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You Ain’t Seen nothing yet. Ba-ba-baby you just ain’t seen nothing. Here is a production cut you will never forget! You ain’t seen nothing yet. OPEC plus has lost its fear of higher oil prices and its fear that the U.S. cares about rising oil prices. OPEC plus saw a golden opportunity to fleece the global economy while the Biden administration stands idly by.

Instead of raising production to meet demand, the market says we need, they instead just rolled-over their march production levels in April, except for Russia, Kazakhstan which could slightly increase production to meet domestic needs. Yet the real kick in the teeth and challenge to the Biden administration silence was from Saudi Arabia who decided to extend Saudi Arabia its voluntary unilateral million-barrel-a-day production cut in April. This broke a Saudi pledge to only do that cut for a couple of months. OPEC plus now controls the global oil prices and as far as prices, well-baby you ain't seen nothing yet.

The Biden administration is silent on OPEC because they need sharply higher prices to achieve their carbon goals. How high will they allow prices to go? Well according to a report in Bloomberg Green, they must rise by 600% to rein in global warming. Bloomberg says that according to energy consultant Wood Mackenzie Ltd., "To stop global temperatures from rising above 1.5 degrees Celsius from pre-industrial levels, carbon prices must surge to $160 per ton of CO2 by 2030, up from a global average of $22 at the end of last year, it said in a report Thursday.

That may give you an indication of the upside on oil and gasoline prices under Biden. This is not news to my readers as we warned that Biden policies will send oil and gas prices soaring. Everything the administration has done has restricted supply. Now U.S. consumers are going to feel the pain. We said that gasoline prices would exceed $3.00 a gallon for the national average, now others are as well. If we continue this path, $3.00 a gallon might look cheap.

Earners at the low end of the wage scale are going to bear the brunt of the Biden policies. They will suffer from needlessly higher gasoline and heating bills. Manufacturers facing higher costs may restrict hiring or keep wages low because of increased energy costs. That will mean fewer job opportunities. Their paychecks will go into their gas tanks and they will have less money to feed and educate their children. If Biden fails to stand up to OPEC, we are heading into stagflation as growth will be stymied and the poor will become poorer.

History is clear that recessions are often set off because of an oil price spike caused by things other than supply and demand fundamentals. With OPEC unchecked and the Biden administration rooting them on, we are going to face some major economic challenges.

This may be why we are seeing yields start to rise. Fed Chairman Jerome Powell shook the markets as he said that the yield curve had caught his attention. He is hopeful that inflationary pressures driven by oil are transitory but with Biden allowing OPEC to control prices, that might be wishful thinking.

The best you can do as a business is to stay hedged. Underinvestment and foolish government policy means that as far as the long-term upside on oil and gas, you ain't seen nothing yet.