 We are going to talk about gas prices today. We're going to talk about refineries. We're going to talk about the Biden administration's panic. We're going to talk about windfall taxes. We're talking government policy around oil today, oil, gasoline. God, in some places, premium gas is $7 a barrel, $6.99, $7 a barrel. I don't know what it is in Puerto Rico. Puerto Rico is funny because Puerto Rico like they started going metric, but they didn't finish it. So some things are metric and some things are not. And really, maybe the only thing that really is metric is gas prices. So gases are quoted in not in gallons, but in liters. So the price is per liter. So to figure out, but everything's in miles, everything else is in gallons. The car is in gallons. So you have to do the calculation. So I don't know what the price is in Puerto Rico because I haven't done the math. So anyway, gas prices through the roof, $6 to $7 for premium gasoline. That is amazing. That is stunning. Inflation generally, as we've talked about on the show before, has been through the roof and it seems to keep surprising the Biden administration. They keep being like, oh my God, what's happening? It was supposed to be transitory. Inflation is supposed to be over. What's going on? And they have no idea what's going on. And they really are panicking and they're struggling to figure it out and they don't know what to do. The better economists on the left are telling them, well, it's all an issue of for the Fed, you can't do anything. And the worst economists, which are most of them, on the left are telling them complete nonsense. So it really is. I mean, I can understand the Biden administration. I mean, that's good. They're going to have the worst economy since, I don't know, since the 1970s. They're going to have inflation. They're likely to have stagflation. We might get a deep recession. They've got a midterms coming up where they're going to be wiped out because Americans are not going to vote for Democrats given the circumstances. I mean, it's enough that you got TRT and you got all the other stuff going on. But then on top of that, you've got a floundering economy, you've got inflation, the cost of living is going up, gasoline at seven bucks. Nobody can win under those circumstances that they're losing. And it's just spiraling out of control with poor Democrats not knowing what to do. And they're just frantic. So Biden, when the initially inflation started, the story out of the administration of Janet Yellen and Biden, Janet Yellen is a decent economist. I mean, she knows better, but I don't think she has any real control there. Janet Yellen and Biden was, oh, it's transitory. It's just supply chains. They'll get fixed. No problem. Once the supply chains get going again, and any day now, that's going to happen. We know that. And there's nothing we can do about it, the government. But supply chains are going to get going. We just need to spend more money. If we spend more money, supply chains get going, inflation will go away. And then they went, whoops, inflation didn't go away. Oh, but it's the Russians. It's a war in Ukraine. It's the evil Putin years, but it's evil. Putin's responsible for American inflation. That's the problem. It's Putin. If only we can defeat Putin quickly, inflation will go away. Well, we're not going to defeat Putin quickly. And inflation is not going away. And inflation has nothing to do with Russia. It's interesting that they haven't really blamed China yet. I think, I think that it's because China is like Trump's gig. Like Trump blamed China for everything. It's like the Democrats are like, you know, if we blame China, we sound like Trump. We can't do that. So they're not blaming China. They're blaming everybody else, but not China. So they blamed Russia. They blamed, they said it's transitory, just supply chain stuff that is going to get fixed like that because it's easy to fix supply chain stuff. And none of that has worked. American people are now buying it. And people are struggling. People are clamoring for the government to do something because we've trained the American people that whenever you have a problem, the solution is government. And the Biden administration doesn't know what to do. So they've picked up lately the Elizabeth Warren line. Inflation is not supply chains. It's not Russia. It's not China. You know, the lockdowns in China reducing supply. And it's certainly definitely unequivocally not the stimulus, the gazillions of dollars that the federal government and the Fed poured into the economy during COVID. It can't be that, right? Because that's good because that's government spending. That's, that's MMT. That's always a positive. Then what could it be? Well, this is obvious. They should have thought of this in the beginning. It's greed. It's always greed. It's always the greed of corporations responsible for all the evils in the world. I mean, COVID is only because the greed of the pharmaceutical companies or at least certainly, you know, because COVID made the pharmaceutical companies a lot of money. So it's always greed. And the financial crisis was caused by greed on Wall Street. And so it's greed. Companies are raising prices for no reason. How dare they? They're raising prices for no reason. And not only are they raising prices, but they're not producing enough product for people so their shortages of prices go up even more. And they're doing it on purpose. So this is where the Democrats almost always go. This goes back to the 70s. And, you know, to be fair, this is what Republicans do as well. When Republican administration is in charge in times like this, like the Nixon administration, which basically puts price controls on the economy because of those greedy corporations daring to raise prices and making money. So they're blaming business. They're blaming corporations. Today, Biden sent a letter to executives at Mavathon Petroleum, Valero Energy and Exxon Mobile. The letter was also sent to Phillips, Chevron, British Petroleum, well, they don't call themselves British Petroleum. That's not politically correct, BP and Shell. And in the letter, the White House Biden, President Biden, President Biden sent a letter to all these other company executives saying, how dare you? Why aren't you producing more gasoline? Why are gas prices so high in America? You've got to produce more gasoline. Do you understand me? You've got to produce more gasoline. And how dare you make so much money? Profits in all these companies is way up. How dare you make so much money? You've got to produce more gasoline. You've got to increase the finding capacity immediately. Now, I want more refineries working now, today, and more gasoline will reduce prices and maybe I've got a chance in 2022. The problem Biden is going to face is that there is no more refining capacity. You know, refineries are working day and night. Now, you know, they're all kind of problems with refining, like the fact that in the summer, California switched an ethanol gasoline oil blend, which requires particular refining processes and capabilities. And when they do that, for a while, things slow down and there are refineries. And then when they, you know, they pick up, but the gasoline produced by refineries that are producing gasoline from California is legally cannot be sold in any other state because other states have different blends. They don't have the California blend. And you can go on and on and on with the stupidity of regulations and controls that exists out there that make it more difficult for a finest increase capacity. But the fact is capacity right now in the United States is over 90%, 94% last I looked. So maybe there's a 6% increase they can maybe squeeze out somehow, but you have to shut down certain plans for maintenance sometimes. And the fact is we're running at full capacity. This is it. What's Biden going to do next? And he knows this. It's not like the Biden administration doesn't know that refineries are running at full capacity. And it's not just that they're running at full capacity. Capacity has shrunk. Why? Why is capacity shrunk? Why are refineries in the United States and really all over the world producing less gasoline have the capacity to produce less gasoline today than they could three years ago? Why over COVID over the last three years have over refineries reduced capacity to produce? Why would they do that? Well, let's think about that, huh? Over the last three years and certainly during the Biden administration and during the Biden campaign and Biden was running for president, I just have a quote on this. Where's my quote? Let's see if I can find my quote. Yeah, yeah, yeah. There's a quote here. This is Biden during one of the presidential debates in 2020 in a primary debate. He was outraged by the suggestion his climate plan wasn't ambitious enough. So he said quote number one, no more subsidies for fossil fuel industry, no more drilling on federal lands, no more drilling, including offshore, no ability for the oil industry to continue to drill period ends number one. All right. Well, if the Biden administration is going to come in and stop drilling and prevent people from drilling and generally shift, you know, heavily subsidize other forms of energy, then why would any rational oil company, why would any rational refiner expand refining capabilities? If the Biden administration was to do everything in its power to reduce and to eviscerate the internal combustion engine in favor of electric cars, why, why? And this is true globally, not just in the United States. If Europe was going to now shift everything to electric cars and disincentivize the internal combustion engine, why would I increase refining capacity? I would shut down. I would start shrinking my refining capacity to adjust a new world in which people didn't want gasoline, didn't want oil. What oil was the enemy? So here we are in a situation where the left and the left globally, so this includes Europe, is basically declared war on oil. The right is quiet and impotent as Cook says in the chat. They're too busy going after Disney. They're too busy arguing about who or what a woman is. They're too busy in the cultural wars. They're too busy with that. You know, who has time for refiners and oil and economics and inflation. That's boring stuff American people don't care. And then the right, American people don't care. What American people care about is CRT and transgender stuff. And that's what seems to consume the entire energy of everybody. It's the cultural wars. It's the cultural wars. Yes, abortion. We got to get rid of abortion. Who has time? Who has time for economics and economic policy? And so there's no opposition, but the world basically is declared war on oil, on oil refining, on oil discovery, on oil drilling. So guess what happens? Capital flows away from the industry. Less money gets invested in new drilling. Less money gets invested in new refining capacity. More money goes to alternative energy. More money goes to where the government is subsidizing, where the government is promoting, I don't know, anything that's quote alternative. And then you get a crisis. And suddenly people discover, oh, but we still drive cars. Oh, but we still need oil and gasoline and we need, we still need these things. And it's too late. It's too late because to build a refinery, God, if you had the environmental permissions to build, it's the 10-year process. And it's probably 10 years to get the environmental permission. It's anyway from five to 20 years to build a new refining refining. You can expand an existing one, but again, expand it to where? What about the worms that are going to die when you build a refinery on their little land there that they have? What about the pollution? What about this? What about that? And you could have built a pipeline, but no, no pipeline, not a lot of pipe, not a lot of big pipelines. So not allowed to expand. And the left has been at the forefront of stomping any kind of expansion, any building of pipelines, any drilling, any new refiners. They don't want refining. They want to shut down fossil fuels. Now, I don't think Biden wants to shut it down. He's just playing to his constituency, but his constituency is what matters. So now we're in a position where it's too late, guys. It's just too late. Seven, eight dollars a gallon. Who knows where it'll end. It's a large extent depends on opaque and what the Saudis decide to do. Because here in America, we basically crippled ourselves. We crippled our own ability to produce, our own ability to ramp up production. Banks won't lend. Why? Because then our ESG rating will plummet. BlackRock won't invest in them. And Republicans, no way to be seen. Oh, Republicans did get involved in a new piece of legislation, a new piece of legislation. I don't remember the name of it. Something shipping, something, something supply chains make the world a better place. So it's a bipartisan bill that has been approved by both the House and the Senate. It's going to be signed by Biden, I think tomorrow. It's supposed to save supply chains. It's supposed to make supply chains more efficient. Ooh, you're on. How are they going to do that? Well, you think, for example, maybe the bill will eliminate the Jones Act. Do you know that California imports oil, light oil, for it's some fuel blend from Asia? Because it can't get it from Texas and other places because of the Jones Act. You know, I've already told you that place of Massachusetts and other places in the past have imported natural gas from Russia when they could import it from Pennsylvania, but they can't because of the Jones Act. So you think if you were going to improve supply chains in America, you do it with the Jones Act? Oh, no. No, that's not included in the bill. All right. So maybe, maybe you're going to deregulate shipping, maybe you're going to deregulate the harbors. Oh, no. No, no. Can't do that. Can deregulate. Here is a bill that's supposed to improve supply chains, supposed to improve shipping. And the bill is basically more regulation, more control. It's giving whatever the, I had this, but I don't have it with me. Whatever the regulatory agency that controls shipping and harbors and all of that is gaining more power, new power, they're going to make it less effective. They claim that this will improve exports. But if you want to reduce inflation, what you want to improve is imports. No, it's going to make imports more cumbersome, more bureaucratic. So the one thing that can be done at the federal level, at the government level, at the federal government level, non-fed level to deal with inflation, which is deregulate, increase trade, eliminate tariffs, do away with the Jones Act. These are just a few things that, like that, would lower prices in the United States. No. Can't do that. Can't do that. Don't trust markets. Gotta give more power to the central planners. Gotta, you know, I think the next step is to have Elizabeth Warren set gasoline prices. I think that's her next job. She's going to be in charge of setting the price of oil globally. Central planners, that's what the Democrats have. That's the tool that they have. They have nothing else. So we go after the refiners. So how does refining cost in the U.S. get set? What goes into the cost of gasoline that you get? Well, 60% of gasoline prices, 60%, is crude oil, crude oil. So who determines crude oil prices? Well, it's the market, remember? It's supply and demand. And yeah, Russia, the fact that Russia, Iran, Venezuela, you know, are crippled to some extent or another, reduces the supply from them. Yeah, that reduces the price. But generally, why is crude oil so expensive? It's expensive because there's no new drilling in the United States. It's expensive because OPEC, who, Donald Trump, lavished praise on, was schmoozed with, danced with the princess, sucked up to, has enormous power. And as a consequence of all the sucking up is not afraid of the United States. It's funny because Biden tried to be tough with Saudi Arabia at the beginning. And now, now he's regretting it. So now he's going to fly to Saudi Arabia and he's going to do a Trump. He's going to dance with the princess. And who knows what else he does with the princess, but he's going to dance with the princess and get them to like America again. Instead of fearing America. But anyway, that's another story. So OPEC, OPEC has basically said, we love high prices. We are not going to increase production. Not interested. And of course, Russia, not completely coming offline because they're still selling to India and other places, but at a much higher price. Because at a much higher cost, put it that way, because the shipping problems, so the quantity coming out of Russia has gone down significantly. But the other flip side of this is of course, economies have exploded after COVID. Economies have grown after COVID. Maybe you don't see it in GDP, but people are starting driving again. So people have shifted during COVID. We still bought stuff, but we bought stuff off of Amazon. We bought stuff at the grocery store. We bought physical stuff. But now people are driving. They're flying. They're moving. They're expending accidentally. The world is going back to normal and supply just can't keep up. Supply of oil can't keep up. So crude prices have gone up through the roof. 17% of the price of gasoline is refining costs and profits. So that's where you can go after the refiners. But of course, gasoline prices are up more than double, maybe triple in some places. That's not from refining costs and profits. That's all, almost all crude oil. 11% is distribution and marketing. Again, distribution is very expensive because of regulations, gas stations, getting into gas stations, all kind of environmental regulations around that. And finally, 12%, more than distribution and marketing. So 12% of the cost of gasoline is federal and state taxes. So we could do a permanent tax holiday for federal and state gasoline taxes. That'd be cool. That'd be cool. That would reduce prices of the pump. But even there, not that much. When crude oil prices have gone up three times, then gasoline prices are going to go up three times. Now, are refiners making a lot of money? Are oil companies making a lot of money? Because note, the costs to drill the oil, to bring it to the surface have not gone up, maybe gone up a little bit because labor costs have gone up, but the price has gone up. They're making a fortune right now. All these companies are making a fortune. That's evil. That's evil. Now imagine, imagine Exxon decided tomorrow to become a non-profit, zero profits. It's going to take profits to zero. Would that change the price of oil on the markets? No. Exxon maybe has two to three percent of the oil market, global oil market. Exxon taking zero profits would not change the price of oil. Maybe it would change the price of gasoline a little bit because it probably has a some impact on the oil they give away to the refiners in the United States, but it would be trivial. It would be trivial. And it would be violating its fiduciary duty, its legal obligation to its shareholders. The way the system works, whether Elizabeth Wan and Joe Biden like it or not, is that companies are supposed to maximize their profits long term for the sake of their shareholders. So you want to penalize companies for making money? Remember that during COVID, I think it was Exxon Mobile lost something like 22 billion dollars. Did the government subsidize them then? I mean they're going to bail out some companies, but about 100 oil companies went bankrupt during COVID. Did anybody? Clamor, was there clamor among Elizabeth Wan's pals to bail out those 100 oil companies? Of course not. There was celebration on the left. CSO companies are making a lot of money today. Good for them. And are they reinvesting their money into increased capacity? Not as much. Why? Because oil and gas has been demonized. There's no future in oil and gas. So what are they doing with the profits? Well, they're giving them to their owners. Who are the owners? Shareholders. So they've been demonized now for doing stock buybacks. But stock buybacks is giving the money to the stockholders. That's the owners of the business. It's their money. How can you demonize giving the money to the people whose money it is? And by the way, who are the stockholders of Exxon Mobile? It's California's pension plan. It's all of the California pension plans. It's the Georgia pension plan. It's pension plans. It's Americans. It's our pensions. All of our pensions. It's 401Ks. It's mutual funds. So it's returning the money to us as shareholders. But no. Oh no. Elizabeth Wan now wants them to invest in more drilling. Really? So that tomorrow she can shut them down because she doesn't like drilling for oil and she wants to subsidize alternatives? So the left demonizes an industry where wouldn't they really, really need them? They're going to force them to produce? Well, force doesn't work. We still live in a semi-free country and you can't force these companies. Now I'm sure that some of the money is going into investment. I'm sure it's a smart investment into investment in areas and in all products where they think they can make a profit in the future. But if they don't think these investments are going to be smart investments, if they don't think these investments can produce a good return for their investors, they should make them. They should just give the money back to investors. That's what stock buybacks are. I love stock buybacks. I think stock buybacks are amazing. All right. So what's the next step for the Democrats to take in this panicked state of trying, trying to bring down inflation, which they caused, well, them and Trump caused? What are they going to do? How are they going to do? Well, the latest proposals is to have a windfall profit tax, a tax on the excess profits above the quote, normal profits company stuff. Now, of course, a government bureaucrat is going to find what normal is. I think you define what excess is and then you get a tax, the excess profit. And I think they want to do this across the entire economy, but for now they're going to do it, they want to do it on oil. I don't think they can get it past the Senate, but they'd like to. We had an excess profits tax on oil from 1980 to 1988. Funnily enough, Ronald Reagan never repealed it, or if he did, he repealed it right at the end of his administration. What were the consequences? The consequences was less drilling in the United States, a decrease in oil production in the US and an increase in imports. It's funny because when you tax something like oil, the price doesn't go down. Why would it go down? But what happens is all companies start being very creative in spending the money, expensing it so that it turns out as an expense and shrinks their profits. So what encourages all companies to do is waste the money, throw it away, invest in things they wouldn't invest otherwise, do things that they wouldn't otherwise do all in order to shrink their tax bill. It's just a way of manipulating behavior. But again, economists understand incentives, at least good economists understand incentives, and what windfall profit tax does not provide incentives to all producers to reduce prices, increase production, or any of those things. She basically got a situation in which we're in today where inflation is increasing and I expect it to increase even more through the summer. Prices are going up. The Fed is trying desperately to raise interest rates, thus suck money and to try to suck money out of the economy by shrinking its balance sheet, but that is slow and weak. I mean, think about it, they raised interest rates by 75 basis points today, so 0.75%. Inflation is at 8.6% annualized over the last 12 months, but 12 months looking forward, it's higher than that. It's higher than that. If the monthly numbers come in at the rate that they've been coming in, we're looking at double-digit inflation, and the Fed is putzing around with three quarters of a percent. Now they promised to raise another three quarters of a percent next month and another three quarters of a percent in September, maybe, if things look bad, maybe. And the Fed is taking out about $30 billion of, 30 or three, anyway, some significant amount of money out of the economy through shrinking its balance sheet, okay? It's a little slow, it's a little weak, and it's very late. It's very late. Yeah, Rob, the Fed rate is 1.75 with inflation at 8.75, pretty much. So, you know, rates, you know, the Fed rate is, the real rate is negative 7%. That's inflationary. A negative 7% real short-term interest rate is inflationary. I'll just note that this Fed chairman was appointed by Trump. I don't know, just thought that might be useful information to have. Powell is, he strikes me as a nothing, and that's why Trump appointed him. Trump appointed him because he's a nothing, and because he's a nothing, Trump thought he could control him, and he did. He basically had him under his thumb. The alternative at the time they were discussing was to appoint John Taylor, the economist from Stanford University, who's a decent free market economist, and Trump didn't appoint John Taylor because he knew John Taylor couldn't be put under the thumb. And of course, Biden reappointed Powell because he knew Powell could be put under the thumb, so much for Fed independence. So we have a situation where inflation is high. It's probably not going to go down significantly soon, although next month's number will be down because it's 12 months looking backwards. But that just means that they're taking the current inflation monthly and they're dropping, you know, last June's number, right? They'll add July's number, or June's number, and they'll drop last June's number. Last June number was very high. They'll drop a high number. They'll add a number that's not as high, and inflation will go down next month. But it's meaningless because forward-looking inflation, inflation for the rest of the year is clearly up, clearly an uptick. So inflation's rising. The Fed's doing its slow methodological, no risk-taking. Don't want to spook the markets. Don't want to create a possibility of a massive recession. So we're going to take it very, very easily. The Biden administration is freaking out because Democrats are going to lose massively in the midterm election. And Biden is going to get blamed for this rotten economy. He is already super unpopular in the polls because of it. And they're freaking out. They're looking for things to do. The only things that would actually have an impact on inflation are things like eliminating tariffs, deregulating. That's it. Deregulation and eliminating tariffs are two big things that would have an impact on inflation. Neither one of those are going to happen. Oh, the other one would be shrinking government spending would have a make a dent in inflation. Those three things not going to happen. The only hope that we have is Republicans win the House and Senate and then negotiate something with Biden that results in maybe, because Biden doesn't necessarily believe in anything, results in maybe some deregulation, some elimination of tariffs and some reduction of spending. But that assumes that Republicans care. It assumes the Republicans have solutions. It assumes the Republicans want to deregulate, want to eliminate tariffs. After all, these are tariffs that Trump put on. Why would you want to get rid of them? It's assumes the Republicans care about this stuff. They don't show any indication that they care about it. Any indication in it. So in the meantime, the government is floundering. The Fed, I think, is floundering, although with less panic, the Fed is floundering with a cool scientific demeanor to them. But that's not floundering. The federal government with Biden is panicked. And we, the people, are screwed. I think that's a technical term. We're screwed. Higher prices, lower standard of living, low quality of life. Soon you're going to see unemployment start ticking upwards, fewer jobs, a floating economy. I think we're at stagflation. I've been predicting stagflation forever. And yeah, I was predicting stagflation during COVID because I said all this money coming in has to have a negative impact. The negative impact is going to be stagflation and slow economic growth. So stagnation and inflation, not a good combination. Not a good combination. And where is our Ronald Reagan or anything approaching a Ronald Reagan? I don't know. the Iran book show grow. Please consider sharing our content and of course subscribe. Press that little bell button right down there on YouTube so that you get an announcement when we go live. And for those of you who are already subscribers and those of you who are already supporters of the show, thank you. I very much appreciate it.