Does anyone have a feel for which direction Natural Gas Per Therm Rates are going. I am at the end of my current term and to get the lowest rate I have to sign up for 24 months which seems like a long time. With the push for green energy I am not optimistic of getting a lower rate.going forward.
I’m in oil and gas. I think over the long term rates are up, but it may be volatile. The cause isn’t really green energy it’s chronic underinvestment in oil and gas and energy executive incompetence over the last 12 or more years. Lots of investor capital got incinerated. And the war it really is Putin’s Price Hike to a large degree. If there was no war, Europe would be better supplied and LNG would not be flying off of our shores
Thanks for the reply I really appreciate the feedback. This will help me with my deision.
Just saw a tweet from an insider that Opec runs out of spare capacity in two months or so. Buckle up
Thanks for the update. Please keep me up to date.
Shell CEO today - “Opec spare capacity is smaller than market expects”
It’s 2 years, 5 months, 16 days now to a new Administration, so I worry UP until then.
or the biz could stop flaring off most of it and use it for Americans.
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The President has not very much influence on the price of oil and gas. Someone tell me their upside political scenario and how it would translate to lower oil prices, and I will debunk it.
What really has driven oil & gas prices:
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the Peak Oil theory, first elaborated by Shell Oil Research Geologist MK Hubbert, never went away… it got hidden by the Shale Gale (or the Shale Ponzi) from 2010 until post-COVID. We are now suffering through the re-emergence of Peak Oil. It’s early days. This will go on for the rest of my life. There will not be another earth discovered somewhere, with new untapped virgin oil fields. We know what we got!
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the Shale Gale took place because of zero interest rate policy, or QE after the GFC. Bondholders were desperate for yield, so the oil industry was more than happy to spin a narrative that hydraulic fracturing (“fracking”) + horizontal drilling could produce virtually endless supplies of oil, and if you buy our high-yield (AKA “junk”) bonds, you’ll make this handsome rate of interest… like 10% they were promising, back when Bank of America was paying 0%. Oh wait, BA is still paying 0%. Anyway, they produced a lot of oil, and management made sure they were paid based on physical barrels produced, or number of wells drilled, but not profitability. This oil, which did make the US a gigantic oil producer, was extremely unprofitable, “they lost money with every barrel but hoped to make it up in volume”. Have you every heard that line? Sadly, that was the oil industry, many billions of Dollars of capital were incinerated.
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So much new, unprofitable oil was found that in late 2014 the price crashed! OPEC + Russia played chicken with the Permian Basin, and the two crashed head-on into each other. Yours truly, formerly employed by Schlumberger, the largest oil field services firm in the world, was laid off, then in 2018 I was laid off again by an oil and gas arm of Emerson Electric! Holy heck. Those were horrible times for me.
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The price crash made unprofitable shale oil MORE unprofitable. By the time COVID hit, investors did want to give the oil industry another dime. They were done. Holy heck, ExxonMobil got delisted from the Dow Jones Industrial Average!
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Low interest rates means people are buying bigger, and bigger, and bigger SUVs and trucks! Seven year financing! $75,000 trucks commonplace! 10 MPG and “rolling coal” Dualies fashionable! Remember how everyone pooh-poohed the first electrics and hybrids… when Clark was pointing out when you could buy a Nissan Leaf for $7000? You couldn’t give them away? This was when we were hitting Peak Consumption mania… which always marks when the oil industry is going to turn. Same thing happened in the early 1970s. I was driving my Dad’s V-8 Buick LeSabre land yacht, I could watch the needle go down… then the Arab Oil Embargo hit.
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COVID hit…
“On April 20, 2020, the front-month May 2020 WTI crude contract dropped 306%, or $55.90, for the session, to settle at negative $37.63 a barrel on the New York Mercantile Exchange.” From bad to worse to even worse. Investment interest in oil and gas dwindled more. More and more people got laid off.
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COVID snap-back, 2021. The oil industry is underinvested in for six years. The oil industry is powered, like every industry, by PEOPLE. Great, talented people with Ph.D.'s in STEM fields, all the way down the line to super-tough men and women in the field who endure crazy hardships in deserts and Arctic tundra and at sea… well, they’ve had enough. They have been laid off and mistreated so much, they can’t take it anymore. Lots of us older folks got rich severance packages (mine was six figures, if you count the lump sum pension rollover to my IRA it was HIGH seven figures) so guess what? They’re not coming back. No one in college wants to major in Petroleum Engineering in TX, LA, OK… because they saw Dad, Mom, Aunts, and Uncles get laid off.
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Not enough investment capital. Not enough people. Not enough TIME to assemble replacements. Oil field depletion worldwide has been continuing apace at -5% per year, unabated, temporarily masked by the Shale Gale. What do all of those spell in 2022?
SHORTAGE
What does shortage mean when oil demand is back to 100 million barrels PER DAY?
$100 oil, not $50 oil!
So someone tell me where is the Democratic influence or the Republican or the Greta What’s Her Name influence in my story above. I’m not saying it doesn’t matter, it does, it’s just not as big as people make it out to be in the grand scheme of things.
I have a friend who is the CEO of EnergyFunders, I invest with her (not a recommendation, and you have to be an Accredited Investor anyway), and she said recently, “I don’t wake up every day thinking about what some politician has just said”. And that’s so true. Oil and gas people are about geology, operations, and finance, and the rest is just blarney.
So I hope you benefitted from my little life story. Admittedly, I know little about refining or midstream. But Exploration and Production, my career home for 36 years, is the main price driver these days, as it usually is.
Post script - I am still working in my field, Geological Sciences, for a specialist cloud computing company servicing many oil and gas clients. I hope to retire in 2-3 years, this time permanently.