White House Desperate To Make New Oil Deals As Gas Prices Crush Biden

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by Tyler Durden
Tuesday, Jun 28, 2022 - 09:45 PM

There are two schools of thought when it comes to the stagflation crisis:  Those that think inflation in necessities is part of a deliberate agenda of national sabotage, and those that think the whole disaster is a product of pure stupidity.  There is certainly enough evidence to suggest that the establishment benefits to a degree from prices skyrocketing, but they also face massive risks if the crisis unfolds too quickly.  

A stagflation event is like an avalanche, it's going to come rushing down the mountain and there's no slowing it once it gets moving.  Such a crisis can be deliberately created through central bank fiat money printing and hiking interest rates into economic weakness, but are the banks and politicians so foolish as to believe they can control its path of destruction once it starts?  

Oil and gas inflation are a boon for certain global groups and certain ideologies, this is a fact.  The number of media celebrities, politicians and corporate journalists pushing a Green New Deal agenda in the wake of rising prices tells us everything we need to know.  Inflation is a crisis of opportunity, a way to force Americans and much of the world to accept green energy initiatives and carbon controls that they NEVER would have accepted before.   

Hey, if gasoline continues to climb into the $7 - $10 range then the majority of people will not be able to afford it beyond the bare essentials of a work commute and going to the grocery store.  So, why not just embrace carbon taxation schemes against a commodity that you barely use anyway?  

And that's the trap.  The crisis artificially inflates a bubble in gas prices, and then prices stay high because of green energy initiatives.  Of course, most people also cannot afford an $80,000 Tesla either, so the middle class and the poor are kicked down the ladder and relegated to mass transit, which will, by extension, become more expensive.

There is also the agenda for Universal Basic Income, something we have seen suggested multiple times as a “solution” to inflation.  This week California Governor Gavin Newsom announced a plan to provide “inflation stimulus checks” to CA residents to the tune of $17 billion.  California is one of the most indebted states in the country, with over $130 billion in outstanding debt and $650 billion in unfunded liabilities.  Where are they going to get the money for this kind of program?  In most cases that money ends up being printed from thin air by the Federal Reserve.  

That is to say, California's governor wants to solve their inflation problem by creating even more inflation.  This insanity is not relegated to CA, there are many political leaders that claim UBI is the magic cure for our economic woes.  If prices go high enough, then maybe the American people can be tricked into accepting UBI as well?  And once people are dependent on the government for their very survival, the chances of them ever defying that government grow slim.   

Oil and gas inflation not only affects prices at the pump, though; it also affects prices on everything else.  Freight rates explode higher causing retail prices to go higher.  Electricity production costs more so your electric bill costs more.  Manufacturing expenses skyrocket so wholesale prices skyrocket.  Everything gets more expensive in a perpetual doom circle, and don't think that people buying less will make any difference.  When there are multiple triggers for inflation including a decline in the dollar's buying power as well as supply chain disruptions, a recession might do nothing to stall the inflationary bullet.  

The problem for the establishment is that the public responds very negatively very quickly to threats of poverty.  Biden is barely halfway through his first term and his national approval rating has plunged to 39%, and most of this is due to his terrible handling of the economy.  They can't reap the benefits of the disaster if the public revolts against them.  

This Catch-22 may be the reason why the Biden Administration has been on a global tour searching for alternative sources for oil imports.  Biden recently announced that he would be releasing record amounts of oil from the strategic oil reserves in order to keep prices from climbing.  This hasn't worked yet, but maybe this time it will be different?

Sanctions against Russian oil have exacerbated the already existing threat of dollar devaluation.  Only 3% of US oil imports come from Russia, but they make up 25% of European imports.  As Europe seeks out other oil exporters so must Joe Biden, because Europe and the US are both drawing resources from the same shrinking pie.  

Biden has been courting the Saudi's in the hopes that OPEC will increase production rates (this is not going to happen, at least not in a way that actually brings down prices).  Beyond OPEC, the State Department is even approaching Venezuela in search of black gold.   

The strategic reserves release program is set to end in six months and Europe's sanctions against Russia are supposed to tighten even more by the end of this year.  This leaves everything to existing exporters.  With inflation rising along with the costs of manpower, a substantial increase in the flow of oil is a pipe dream.  And maybe the establishment already knows that.  Maybe, they are just trying to stall the avalanche until the end of 2022.  Maybe they are trying to get past the next election cycle.  Whatever the reason, Biden and friends are trying to slow the inflation machine down, if only for half a year.  This might just be a “crisis of opportunity” that offers the elites far more pain than promise.