Energy Brief Today: An about-face on climate change at the EPA

By Timothy S. Snyder, Matador Economics

Markets liked the PPI report this morning. But only for about 30 minutes! They are still fixated on tariffs and price war.

Another badly needed improvement in the PPI was posted this morning, with the headline number showing prices were unchanged month over month on expectation of +.3%, The headline year over year showed +3.2% on expectations of +3.3%.

Core PPI, came in -.1% month over month as economists expected +.3%, and the core PPI, year over year came in +3.4% on expectations of +3.5%. These numbers were even better than yesterday’s CPI and indicate, at the wholesale level, prices are improving better even than the consumer level yesterday. That’s Good News!

This morning there is a story in Oilprice.com from Irina Slav titled, “EPA Launches Review of Climate Legislation.” This suggests there will be a fundamental shift in the agency’s direction from working to fight climate change, to supporting prosperity and national security.

According to Slav, “The Trump administration will not sacrifice national prosperity, energy security and the freedom of our people for an agenda that throttles our industries, our mobility, and our consumer choice while benefiting adversaries overseas,” EPA Administrator Lee Zeldin said. “We will follow the science, the law, and common sense wherever it leads, and we will do so while advancing our commitment towards helping to deliver cleaner, healthier, and safer air, land, and water.”

This is a fundamental shift in the EPA’s direction and will generate rigorous debate, moving forward. There will be more on this story as the new program is rolled out. We’re also watching a story out of India, as they spread out their crude oil purchases to Africa and South America.

Yesterday’s EIA report on U.S. inventories showed crude oil posted a build of 1.4 million barrels. Gasoline posted a 5.7 million barrel draw and the distillates posted a 1.6 million barrel draw. U.S. crude oil production added 67,000 barrels per day to 13.575 million barrels and refinery operations added 321,000 barrels per day bringing that total to 15.575 million barrels per day. Apparently demand in the U.S. remains solid.

U.S. winter weather

A massive cold front pushes east out of the Rockies and has generated Red Flag warnings from South Dakota to Texas. A dry air mass on the southern end of the storm has Fire Weather watches as well. There is also a marginal chance of severe weather in Mississippi, Alabama and Georgia.