hope is that solar and wind will eventually take over.

And that is what I want to leave you with this morning. Because as much as we fact-checked Joe Biden today, the key takeaway is really this. We don't have a debate about energy, not really. We have a political debate. And that is this. Do we develop the new before throwing out the old? In other words, should we take our time and develop carefully this new dirty green industry, but meanwhile retain and maybe even expand our oil and gas industry?

Or rather, should we throw out the oil and gas industry as fast as possible, all because of climate change? And then meanwhile, just hope that solar and wind can pick up the slack. Well, right now, our government says the latter. They want to throw out oil and gas. Again, they're words, not mine. Meanwhile, the belief is solar and wind, well, they'll pick up the slack just fine. And if not, well, we'll buy from OPEC nations. So folks, does data or logic support that reasoning?

I mean, does that sound like good energy policy or good energy independence? Well, okay, here's my opinion. I don't think so. But since this is a political debate, I'll leave that up to you. I would just encourage you to keep this in mind as Joe Biden speaks with you today. And if you're so moved, keep it in mind for when you go to the polls in November, because this is really a political choice, a choice that's in your hands. And with that, one more thing before I let you go. I have a request for prayer. We'll be right back. Welcome back to the PDB, ladies and gentlemen. So back in August, I spoke with you all.

about some personal lessons that I learned in my life, shaped by my time at the CIA. Now, one of the lessons was how I respond to problems. You see, I tend to sort them into two categories. On one hand, they're big P problems, like capital P problems. Those are ones that I can't really control, like getting a cancer diagnosis. And then, on the other hand, I have little P problems, those that, well, they might be tough or frustrating, but I can fix them. I have the power to fix them.

Well, one listener wrote in Chris from Flemington, New Jersey. He relayed after that brief that he was diagnosed with pancreatic cancer in June. And he shared that while many of us might call that a big P problem to include me, he promised that it would be a little P problem for him. He would beat it. Well, Chris has had a few rounds of chemo so far, walking three miles a day, he tells me. His spirits are pretty good, and he still listens to the podcast. It keeps him company, he says.

So I'd like for you all to do me a favor. For those of you who are the praying type, please pray for Chris in Flemington, New Jersey. Pray for his continued healing and the hand of God to be with him and on him as always. I'll tell you, I don't know what it would be like to be in Chris's shoes, but if it were me, I'd take comfort in knowing that lots of people from around the country, really around the world, are cheering me on. And that is you all.

So thanks in advance if you do offer up some prayer. And meanwhile, Chris, you have such a big fan in me for a lot of reasons. And one, well, maybe some of the stuff that I thought was a big P problem. Well, maybe. Maybe they're just little P problems after all. Just how I think about them. And that, ladies and gentlemen, concludes your morning brief. As always, we close out the show, reminding each other of why we are here,

talking about our country and our world. It's the creed of every good spy and every smart American. It's from John, Chapter 8, verse 32. And you shall know the truth. And the truth shall make you free. Good day. USAA knows dynamic duos can save the day, like, superheroes and sidekicks or auto and home insurance. With USAA, you can bundle your auto and home

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