Moneybeat: Cosmetic energy independence

MARY REICHARD, HOST: Coming up next on The World and Everything in It: the Monday Moneybeat.

NICK EICHER, HOST: Alright, time now to talk business markets and the economy with financial analyst and advisor David Bahnsen. David is head of the wealth management firm, the Bahnsen Group and he is here now. David, good morning.

DAVID BAHNSEN: Good morning, Nick. Good to be with you.

EICHER: David, I'd like to begin by talking about a story that just did not get as much attention as it probably should have. The Biden administration last week decided to cancel all of the remaining leases for oil and gas in the ANWR. That's the Arctic National Wildlife Refuge in Alaska. And interestingly, around the same time, the Biden for President reelect team purchased a flight of ads for the new NFL season, and touted the President's economic record, specifically mentioning energy independence, let's listen.

JOE BIDEN: They said millions would lose their jobs. But this president refused to let that happen. Instead, he got to work fixing supply chains, fighting corporate greed, passing laws to make us more energy independent. I'm Joe Biden.

So David, how does canceling the ANWR leases make us more energy independent?

DAVID BAHNSEN: It doesn't, obviously. It is a purely cosmetic move, because it also doesn't take away a lot of energy production either. It's one of these political games where it enables him, in this case, to attempt to have his cake and eat it too.

Energy production is reasonably high in America right now. It's just nowhere near high enough. He can tout, “Oh, we are really doing a lot for production,” and then, at the exact same time, say to the far-left and the environmental extremists, “Oh, look, we canceled permits in places like ANWR”.

It's an attempt—which politicians are hardly immune to—of trying to have your cake and eat it too: Playing both sides of the fence. Ultimately, energy independence means you're not sometimes forced to rely on your geopolitical enemies for your energy needs. It would be hard with a straight face for the Biden administration to claim that, since they have gone hand-in-hand to countries like Saudi Arabia and Venezuela, begging them to turn on the production spigots.

The facts of the matter are thus when you depoliticize it, and a person who's the president or running for president can't depoliticize it. A lot of people on the right oppose much of what the President is doing (which includes people like me), but a lot of people can't depoliticize it either.

But I am depoliticizing it. These are just very objective facts. They took 180 million barrels out of strategic petroleum reserve and brought us down to the lowest level we've been at since the early 80s. They have not refilled them at all, even when oil spent about nine months somewhere between $65 and $75. They have begged countries like Saudi Arabia and Venezuela to produce, these are far less green-friendly countries in terms of production than we are; they have a rig count that is now down 40% on the year, as they have approved virtually no new federal permits throughout the year.

Then of course, there is all the jaw-boning that has taken place among financial firms to avoid providing capital to energy producers. So they cannot claim with a straight face that they have generated energy independence: We've gone backwards in this, because demand is higher and supply is not higher. And that is why prices are higher. And this is very basic stuff when one strips the politics out of it.

EICHER: So I brought up ANWR, but I guess my question on that just to try to be fair to the Biden administration on this, is ANWR a big part of the energy independence equation, or is it just a piece?

BAHNSEN: It's a very, very small piece if we're being totally objective about it, since ANWR was a much bigger issue 15 to 20 years ago in the middle of the first decade of the 2000s, post fracking; the fracking revolution in America really made Oklahoma, Texas, Pennsylvania, and North Dakota far more significant players in energy production needs in our country.

EICHER: David, the G20 Summit took place over the weekend in India. I wonder if you have anything, any thoughts at all about the G20? Is there anything significant to talk about there?

BAHNSEN: I think that President Biden is probably happy that both Putin and Premier Xi of China are not there, in the sense that that enables him to be able to speak with other G20 leaders without our two largest adversaries present to try to build up more alliances. I think those alliances are important.

I think that there is probably a lot of work going on behind the scenes to try to maximize Western opposition to a Russia-China Alliance. We're not privy to all of those things, and no real meat on the bone has come out of what's taken place of the G20. That would be my hope: That the opportunity is there for some intelligent advancement of the cause of Western and G20 opposition to a Russia-China Alliance.

EICHER: We're starting to see a rise here in this country of COVID cases. David, based on the responses so far that we've seen, do you think we're doing a little better than we were last time COVID started spiking? Or do you think we're kind of making some of the same mistakes?

BAHNSEN: I'm not seeing any closers; I'm not seeing anybody shutting down. People on the right will be able to call out some extremist on the left suggesting that we do so, but we're not doing it. I think that this is all entirely about the public.

I have no doubt that there are people out there that would love to see more requirements and masks and mandates and other restrictions, but the public is just so far beyond having any tolerance for that, so it's not going to happen. To the extent that there are people now that—individually, on their own, apart from mandates and pressure—choose to say, “I'm going to stay in my house” or, “I'm going to wear a mask”, I really couldn't care less. I think people doing their own thing is what they do.

I have my own opinions about it medically and intellectually, but it's a free country. That's the point, right? Let people freely do whatever they want with regards to their own health. There's absolutely no public appetite to even consider reliving the atrocities we went through a couple of years ago, however.

EICHER: David, any big news on economic data? Or should we shift over to the markets? What are the other big stories this week?

BAHNSEN: I don't think that the macroeconomic data this week was super newsworthy. The initial jobless claims on Thursday were the lowest they had been since February. As I pointed out in my daily market communique, however, you had Labor Day last Monday and so you could have potentially had some reporting that didn't get into the data. I don't know that that's the case, but whenever you see a one week blip, it's always worth waiting for a running average.

The initial jobless claims have stayed very low, potentially the lowest they've been all year. I think that the high of some services had picked up. The new orders had definitely picked up. So it was modestly good news. But at the same time to switch to markets. The bond yields being a little bit higher over the last month has produced a little tension in markets, particularly those markets that were most overvalued and technology is at the top of that list.

EICHER: Alright, David Bahnsen, founder, Managing Partner, Chief Investment Officer at the Bahnsen Group, you can keep up with what's going on with David at his personal website. That's bahnsen.com. You can also sign up for his free weekly dividend cafe at dividendcafe.com David, thanks so much.

BAHNSEN: Thanks so much, Nick.

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