Energy Week, Episode 4: Why the majors aren’t worried about “Peak Oil” but the markets are worried about events in Saudi Arabia.
Show Notes: In this episode, David Blackmon and Ryan Ray discussed how the ongoing upheaval in Saudi Arabia is impacting oil markets, and the impacts it all could have on the planned IPO for Saudi Aramco. Next, they talked about the reasons why the various “Peak Oil” theories and narratives are wrong, and why the big oil companies aren’t really worried about them. Finally, David talked about the reasons why he thinks the U.S. industry just might not mess up the current positive oil price situation in 2018.
Listen to the Podcast Here
Links to articles referenced in Episode 4 of Energy Week:
Power grab in Saudi Arabia threatens oil market stability
“End Of Oil” Narratives Are Misleading
Peak oil? Majors aren’t buying into the threat from renewables
Oil Pulls Back After U.S. Rig Count Sees Significant Increase
Why U.S. Oil Producers Might Not Mess Up A Good Thing In 2018
A good friend of mine who runs the government affairs shop at a large independent producer has a favorite saying: You can always count on the oil and gas industry to mess up a good thing. The last time he said that to me was about this time a year ago, when it was apparent that, after a terrible year during which the oil price for West Texas Intermediate (WTI) had sunk as low as $26/bbl, the price would top $50 by the end of the year in the wake of the agreement between OPEC, Russia and several other non-OPEC nations to curtail exports.
We were discussing the probability that, in response to that higher commodity price, the upstream segment of the industry would respond by activating a large number of idled drilling rigs early in 2017 and drill its way right back down to a lower price. Which, of course, is exactly what happened: The industry brought more than 200 additional rigs online during January and February, and another 100 or so during the next couple of months, and the market responded by trading for WTI at $43/bbl by the end of April, even as OPEC and Russia reported high levels of compliance with their lower production quotas.
Now here we are, coming toward the end of another year, and once again we have a situation in which crude prices are ramping up to an even higher level, thanks to steadily rising demand, anticipation that OPEC and Russia will renew their export agreement through 2018, and other favorable market signals. One of those other favorable signals is the fact that the rig count in the U.S. has fallen off by about 70 rigs in the last seven weeks, as shale producers have executed on more conservative drilling budgets during the second half of the year. As a result, the rate of increase in overall domestic oil production has basically leveled off at levels the market can absorb.
So will the U.S. industry mess up a good thing again in 2018? It might surprise my good friend that this time I don’t think it will, at least not to the extent that it did over the first half of 2017. This view could change by the end of December, but right now there are several factors that indicate that, while drilling will definitely pick up again after January 1, it will be a more muted response than we saw this year.
Read The Rest Here
The popular joke about Tesla founder and CEO Elon Musk is that every time his company reports another quarterly operational loss, he makes another high-profile speech about creating a human colony on Mars. After last week, Musk may need to consider making a series of such speeches.
Not only did Tesla report another quarterly loss last week, it reported its biggest single-quarter loss since starting business in 2009. Its Q3 2017 loss of $619 million almost doubled its previous record quarterly loss, which came in Q2 2017. That second-quarter loss barely exceeded the company’s Q1 loss of $330 million.
As if to heap insult onto injury, just a couple of days after Musk had to acknowledge his company’s worst financial quarter, the Republican-dominated House of Representatives unveiled its proposed tax overhaul for both individual and corporate taxpayers. While the GOP plan would lower the corporate tax rate on corporate profits to 20%, from its current 35%, that is hardly relevant to Tesla, which has never reported an annual profit in its history and in fact has only twice reported a quarterly profit.
Making matters even worse, not just for Tesla but for all other manufacturers of electric vehicles in the U.S., the GOP tax plan would repeal the existing $7,500 tax credit available to purchasers of these cars. This credit, along with similar credit and rebate programs available in the various states, has enabled EVs to be at least somewhat price competitive with gasoline and diesel cars. Were the credit to go away, it is very likely that sales of EVs would plummet, a reality that no amount of speeches or press releases about Mars could hope to offset.
Read The Rest Here
Today’s Campaign Update
(Because The Campaign Never Ends)
- Just when I’ve promised myself to stop writing about Hollywood depravity scandals for awhile, I get up this morning to the following tidbits of news:
- Actress Denise Richards’ divorce papers say that one of the main reasons her marriage to Charlie Sheen ended because of his sexual obsessions with young boys;
- Actor George Takkei, who has spent his past five years on Twitter, sanctimoniously telling everyone else how to live their lives, now stands accused by a former male model of sexual assault;
- Jann Wenner, founder of fake news magazine Rolling Stone, is accused of offering jobs in exchange for sex. Hey, when everything you’re doing is fake, are actual qualifications really necessary?;
- Three women have accused “Atomic Blonde” producer David Guilloid of rape. He apparently considered Harvey Weinstein to be his life’s role model;
- And now, even actor Richard Dreyfuss stands accused of exposing himself and other acts of harassment by a writer who worked with him back in the 1980s. This comes just days after Dreyfuss himself accused fellow actor Kevin Spacey of preying on his then-minor son years ago, proving yet again that what goes around comes around.
- Holy cow, that’s just one day’s sleaze oozing out of Hollywood’s whitehead-filled pours. Imagine what is yet to come from the blackheads.
- Speaking of actors who sanctimoniously tell the rest of us how to live our lives, Hollywood is about to move into its five month-long season of handing out awards for all the products it created during 2017, all of which fall into the range of so-awful-they’re-unwatchable to mediocre-enough-to-waste-30-to-120-minutes-watching-them. The official calendar for Hollywoods’ award season lists no fewer than 20 different awards ceremonies at which the depraved culture’s actors, producers, directors, writers, photographers and various other flunkies will have their chance to pontificate about how awful the rest of America is.
- That list includes awards you’ve heard of, like the Academy Awards, the Peoples’ Choice Awards and the Golden Globes, and many that most have never heard of, like the SAG Awards, the Gotham Awards, the DGA Awards, the NYFCC Awards. The list goes on and on. It seems that no one in our society requires positive reinforcement from their peers like Hollywood’s pathetic collection of abusers of women and children.
- Last year, every one of the awards shows immediately devolved into a competition between award presenters and winners to see who could say the nastiest things about President Donald Trump and those who voted for him. Because, after all, nothing says “we’re better than you” than a bunch of sexual predators with microphones and cameras lashing out at all us hicks in flyover country.
- But hey, after everything that has already been revealed about Hollywood’s depraved, sleazy, women-and-child abusing culture, surely that culture’s representatives who appear on stage at these awards events will get a dose of humility, give and accept their various undeserved awards with quiet dignity, and maybe a few will even offer apologies to the rest of America for the unbridled arrogance displayed by their community in the past towards the “little people” who happen to pay their bills.
- Hah-hah-hah! I’m cracking myself up here! Ok, just kidding with you. It is a very safe bet that what we will see instead is the hosts of the various programs, in their opening monologues, making passing reference to the rampant depravity revealed in all the myriad scandals, and then following up with “But Trump!”, or “But Roy Moore!”, thus freeing everyone else up to just go about their normal business of bashing people they don’t approve of.
- This is all these people know how to do. They can’t summon up the most modest level of dignity because most of them surrendered their personal dignity to the Harvey Weinsteins and Kevin Spaceys of the world in exchange for whatever level of fame they have managed to acquire, and those who didn’t knew about what was going on and remained quiet for fear of reprisals by the powerful. To speak openly and honestly about Hollywood’s culture of abuse is to admit their own culpability. Far easier to just keep lashing out at the guy with the funny hairdo, and pretend the rest of America is laughing along with all of their uneasy colleagues in the audience.
Just another day in Hollywood Depravity America.
That is all.
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