This video is brought to you by ftx, learn more about ftx, a link down below where you can incorporate trading views trading indicators with your cryptocurrency trading at ftx and get free crypto via the link down below. When you sign up all right folks, let's go through what joe biden just said and what its impacts could be for the united states economy. What do we think about the keystone pipeline? What do we think is that ever going to actually come back online or the potential for that a fourth phase, uh? What are uh you know: could these high oil prices lead to a recession? What are companies doing in response to what joe biden's talking about? Let's break it all down in this video, so uh, first joe biden just came out and suggest well actually told us that we are now banning all imports of russian oil, energy and natural gas. No more oil will be accepted at our ports.

This comes by the way at the same time as other european countries are not going as far. However, the united kingdom is banning russian oil, but keeping natural gas imports. For the time being joe biden says, this is in cons, uh consolation with european allies. However, some of them are more reliant on russian oil and natural gas than we are.

Joe biden reiterates that we are a net exporter of of energy goods and therefore we can, whereas maybe they can now uh. He does suggest that this will impact gas prices, that gas prices are going to go up and that he's doing everything he can do to sort of minimize the pain on americans while at the same time inflicting further pain on putin and, of course, he decries. The atrocities that are happening in ukraine due to putin's war, he says that this is a method of defending freedom and defending freedom costs money, and we, of course, are going to continue providing defensive weapons uh to ukraine, which i always thought. That phrase was interesting like as an assault rifle a defensive rifle.

I i get what he's saying. Obviously you know stinger missiles uh to defend against air assaults, uh javelins to defend against invading tanks. I get it just kind of a weird phrase, but anyway, germany, finland, netherlands, they're also providing weapons uh, also uh, going to reiterating again the nato commitment. The article five commitment that an attack on one would be an attack on all.

This is why we're boosting how many troops we have on those nato borders but uh when it comes here to some of the other comments that he made. He mentions that we're going to release about 60 bill of 60 million barrels of oil from our joint oil reserves with other countries, half of those about 30 million coming from the united states. Now it's worth noting that the united states uses about 20 million barrels of oil per day. So really this seems like a little bit of a rounding error.

I hate to say it: it's like three days worth of supply, although the thesis is that maybe that'll help blunt just if we focus all of that on, let's say gas prices, maybe that'll help blunt gas prices a little bit uh though uh. Well, what was it? The um, the european commission estimated that uh globally every dollar increase in the price of gas. We see global gdp drop by about 400 billion dollars per year, so so huge impacts that rising oil and gas prices could actually have to consumers in our markets. And that's what we got to talk about next, going beyond what joe biden said, joe biden uh, so we're going to talk about that right after i finish this last thing from biden here, biden did also mention.

He brought up the value of the rupal right now, which it's just sort of worth, seeing that the he mentioned that the ruble is now worth less than one penny uh. So when you try to convert it to the dollar, but it's actually even worse than that. Take a look at this particular chart right here so uh. This is uh the last year of how many rupals it takes to get to the uh to a dollar here.

If you just go to the last month here, you can see how we broke a hundred uh when uh a hundred rubles for a dollar when the war started, and it's just kept going up. It's that is, the russian currency, has lost more and more money, as time has gone on here, so their their economy is really going to be reeling here, especially with with all the companies that are now refusing, of course, to do business. There biden mentioned some of these. We already know a lot of these visa.

Mastercard american express apple ford, nike others, like hermes, h, m ikea, uh, facebook, twitter youtube a lot of companies really smashing on on russia here for this. But what do we? What do we know about companies and what does joe biden say about companies? Well, he talks about these. These two problems that we have. He believes that number one that companies are should really be producing more oil and that right now, instead of producing more oil, they're really more like price gouging us by increasing uh by essentially allowing these price increases to happen rather than producing more oil.

And it's true. I mean off the peak of our highest oil rig count. Our oil rig count is, is slowly growing, like the number of online oil rigs that we have, but it's nowhere near the peak that we used to have, i think, we're at about half as many oil rigs that are actually online right now and this morning we Got a couple comments from different ceos: one is occidental's ceo, vikki holla. This is by the way, the company that warren buffett just took a 10 stake in, and so there's been a lot of retail flow into energy stocks.

In fact, just yesterday, 340 million dollars of retail money went into these oil stocks, probably following the coattails a little bit of warren buffett here. But the occidental ceo mentions that what they're going to do with these extra profits that they're getting from high oil and gas prices is they're going to pay off their debt. It's too complicated right now to expand supply because supply chain issues are too hard, and that makes it really hard for them to grow. U.S oil production and what they're going to do is they're going to make sure they preserve as much cash as they need to.

So that when the oil cycle goes down again and oil prices go down again, they could still send dividends to their shareholders during those down cycles. So in other words here you go. You've got the ceo of a company that warren buffett - just didn't. You know took a 10 stake in disclosing in english that no we're not going to produce more oil, we're going to send more money to our shareholders.

Saudi aramco's ceo blamed a lot of this oil price uh disaster, obviously uh being accelerated by ukraine, but blame part of it on the mixed signals. We're getting from politicians like biden. Are we going to ban oil? Are we not going to ban oil, so i thought that was kind of interesting, but what you notice with the ceos is there? None of them are saying: oh yeah, we're going to ramp up production they're, actually telling us they're not going to ramp up production and they're, using this to sort of clean up their balance sheets and send more money to shareholders. So i think biden's calls here for u.s companies to produce more oil are just falling on on deaf ears.

He does talk about becoming more energy. Independent, loosening regulation will not lower oil prices. He says which we're going to talk about the keystone pipeline. In a moment.

I definitely want to talk about that. We're going to talk about the economic impacts of this, but uh biden uses this as another opportunity to talk about passing things like build back better and providing tax credits for electric vehicles and winterizing homes. He says that'll help. Personally, i hate to say it, but there are a lot of homes that were built post world war ii, where people are like.

Oh i'm, going to put dual paned windows in and the house doesn't even have insulation in the walls which inherently is, is almost worthless. I mean it helps a little bit. Don't get me wrong. The wall is obviously thicker than a single pane window uh and if you go to a double pane, there's some level of improvement, but a lot of homes are just.

They were just built poorly right compared to how we built homes today. That is a good thing, but uh yeah look at the same time as we've got these high energy prices. Climate change is also a big issue. You know the ipcc just released a 3 000 page report talking about these profound shifts in the climate about not just uh heat waves and hurricanes and storms and and flooding.

I mean look at australia. You had dozens of people killed in floods in australia. Uh. You see the fires in california or whatever uh, but they also do mention that better building codes for new construction are actually starting to help.

Uh have an effect, which is very good, so i think one of the things that is worth now thinking about is how could these potential higher oil prices affect the market and there's some charts that i want to show us here so uh this morning there was A writer over at bloomberg, who put together their thoughts and i'll, give you a summary here. They kind of looked at the past oil shocks and they noticed something that really has to happen in an oil shock for an oil shock alone to cause a recession. And what they say is it all comes down to energy spending as a percentage of of income? This i thought, was very interesting, so we'll go ahead and pull this graph up right here, so that is right here: energy spending as a percentage of income. So the white line here is the household spending on energy as a percentage of income.

The blue line, which we can can't see right now because i'm in the way is, is an estimate because we don't have the official numbers yet. But it's worth looking back just to get sort of a bearing here on this chart. Here, look back at the early 80s right here and take a look at this. We spent about 10 to 11 of our wages on energy back during the paul volcker era.

Right, if you look back to the 1990s as an example right here, so sort of the turn of the century 90 to 94-ish, we were spending somewhere around seven to nine percent on energy and in 2008 during the recession there we also peaked above 10. Again, if we go over here to the estimate of where energy spending is now you can see, it looks like right now we're sitting around. Potentially, the blue line's, just an estimate around eight percent and the last read from january, put us around six percent, obviously that six percent is going to go up because, since january oil prices, energy prices have skyrocketed. So eight percent is the current estimate, and their argument is that we really need to get back to about this ten percent level for uh energy prices or an energy price shock to actually lead to a recession.

Now oil right now is sitting at about 130 dollars per barrel. The problem is, you: have these bare case scenarios of potentially oil going up to 150 175, even potentially as high as 200 dollars per barrel, and actually, let me correct this right now. Right now, brent is actually at uh. It's about 130 2.5 right now is about where brent's sitting right now, and so there are these fears that oh, my gosh.

Well, what if we go up to 175 or what, if we go to 200? First of all, it's worth knowing that if we just go to 150 150 per barrel, cpi itself is expected to go up another two percent. On top of where we sit right now uh, so you do have that concern that we have more inflation that we're creating, hopefully, a new form of transitory inflation. But if we do get to these higher levels, this 175 200 yeah. Then it's entirely possible that we're going to get to these 10 levels of energy spend as a percentage of income where, if right now we're at 8, that 10 level could potentially signal an oil induced recession.

So it's possible, but right now, hopefully that's just more fun and and not yet something that we need to be super or hyper concerned about uh. And if you take a look at the markets, markets didn't really like it. While biden was talking, which was roughly right here - are sort of red lines here, but it seems like we're kind of getting over some of that right now now a little bit more to talk about regarding this, the the oil shock. So take a look at this uh.

This is uh. This is another chart where they show that ten percent right spending above ten percent, and this is where we highlight the recessions as well, and so this is where they show us, essentially what i just described where the recessions are and how, when we hit 10 or Near 10, it could potentially trigger recessions - and those specifically of course again here here and not so much in the in the early 90s right here, because we only hit about 9 and still had a recession. And then, of course, here was your dot-com bubble, which wasn't energy induced at all. Okay, let's see what else we have here.

So this is interesting: uh, okay, yeah, that was it in terms of charts. So, let's keep going here so the particular author over at bloomberg did mention, though, that it's most likely the biggest shock here from this oil crisis is going to be felt in western europe and even some parts of course of eastern europe, but mostly western europe, because They're super reliant on this russian oil and natural gas, at least for the time, building, time being until we can get more production or pipelines over there, which that brings up a lot of questions about. Why don't we have that keystone, xl pipeline everybody hears about, and so this is where some data is really useful to talk about, because we import 7.9 percent of our oil from russia. 51.3 percent comes from canada and only about 3 of our crude comes from russia.

7.9 total, which would include like petrol and diesel and gas and stuff like that uh average price of gas right now, is over four dollars: nationwide in california, you're seeing some gas stations charge six seven dollars already a per per gallon of gas, which is pretty wild, But you're already seeing prices that high in europe uh and there's a lot of talk about the keystone pipeline, the excel pipeline. So a quick note about what what you want to know regarding the keystone is that there are three well four phases of the keystone pipeline. There's phase one two and three: a those already exist, uh actually and three b, so you've already got one two and three and b those phases completed and uh. The fourth phase is the phase that got cancelled by joe biden, so on january 21st, 2021, which was you know, inauguration time day after his first day in office right we get the keystone pipelines permit revoked because the government wasn't building this.

This was a private enterprise that was spending the money to to pay for the pipeline. You know shareholders were paying for this pipeline to be built, and the expectation was that this was going to create 28 000 construction jobs. Originally obama killed it and instead called for local development and local production, because the keystone pipeline brings oil from alberta, canada to about nebraska, and then we pump it all the way down to the gulf coast where we have a lot of refineries. Well, so obama killed it in 2016..

Donald trump actually authorized it because he wanted to create those 28 000 jobs. Even though they'd be temporary jobs, it'd still take a couple years uh and he authorized american steel as a condition of approving the permit. So the pipeline was going to be built with american steel and, by the time, biden killed it. Only eight percent of the pipeline had been built and there are arguments that on sort of both sides here that hey well, we should have the keystone pipeline, because that'll help us have more oil and and if we have more oil than prices would go down and Sort of a note here is federal reserve.

Chairperson jerome powell was just asked about this. He was asked hey like if we had the keystone pipeline, wouldn't prices come down and his response was well. You know i don't like to comment on politics, but yeah look more supply equals lower prices right so but uh you know powell's pretty obvious about it. He's pretty blunt about it.

I should say that, like yeah, if we had the pipeline prices would be lower, but the problem is we don't, and it would probably take one to two years to make it. Some folks say that the pipeline wouldn't make a difference anyway. Because - and this is one argument - because right now, we just use trains to bring in oil from canada. Personally, i think that's a bad argument, because we have a ton of shipping and logistic issues right now.

Another argument that you see is that the keystone pipeline would have a little impact on oil and gas prices, because oil and gas prices are largely geopolitical based. This might be true, but i personally believe if we had the keystone pipeline instead of starting at let's say 3.50 for gas and now going to let's say over four dollars per gas. Maybe we would have been at say three dollars and then we'd see from three dollars to 350 right. So to me, there's there's no way.

Somebody could really argue that the keystone pipeline wouldn't have helped us in this situation, but unfortunately, it's a little bit monday morning. Quarterbacking, because i mean who could have expected that putin would have gone crazy here uh. There is, though, also a climate cost here, and that's because the oil that comes from the alberta region is tar sands oil and it's a lot thicker. It's a lot more carbon intensive to process.

So the argument here, then, is: well. We don't want to affect climate change, so maybe we shouldn't be using that oil anyway, since it takes so much more carbon to process than oil that we could get here from fracking or other purposes. I'll tell you, california, by the way, has some of the cleanest oil that exists, but california is like. Oh, let's shut down all the oil friends it's like come on.

We got some of the cleanest freaking oil here, it's just exhausting but anyway uh. So obviously this is where you get the arguments that oh well, you know natural gas uh. You know costs around four to seven cents. Solar and wind also cost around four to seven cents.

So why don't we use solar and wind? Well, we don't use solar and wind as much why? Because batteries cost a lot batteries batteries at about 17 to 18 cents per kilowatt hour, those measures there and cents were per kilowatt hour, uh to the cost of solar wind. So it's just like four times as expensive to use and rely on solar and wind uh alone, and so this is where you're really getting sort of the the arguments here. On one hand, you've got the climate change advocates who are like. We really need to have green energy, but the argument is it's just it's too expensive right now we're getting in that direction, we're closer than we've ever been before.

To actually being more. You know climate, sustainable or energy sustainable, but it's too expensive right now to fully transition over to that, like, for example, if we had to make gasoline, let's say we could make gasoline from solar and wind just as an argument. Well, we would probably be talking about gas costing us 16, a gallon that obviously wouldn't make sense, because that would just bankrupt people that would cause a real recession, just like we saw in in the uh the charts that once we get to that ten percent of Energy spent we could be seeing an oil induced recession, not there yet still at eight percent, but it's something to really keep an eye on and so yeah would. The keystone pipeline have helped, of course, would it help now, probably too little too late? I mean maybe the idea of let's say: if biden came out and said all right, we're approving the pipeline now.

Maybe the idea of that would help oil futures settle down a little bit but unlikely because see uh, there's something to know about oil futures and i'm not the best expert of this. But i'm going to try my best and oil futures are in the state of. What's called backwardation right now, backwardation is where the oil futures are pricing in oil, at let's say 130 dollars per barrel for let's say may, but the actual market believes that oil deliveries in may might only cost a hundred and ten dollars so you're, actually paying more. For those futures now do the speculation or manipulation or whatever then they're actually expected to be worth at that time.

The opposite is contango, so uh. This gives you a full breakdown here of what biden said what companies are doing and the keystone pipeline, and so the bottom line here right now is that this is expected to affect europe more. We do expect uncertainty to last amongst how oil affects our stock market uh and individual stocks, and we know that these oil companies are not expected to increase production and we don't expect the keystone pipeline to come around anytime at all and certainly under a biden, administration And so we don't believe uh that production is going to get increased and so maybe there's a reason to speculate on oil stocks, which a lot of people are doing. Even warren buffett uh getting into uh oxy is the ticker symbol there that he took a 10 position in, and you will see later today that the house of representatives will be voting on a bill.

That uh will be somewhat similar to potentially banning oil, but i think they still have to reconcile that with what joe biden's doing and whatever the house passes is probably not going to mean anything. It's generally what the senate passes that matters since that's where you've got manchin who's, saying yes, ban russian oil and we need to increase local production of oil, so there you go! That gives you a full summary of what joe biden said. What the heck is happening with oil.