You've probably noticed that prices at the pump are rising again, going up almost $0.10 per gallon per week since bottoming in late 2022.
The jacked-up price rise is beautifully illustrated by these two charts of current wholesale and retail gasoline prices:
The bad news is gasoline prices are going to continue to rise. The good news is you can profit from it.
Allow me to explain…
You’ll notice in both charts above that the price of gasoline peaked around June 2022.
What happened was this…
In November 2021, President Biden announced the release of emergency oil reserves to combat high energy prices ahead of the busy holiday travel season.
It was more of a symbolic gesture to tamp down the chorus of complaints from Americans because it was going to take weeks for the barrels to hit the market and would not solve surging gas prices for months.
According to a White House press release on November 23, 2021, the Department of Energy would release 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) — the largest release from the reserve in U.S. history.
Biden noted, "It will take time, but before long, you should see the price of gas drop where you fill up your tank.”
Biden was correct — one of the only things he’s been correct about.
The COVID-19 pandemic lockdowns caused a catastrophic drop in demand that halted oil production and led to a lack of oil supply around the world — an issue the SPR release was meant to address.
It was a perfect witch's brew for gasoline prices to soar once nations began opening up from their lockdowns. Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
And when that started happening, the supply of oil wasn’t there to meet demand without a dramatic rise in gasoline prices. And, boy, did they rise. It was simple supply and demand — as old and predictable as the core emotions of fear and greed.
Regular gasoline prices would rise about 54% in the next seven months as surging demand completely swamped supply.
At the start of the first release, there were 605 million barrels of oil in the Strategic Petroleum Reserve.
But this was just the start of a long withdrawal from the SPR for the next year.
With the Russian invasion of Ukraine, prompting sanctions that limit oil and gas imports from Russia, the supply of oil became even tighter and more dire.
So in March 2022, just one month after Putin invaded Ukraine, the Biden administration once again announced another unprecedented release of oil from U.S. reserves.
The release would amount to 180 million barrels of oil. The Biden administration said it would act as a “wartime bridge” as U.S. and global oil production ramps back up after the COVID-19 pandemic.
But here’s the real juice and why I’m writing to you today about a profit opportunity as a gas- and oil-starved world looks to the U.S. for relief.
At the same time that Biden was releasing oil from the SPR, he told Congress to “make companies pay fees on wells from their leases that they haven’t used in years and on acres of public lands that they are hoarding without producing.”
A fact sheet released by the White House notes:
Companies that are producing from their leased acres and existing wells will not face higher fees… but companies that continue to sit on non-producing acres will have to choose whether to start producing or pay a fee for each idled well and unused acre.
That sent American oil companies into a drilling frenzy, especially in our flagship oil patch — the Permian Basin that covers West Texas and Eastern New Mexico. More on this in a minute.
By December 2022 — roughly a year after Biden started tapping the Strategic Petroleum Reserve — more than 250 million barrels were drained out of the SPR. That represents about 40% of our total emergency oil reserve supply.
Now it has to be refilled while at the same time also supplying the U.S. and the global economies with enough oil and gasoline for their daily use.
The United States consumes around 20 million barrels of oil per day, with global consumption hovering around 100 million barrels daily.
Again, this is a perfect storm for a bull market in oil and oil producers.
On January 13, 2023, Reuters reported:
Exxon Mobil in coming days will sharply boost gasoline and diesel production at its Beaumont, Texas, refinery… completing a $2 billion expansion first considered nine years ago.
Initial startup of a 250,000 barrels per day (bpd) crude distillation unit (CDU) at the 369,000 bpd refinery is expected by January 31, the sources said, making the Beaumont refinery the second-largest in the United States.
It is the first major expansion to U.S. oil processing in nearly a decade, adding the equivalent of a mid-sized refinery, and coming online as scheduled at a time when U.S. President Joe Biden has been urging refiners to produce more fuels or face penalties.
And get this — it was revealed late last year that the Biden administration quietly approved plans to build a new crude oil terminal in the Gulf of Mexico off Texas.
The Department of Transportation’s Maritime Administration approved the application for Enterprise’s Sea Port Oil Terminal, one of four proposed offshore oil export terminals.
According to the application, the port will have 4.8 million barrels of storage capacity and add 2 million barrels per day to the U.S. oil export capacity.
Why are these companies building new terminals?
Because production in “King Permian” is expanding. Rig counts are rising, and companies are buying out smaller producers and acquiring more acres as the Biden administration pushes them to pump out oil.
There are three Permian players that are immediate buys right now. One pays a sweet 7.5% dividend and just increased its payout. Another just acquired a large acreage parcel on the New Mexico side of the Permian. Its oil and gas revenue has skyrocketed from $862 million to nearly $3 billion in just two years!!!
And the third — the smallest of the bunch, with a market cap of just $700 million — has seen its Permian oil revenue rise 8,507% in two years. Its stock has doubled in value in just five months… and will most likely double again this year.
I urge you to go through our exclusive presentation on this emerging opportunity right here in our backyard. We consider these to be the best plays to start off 2023.
Brian Hicks Brian is a founding member and President of Angel Publishing. He writes about general investment strategies for Wealth Daily and Energy and Capital. For more on Brian, take a look at his editor’s page.
Brian is a founding member and President of Angel Publishing. He writes about general investment strategies for Wealth Daily and Energy and Capital. For more on Brian, take a look at his editor’s page.