Viking Posted July 23, 2022 Share Posted July 23, 2022 One of the unanswered questions is when will US end SPR oil release? I think the current release is set to end Sept 30. Sounds like that may be the end of it. 1 million barrels per day will come off the market. ————— 'We can't be an oil supplier': Biden's adviser says oil reserve releases must end - https://finance.yahoo.com/news/we-cant-be-an-oil-supplier-bidens-adviser-says-oil-reserve-releases-must-end-205428929.html One of Biden’s top energy aides confirmed Friday the administration won't extend the oil releases from the Strategic Petroleum Reserve that are scheduled to end this fall. The Strategic Petroleum Release “was really a stop-gap measure,” says Amos Hochstein, Biden’s Special Presidential Coordinator for International Energy Affairs. “We can't be an oil supplier. It's a reserve and so we have to keep that.” …Hochstein says he has secured promises from CEOs that investments being made now in improvements like drilling profiles and platforms will pay off with an increase of about 800,000 to a 1 million barrels a day towards the end of the year. This would replace, his argument goes, the 1 million additional barrels a day on the market right now because of Biden’s April move to release the oil reserves. Link to comment Share on other sites More sharing options...
lessthaniv Posted July 23, 2022 Share Posted July 23, 2022 1 hour ago, Viking said: One of the unanswered questions is when will US end SPR oil release? I think the current release is set to end Sept 30. Sounds like that may be the end of it. 1 million barrels per day will come off the market. ————— 'We can't be an oil supplier': Biden's adviser says oil reserve releases must end - https://finance.yahoo.com/news/we-cant-be-an-oil-supplier-bidens-adviser-says-oil-reserve-releases-must-end-205428929.html One of Biden’s top energy aides confirmed Friday the administration won't extend the oil releases from the Strategic Petroleum Reserve that are scheduled to end this fall. The Strategic Petroleum Release “was really a stop-gap measure,” says Amos Hochstein, Biden’s Special Presidential Coordinator for International Energy Affairs. “We can't be an oil supplier. It's a reserve and so we have to keep that.” …Hochstein says he has secured promises from CEOs that investments being made now in improvements like drilling profiles and platforms will pay off with an increase of about 800,000 to a 1 million barrels a day towards the end of the year. This would replace, his argument goes, the 1 million additional barrels a day on the market right now because of Biden’s April move to release the oil reserves. …right before the midterms. Link to comment Share on other sites More sharing options...
Ulti Posted July 23, 2022 Share Posted July 23, 2022 https://www.cnbc.com/video/2022/07/22/putin-knows-what-hes-doing-in-the-energy-markets-says-sps-dan-yergin.html Link to comment Share on other sites More sharing options...
Ulti Posted July 23, 2022 Share Posted July 23, 2022 Pretty sharp guy Link to comment Share on other sites More sharing options...
Ulti Posted July 23, 2022 Share Posted July 23, 2022 https://smartermarkets.media/summer-playlist-episode-1-jeff-currie/ excellent podcast 7-2-22 and looks like a good site to explore all things energy Link to comment Share on other sites More sharing options...
SharperDingaan Posted July 23, 2022 Share Posted July 23, 2022 (edited) Most of the population increase is in the poorer countries. The incremental demand is for refined product (can't do anything with just crude oil), supplied from Asian refiners, and cracked from Russian and Iranian crude. 'Western' demand is essentially a declining 'wash' - inflation driven switching from gasoline to EV, plus ongoing aging (old folks don't drive), plus periodic Covid demand destruction washing out against population growth. Get inflation under control, and the worlds economies can recover. Recession to drive down demand and untwist supply chains, interest rates back to historic norms, labour market settling to historic norms, and market forces allowed to 'put down' the zombies (US Fed view). Resultant cumulative permanent demand destruction largely 'washing' out the subsequent material recovery in demand as the worlds economies come back. WTI in the USD 85-125 range for a very long time. Putin/China are playing the long game, and being smart about it - they own the poor, and their incremental demand for o/g as the poor progressively become wealthier over time. The west is playing the short game, using price to drive substitution to electric vs o/g, and rebuild infrastructure for a different age. Both are rational. To some extent, the US is also playing the long game. - the sour crude SPR is near empty and needs to be refilled. Mexico, and VZ can deliver via ship, Canadian heavy has to be delivered by rail. Hence if I'm a western o/g producer ? I'm asset stripping whatever I already have at 85-125/bbl, returning capital/reinvesting in green energies, and using M&A to consolidate fields and manufacture as efficiently as possible. Exactly what we see today. SD Edited July 24, 2022 by SharperDingaan Link to comment Share on other sites More sharing options...
james22 Posted July 25, 2022 Author Share Posted July 25, 2022 To be sure, history shows that grand energy transitions are possible. The key question today is whether the world is on the cusp of another. The short answer is no. There are two core flaws with the thesis that the world can soon abandon hydrocarbons. The first: physics realities do not allow energy domains to undergo the kind of revolutionary change experienced on the digital frontiers. The second: no fundamentally new energy technology has been discovered or invented in nearly a century—certainly, nothing analogous to the invention of the transistor or the Internet. https://www.manhattan-institute.org/green-energy-revolution-near-impossible Link to comment Share on other sites More sharing options...
Spekulatius Posted July 25, 2022 Share Posted July 25, 2022 3 hours ago, james22 said: To be sure, history shows that grand energy transitions are possible. The key question today is whether the world is on the cusp of another. The short answer is no. There are two core flaws with the thesis that the world can soon abandon hydrocarbons. The first: physics realities do not allow energy domains to undergo the kind of revolutionary change experienced on the digital frontiers. The second: no fundamentally new energy technology has been discovered or invented in nearly a century—certainly, nothing analogous to the invention of the transistor or the Internet. https://www.manhattan-institute.org/green-energy-revolution-near-impossible I guess nuclear energy and solar does not count. Both aren't 100 years old. We also have fusion, but i think it will take another 30 years to commercialize. it doesn't mean we can abandon hydrocarbons (they are used for the chemical industry anyways, so no way to abandon them, even if we don't use them for energy) but mankind has certainly developed new energy sources. There are several more like geothermal, heat pumps that are more niche. The latter one are pushed in Europe for heating homes and should help to wean of from Russian NG gas for heating. Link to comment Share on other sites More sharing options...
Ulti Posted July 25, 2022 Share Posted July 25, 2022 Energy crisis is everywhere From Australian Financial Review on Monday\(middle of july $1a=$.70 us) "Prices for wholesale power more than doubled to an unheard-of average of $323 a megawatt-hour in Queensland in the June quarter, easily the highest of any state in the past two decades, according to adviser Energy Edge. “And the quarter was so high that it nearly lifted the average price for the entire financial year above the previous highest quarter in Q1 2017,” Mr Stabler said. "Price increases were even higher in other states, rising 293 per cent from the March quarter to $$224/MWh, of 247 per cent in NSW to $302/MWh; and of 260.5 per cent in South Australia to $256/MWh, according to the Energy Edge data." Of course not all of this is due to green lunacy. The problem is that continued green activism has demonised coal so much that no-one is building new conventional plants (there is one gas plant in the pipeline which the government is building, that's it) and the aging plants still in service cannot cope. The part below is a fair summary of what's happening. Remember its winter in Australia. "The elevated prices have been driven by record prices for coal and gas, exacerbated by the war in Ukraine which has caused international buyers to turn away from Russia, a major supplier of global energy. At the same time, several coal-fired power stations have been shut for maintenance work, suffered breakdowns or have had coal supplies constrained, tightening up the balance between supply and demand during the peak winter months." Link to comment Share on other sites More sharing options...
lessthaniv Posted July 25, 2022 Share Posted July 25, 2022 Canadian Federal Government discussion document on on emissions caps. https://www.canada.ca/content/dam/eccc/documents/pdf/climate-change/oil-gas-emissions-cap/oil-gas-emissions-cap-discussion-document-july-2022-en.pdf Link to comment Share on other sites More sharing options...
Gregmal Posted July 25, 2022 Share Posted July 25, 2022 Its quite enjoyable seeing all the woke climate crusaders now being in this position. Only way way out. Can do it the easy way, or the hard way. Either way, I win. Link to comment Share on other sites More sharing options...
LearningMachine Posted July 26, 2022 Share Posted July 26, 2022 On 7/3/2022 at 4:55 PM, Viking said: - https://bisoninterests.com/content/f/buffett-buys-oil-gas-stocks Thanks @Ulti for re-posting this today what @Viking had posted earlier. Even though Bison Interests totally missed calling out Buffett's purchase of COP at peak in 2008 (despite leaving the link to COP purchase in their Sources section :-)), it caused me to go back and look at Buffett's 1956 article on The Security I like Best (more readable in text form here). Really amazing how Buffett calls out that he should have titled the article "The Inflation Hedge I Like Best." valuing the company based on oil & gas reserves, not just the income it was generating how "leverage" resulting from both oil payments (I'm thinking he meant royalties) and loans, made the returns much much bigger how payments are obligations of the specific property not the company (shows how amazing he was at ironing out each specific risk). Compares the inflation hedge to owning rental income properties with fixed mortgage payments Buffett was recognizing all of the above when he was 25 years old back in 1956. Just amazing! By the way, I think Bison Interests also miss-attributed that Buffett called out the peak in oil stocks in https://www.berkshirehathaway.com/letters/1983.html. What Buffett was saying was that "Asset-heavy businesses ['natural resources, plants and machinery, or other tangible assets'] generally earn low rates of return – rates that often barely provide enough capital to fund the inflationary needs of the existing business, with nothing left over for real growth, for distribution to owners, or for acquisition of new businesses." Meaning stay away from companies with high PP&E! Link to comment Share on other sites More sharing options...
Spekulatius Posted July 26, 2022 Share Posted July 26, 2022 (edited) 11 hours ago, LearningMachine said: Thanks @Ulti for re-posting this today what @Viking had posted earlier. Even though Bison Interests totally missed calling out Buffett's purchase of COP at peak in 2008 (despite leaving the link to COP purchase in their Sources section :-)), it caused me to go back and look at Buffett's 1956 article on The Security I like Best (more readable in text form here). Really amazing how Buffett calls out that he should have titled the article "The Inflation Hedge I Like Best." valuing the company based on oil & gas reserves, not just the income it was generating how "leverage" resulting from both oil payments (I'm thinking he meant royalties) and loans, made the returns much much bigger how payments are obligations of the specific property not the company (shows how amazing he was at ironing out each specific risk). Compares the inflation hedge to owning rental income properties with fixed mortgage payments Buffett was recognizing all of the above when he was 25 years old back in 1956. Just amazing! By the way, I think Bison Interests also miss-attributed that Buffett called out the peak in oil stocks in https://www.berkshirehathaway.com/letters/1983.html. What Buffett was saying was that "Asset-heavy businesses ['natural resources, plants and machinery, or other tangible assets'] generally earn low rates of return – rates that often barely provide enough capital to fund the inflationary needs of the existing business, with nothing left over for real growth, for distribution to owners, or for acquisition of new businesses." Meaning stay away from companies with high PP&E! I think Hagstrom book (Warren buffet Way) about Buffett contains a lot of his thinking about inflation. Companies with a lot of PPE benefit first but when they have to replace their assets, it's payback time. I think he specifically called out steel companies which actually did fairly poorly in the 70's I think (also due to rising foreign competition, not just issues with inflation). Stuff like TV stations did phenomenally well because the intangibles became more valuable due to ads being a more or less fixed percentage of nominal GDP. Same will be true to GOOGL and FB, I think. Edited July 26, 2022 by Spekulatius Link to comment Share on other sites More sharing options...
Viking Posted July 26, 2022 Share Posted July 26, 2022 (edited) Good summary of current state of oil market. Bottom line, expectation prices will remain in $95-$105 range into 2023. Oil companies will print money. ————- Morgan Stanley oil analyst Martijn Rats has cut his oil price forecasts - “Over the last year we have argued that oil supply would be tight-enough-for-long-enough that some demand erosion needed to take place. In June, prices reached levels that achieved just that, and demand appears to be softening in response. As a result, we lower our near-term price forecasts … Prices reached levels that are hard to absorb: Add to this tightness in the refining system and this explains why diesel and gasoline prices reached ~$187 and ~$180/bbl respectively in June. In response to the commodity-induced inflation surge, central banks are now hiking rates in-sync. Of the 38 central banks globally, 29 (or 77%) have hiked rates in the last 6 months. That percentage is at a 40-year high, making this the most-synchronized cycle of rate hikes since the early 1980s … This combination of factors continues to drive rapid downgrades to GDP expectations in all main regions. Our oil demand forecasts were not stretched, but equally, they were not designed for the breadth of rate hikes and magnitude of GDP slowdown that now appears to be unfolding. With actual oil demand data also starting to come in softer than expected, we lower our 2022e growth estimate from 2.2 to 2.0 mb/d, and our 2023e estimate from 2.7 to 1.8 mb/d” Mr. Rats has reduced his fourth quarter WTI forecast by US$20 to US$107.50 and his second quarter of 2023 estimate from US$107.50 to US$97.50. Edited July 26, 2022 by Viking Link to comment Share on other sites More sharing options...
lessthaniv Posted July 26, 2022 Share Posted July 26, 2022 Topaz reported today. Not a name that I own, however peaking inside the financials to look at the Q2 reported commodity prices gets me excited for some of the numbers that are about to be reported by the names I do own. Link to comment Share on other sites More sharing options...
lessthaniv Posted July 27, 2022 Share Posted July 27, 2022 Interesting read. Academic paper out of Yale analyzing the Russia/Ukraine situation. A very good summary of the energy markets included within. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4167193 Slide deck was also provided. https://yale.app.box.com/s/7f6agg5ezscj234kahx35lil04udqgeo Link to comment Share on other sites More sharing options...
SharperDingaan Posted July 27, 2022 Share Posted July 27, 2022 (edited) Currently, the discount on cash purchases of bulk goods leaving Russia is roughly 35%, plus another 15-20% for bribes and transportation. Cheaper still, if some of that cash can be paid anonymously outside the country. Lot of the 'roofs' are also the goods resellers in both the west and the east. Profiting on both the purchase and the resale of the goods. However nobody makes anything, unless those luxury goods can be resold, absent a deep discount. Easiest way to do that is to ensure that the various 'Russia' traders make some money, and spend it in the various Russian owned clubs. Opportunity ! SD Edited July 27, 2022 by SharperDingaan Link to comment Share on other sites More sharing options...
Spekulatius Posted July 27, 2022 Share Posted July 27, 2022 (edited) 9 hours ago, lessthaniv said: Interesting read. Academic paper out of Yale analyzing the Russia/Ukraine situation. A very good summary of the energy markets included within. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4167193 Slide deck was also provided. https://yale.app.box.com/s/7f6agg5ezscj234kahx35lil04udqgeo And here are people claiming that the sanctions are not working based on the Ruble strength. The Ruble strength just means that Russia can't buy anything. Yes energy is booming based on firm pricing, but the rest of Russia's economy is having the equivalent of the great depression, if not worse. @lessthaniv thanks for posting. Edited July 27, 2022 by Spekulatius Link to comment Share on other sites More sharing options...
Libs Posted July 27, 2022 Share Posted July 27, 2022 8 hours ago, lessthaniv said: Interesting read. Academic paper out of Yale analyzing the Russia/Ukraine situation. A very good summary of the energy markets included within. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4167193 Slide deck was also provided. https://yale.app.box.com/s/7f6agg5ezscj234kahx35lil04udqgeo Fascinating. Thanks. Link to comment Share on other sites More sharing options...
Ulti Posted July 27, 2022 Share Posted July 27, 2022 https://www.nytimes.com/2022/07/27/opinion/environment/energy-crisis-oil-gas-fracking.html Link to comment Share on other sites More sharing options...
Ulti Posted July 27, 2022 Share Posted July 27, 2022 Link to comment Share on other sites More sharing options...
Sweet Posted July 27, 2022 Share Posted July 27, 2022 2 hours ago, Ulti said: https://www.nytimes.com/2022/07/27/opinion/environment/energy-crisis-oil-gas-fracking.html Behind paywall. The title seems to suggest fracking was ‘wasteful and unnecessary (had to google the word). Why does he think that? Link to comment Share on other sites More sharing options...
Pelagic Posted July 27, 2022 Share Posted July 27, 2022 (edited) 11 minutes ago, Sweet said: Behind paywall. The title seems to suggest fracking was ‘wasteful and unnecessary (had to google the word). Why does he think that? Just a short opinion piece. He's basically right in that a lot of capital flowed into fracking and not a lot was returned to shareholders. The crux of the argument: Quote Fracking has been, for nearly all of its history, a money-losing boondoggle, profitable only recently, after being propped up by so much investment from venture capital and Wall Street that it resembled less an efficient-markets no-brainer and more a speculative empire of bubbles like Uber and WeWork. Not sure on the unnecessary part though. If not from fracking, where would the shortfall have come from? Would investment in production elsewhere in the world have been more profitable? Would oil prices have remained higher during the 2010s? Edited July 27, 2022 by Pelagic Link to comment Share on other sites More sharing options...
Sweet Posted July 28, 2022 Share Posted July 28, 2022 (edited) He is correct shareholders have been wrecked, but wrong about it being profitable only recently. Oil companies were spending huge money to grow production as fast as possible. Moderation of that growth is now finally showing all the doubters that Shale is extremely profitable. It was the ‘drill baby drill’ approach, which crashed prices and destroyed shareholder value, it was never that shale was uneconomic. The fundamentals of shale are sound, it’s not the marginal cost barrel in world oil markets. It only took two oil downturns, and a near death experience with covid, for the producers to find religion again. Thanks for posting what was behind the paywall. Cheers Edited July 28, 2022 by Sweet Link to comment Share on other sites More sharing options...
fareastwarriors Posted July 28, 2022 Share Posted July 28, 2022 8 minutes ago, Sweet said: Thanks for posting what was behind the paywall. Cheers here you go: https://archive.ph/OCRFK Link to comment Share on other sites More sharing options...
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