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Here's what the Oilman has for you today:

• Will Pioneer Acquire Range?

• Europe's Gas Gamble

• Democrats, Republicans, and Experts Against California Governor's Attack

• Tweet of the Day

Pioneer Acquires Range?

Oil and gas explorer Pioneer Natural Resources is reportedly eyeing a potential acquisition of natural gas producer Range Resources. In a strategic shift, Pioneer may expand its footprint in the Appalachian region, where natural gas is the key resource, unlike its current focus on the Permian Basin in West Texas, where it produces oil and natgas.

Nothing is set in stone yet

Pioneer has released a statement saying it's "not contemplating a significant business combination or other acquisition transaction." Meanwhile, Range Resources is busy playing hard to get, and not responding to any requests for comment.

Pioneer's CEO Scott Sheffield is no stranger to dealmaking, having made some big acquisitions in recent years, including Parsley Energy and DoublePoint Energy. If the acquisition pushes through, Pioneer may cement its place as one of the largest independent US producers.

Not feeling the chill

Other Appalachian-focused gas producers, such as EQT Corp., Coterra Energy Inc., and Antero Resources Corp. also saw share gains following the news. This is good news despite the unusually mild winter in the US, which has led to weaker-than-expected demand for gas, causing prices to plunge by more than half in the past two months.

All in all, it seems like Pioneer's desire for consolidation in the shale industry is heating up, and Range Resources is now in the hot seat.

Will Pioneer seal the deal? Stay tuned.

Europe's Gas Gamble

Europe got lucky.

Full gas storage sites and milder temperatures saved the continent from an energy crisis. The European Union had the printed cash to buy up liquid natural gas (LNG) at exorbitant prices, unlike poorer countries such as Pakistan and Bangladesh.

But now the EU must prepare to repeat the trick.

Last summer gas prices in Europe hit over 340 euros per megawatt-hour

This prompted the EU to approve a cap mechanism to trigger when the price of gas surpasses 180 euros per MWh. The bloc also plans to buy gas together to prevent competition between member states and wealthier countries hoarding supplies.

Yet, these measures are insufficient when faced with the fundamental challenge of limited supply. China's demand for LNG is predicted to surge this year, while Europe remains the world's primary destination for LNG.

IEA's Warning

Fatih Birol, head of the International Energy Agency, warned of Europe's deep supply gap, estimated at 30 billion cubic meters, due to the now-defunct Nord Stream pipeline. Birol cautioned that Europe may face another winter of gas shortages, despite enough import terminals. As several market analysts note, EU gas storage can only meet a quarter of its demand, and its distribution is uneven among member states.

Germany plans to become the world's fourth-largest LNG importer by 2030, with a capacity of 71 million tons, mainly from the US. The EU will continue to pay high prices for gas consumption, an inflation driver for European economies.

Europe's gas gamble hinges on buying expensive LNG, hoping for milder temperatures, and managing uneven storage capacity.

Doesn't sound like much of a plan to the ol' Oil man.

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Democrats, Republicans, and Experts Against California Governor's Attack

California Governor Gavin Newsom's plan to stick it to the oil companies has hit a bit of a roadblock. At a recent state hearing, his proposal to limit the profits of oil exploration and refining companies was met with criticism from all sides.

Gavin's attack on oil companies

The state's Senate Committee on Energy, Utilities, and Communications hosted a hearing to consider the legislation known as SBX1-2, which was proposed by Democratic state Sen. Nancy Skinner and backed by Governor Newsom in December.

The bill seeks to penalize oil companies with a financial penalty if they increase gasoline prices "excessively." However, experts at the hearing weren't too thrilled with the proposal.

Michael Mische, a professor at the University of Southern California Marshall School of Business, was quick to voice his opposition to the bill, stating that it "will only make matters worse for the California consumer." He also added that the bill "will reduce supply, force out producers, and reduce employment in a high-paying sector."

That's not good news for the people of California

Catherine Reheis-Boyd, the President and CEO of the Western States Petroleum Association (WSPA), criticized the bill, saying that it "misguidedly focuses on profits, rather than the root cause of price spikes - a lack of supply." She went on to explain that California faces serious supply constraints as it relates to crude oil, gasoline, diesel, and jet fuel, and that increasing a reliable and safe supply is the way to address prices and provide relief at the pump.

In the end, it seems like Governor Newsom's plan to punish oil companies for "lying and gouging Californians to line their own pockets" may have some unintended consequences. While the state has continued to place restrictions on the oil and gas industry as part of its climate agenda and push to rapidly boost renewable energy supplies, it's clear that the state's high gas prices are not solely the fault of the oil companies.

On the contrary, policies by Gavin and likeminded politicians are fomenting the problem.

Around the Digital Patch

🛢️ Oil up in choppy trade, Russia cuts supply.🛢️ U.S natgas up over 3%.🛢️ EIA releases January gasoline and diesel fuel update.

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