It’s not exactly news that, so far as the Biden administration is concerned, climate policy trumps both human rights and America’s strategic interests.
Even so, with its latest opening to Venezuela, the White House has combined disdain for human rights with a degree of geopolitical stupidity impressive even by its own dismal standards.
A columnist at the Wall Street Journal explains:
At the United Nations climate conference in Sharm El Sheikh, Egypt, the U.S. agreed to pay environmental reparations to developing countries. Days later it emerged that the Biden administration would issue a new license to Chevron to resume operations in joint ventures with Venezuela’s oil company, PdVSA.
The U.S. government thinks you’re a fool, dear reader. And not only because it waited until Americans were en route to grandma’s house for Thanksgiving to let news slip of a deal to increase heavy-crude output from joint ventures controlled by a dictatorship allied with Iran. Or that it expects you to believe that Venezuela is considering a return to free elections in exchange.
Presumably you also haven’t noticed Team Biden’s effort to impede the development of huge reserves of light sweet crude from Guyana, a U.S. ally.
Washington policy makers occasionally make miscalculations that help American enemies, undermine development in a poor country, or harm U.S. economic interests. But to nail the trifecta requires a special blend of ideological blindness and incompetence that is mercifully rare. Still, as the administration’s treatment of Guyana demonstrates, it does happen. . . .
And now, via the Financial Times, shale legend Harold Hamm weighs in:
Shale pioneer Harold Hamm has hit out at the US’s oil deal with communist Venezuela, saying it marked a new sign of “desperation” from the administration of Joe Biden as it tries to beat back fuel inflation.
The US last week said it would allow supermajor Chevron to restart some operations in Venezuela, more than three years after Donald Trump’s administration imposed sanctions on the country’s oil sector. The move could help free up more global crude supplies amid an energy crunch triggered by Russia’s invasion of Ukraine.
“This Venezuelan deal, that’s a good example of the desperation that this administration is dealing with,” said Hamm, the outspoken shale billionaire who founded Continental Resources and previously advised Trump on energy policy.
Battling a surge in domestic fuel prices that have fanned rampant inflation across the US economy, the Biden administration has released oil from the emergency federal stockpile, implored Saudi Arabia to supply more crude, and called on shale producers to increase drilling…
But Hamm said Biden’s earlier pledge to transition from oil and end fracking on federal lands had stymied the once-prolific shale patch…
The shale tycoon said he expected further inflation as long as shale production, rich in the so-called middle distillates needed to make diesel — a crucial input in US industry and transport — remained depressed.
“They know what they did. They know they took the federal lands off the table,” Hamm said. “They know better and shame on them . . . They want to put oil and gas out of business.” . . .
“You have to understand where diesel comes from, and you can’t make it out of tar,” he said, in a reference to Venezuela’s ultra-heavy bituminous oil, which needs to be blended with lighter grades and requires extensive refining. . . .
Extensive refining, eh?
There’s a problem there too.
Turn to an article in the Washington Post from the summer to read this (my emphasis added):
Oil refineries across the country are being retired and converted to other uses as owners balk at making costly upgrades and America’s pivot away from fossil fuels leaves their future uncertain.
Ah.
Building refineries (or even adding significant capacity to existing refineries) is an expensive business. Given the hostility to fossil fuels within the administration, large sections of the Democratic party, the administrative state, activists, and much of the investment community, it’s unsurprising that companies are unwilling to make the capital commitment necessary to make up for a growing refining shortfall. Where that will take us is to nowhere good, but that’s a topic for another day.
I wrote about Hamm in a Capital Letter back in June, noting his irritation at the way that those who dominate (and, he might have added, regulate) public securities markets were turning against fossil-fuel companies.
He is not, shall we say, a fan of ESG (an investment discipline under which actual or potential portfolio companies are measured against various environmental, social, and governance benchmarks). In order to avoid having to deal with all that, Hamm had (at the time I was writing), launched a bid to take his flagship, Continental Resources, private.
The deal closed a week or so ago.
“Operating as a private company enhances our ability to do what we do best and unlocks endless possibilities,” Hamm said in a letter to employees Tuesday morning.
And what that says about the state of our public markets is . . . not good.