Oil

The administration’s recently proposed regulation for flexibly refilling the SPR is a welcome policy change with serious potential to deliver price and supply stabilization benefits.

The long-term goal of energy policy should encompass more than just security and decarbonization: the goal should be to ensure energy capacity abundance and stable energy cost.

The White House should not use the refining capacity crunch as a reason to avoid grappling with the fragile state of crude oil supply, as it appears to be doing. In gasoline and other refined products, there are two related but separable sources of scarcity: crude oil and refining capacity.

The Department of Treasury should be making use of the Exchange Stabilization Fund (ESF) to target accelerated supply-side responses and insure critical producers against downside risks.

Given the discretion afforded the Secretary in utilizing the ESF, and the strong correlation between commodity price volatility and exchange rate volatility, the Secretary has the authority to establish a Supply Insurance and Acceleration Program for key commodities.

Summary Although neither the magnitude nor composition of last week's inflation print surprised us, especially given the knock-on effects from the 'Ukraine shock', they did surprise the CPI forecasting consensus. In response, Chair Powell and the rest of the committee will likely deliver two innovations: 1.

Creative production contracts involving the sale of put options (as we previously advocated for), could help set a soft “floor” on oil prices, preventing a large-scale return to consumer purchases of gas-guzzling cars.

Summary The Department of Energy (“DOE”) is about to engage in rulemaking to broaden the types of acquisitions it can engage in to help refill the reserve in a manner that is both cost-efficient and consistent with the broader goal of enhancing energy security. This rulemaking is a worthwhile opportunity

Repeated price crashes in a variety of industries led to a situation of underinvestment in productive capacity that created the conditions for the inflation we see today.