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Oils well that ends well

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  • Oils well that ends well


  • #2
    Re: Oils well that ends well

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    • #3
      Re: Oils well that ends well

      Oil. THE most important commodity politically and economically on the face of the earth. The virus hasn't changed that.
      And the pundits that say that "green" energy is going to replace it are dreaming.
      Green energy is going to consume a ton of taxpayer money, and make a bundle for the investment bankers on Wall Street. But it's not going do a damn thing for the average Jane & Joe but make their standard of living decline.

      We are headed into a period of increasingly rapid energy price inflation. All forms of it.

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      • #4
        Re: Oils well that ends well

        .....................& with it a return to REAL interest rates?
        Mike

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        • #5
          Re: Oils well that ends well

          Agree with most of your sentiments, Living standards will go down that's baked in the cake.

          But we are heading to a future that relies less on fossil fuels. Oil might have a few more decades but its influence will wane along with coal.

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          • #6
            Re: Oils well that ends well

            In the case of the British I think they face a number of problems, they pissed away their Northsea oil/Gas now they replaced production with borrowing. That can NOT go on!
            I see upperclass getting EV/HFC cars.....everyone else, get the bus!

            ...........and get the bus to war!
            http://www.msn.com/en-gb/money/other...CLc?ocid=ientp

            Mike

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            • #7
              Re: Oils well that ends well

              Originally posted by GRG55 View Post
              Oil. THE most important commodity politically and economically on the face of the earth. The virus hasn't changed that.
              And the pundits that say that "green" energy is going to replace it are dreaming.
              Green energy is going to consume a ton of taxpayer money, and make a bundle for the investment bankers on Wall Street. But it's not going do a damn thing for the average Jane & Joe but make their standard of living decline.

              We are headed into a period of increasingly rapid energy price inflation. All forms of it.
              Thanks GRG55. I'm always inclined to accept you view of petroleum markets. Can you unpack your comments a bit further to help me understand the logic behind it?
              I can think of 3 things would drive up oil prices

              -increasing demand
              -fall off in supply
              -dropping value of currency

              I'd like to hear more of you views on these causes and any others.

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              • #8
                Re: Oils well that ends well

                Had quite an interesting one on Sunday.
                DRiving to my Sister's & on a bust 3 lane highway......a BMW 530d & Golf "R" start to dogfight traffic light to traffic light.
                The BMW did far better than I expected, its torquey diesel motor gave it off the line go that the Golf didn't have unless he used "Race start"......then a lady appeared in a Mini Cooper EV.

                She just trundled up to light & waited.....she was I guess local because at the 1st flicker of light change she was off!
                caught the other 2 napping & her mini "spat" down the road, I think she did 60 in way less than 7 secs........beat the pair of them to the next lights.
                Sure her mini would top out at 95 mph.....but that didn't matter.

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                • #9
                  Re: Oils well that ends well

                  Oil is seen as dirty & old fashioned.......Hydrogen left it too late.......if Toyota can produce Solid State battery with 25 year life & 2-3 times the engery density ......then 2025 should see a major change. Hydro-carbons are not finished, but perhaps we just use them with more care.

                  Mike

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                  • #10
                    Re: Oils well that ends well

                    If "Only" we done this:-

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                    • #11
                      Re: Oils well that ends well

                      Originally posted by thriftyandboringinohio View Post
                      Thanks GRG55. I'm always inclined to accept you view of petroleum markets. Can you unpack your comments a bit further to help me understand the logic behind it?
                      I can think of 3 things would drive up oil prices

                      -increasing demand
                      -fall off in supply
                      -dropping value of currency

                      I'd like to hear more of you views on these causes and any others.
                      #1 Supply destruction. The nitwits declaring the end of US shale have no idea what they are talking about. That's the fastest supply to turn off and fastest supply to turn back on - as I have posted before it is the closest thing the global oil industry has to "just in time" inventory, and it's not located in some far off, politically unstable desert or tundra. But have a look at the incredible damage being done to the expensive, long lead time projects overseas. A large number of them will never be restarted.

                      At the moment there's probably no industry that is more out of favor politically in the west (cue Joe Biden) and financially among the investment elite and the Davos crowd (cue Mark Carney and Jeremy Grantham). Petroleum is an enormously capital intensive business. The lack of capital investment is going to further constrain supply and leave the industry in the hands of the major multinationals in the west (cue Chevron's recent acquisition of Noble for its Permian shale acreage) and the national oil companies most everywhere else - an asset consolidation phase I have previously posted would happen in "the next downturn".

                      #2 Increasing demand. No matter what the green cohort says, if we intend to rebuild our economies and create jobs in sufficient numbers in any reasonable time frame after this damn virus is finally done we are going to need oil, natural gas and LPGs. I am not going to waste time here trying to explain the hopelessness of trying to do it without, and rely entirely on sourcing forms of "green, renewable" energy. There will be plenty of money directed at those efforts because of policy decisions, political pressure, tax incentives and direct subsidies, tax disincentives such as carbon taxes, investment momentum, ESG reporting requirements, virtue signalling and a host of other reasons. The investment bankers and private equity are gearing up for the next bonanza, which will be in "clean energy". It will come at the considerable expense of the average Joe and Jill and take yet another slice out of the dwindling "middle class". In the aftermath of this virus destroyed global economy, those that cannot afford the capital investment to convert to the new forms of green energy (a shiny new EV in the driveway, for example) will have to make do with what they already have. I think that's going to be a LOT of people.

                      #3 Inflation. I think it may still be a bit too early to declare the death of the US$, and one more rise in the Dixie (to kill off what's left of the rest of the global economy) seems reasonably probable. Certainly when one looks at the US$ in comparison with the second tier currencies not represented in the index, and particularly some of the previous high flier EMs such as Brazil, the potential for a domino effect can't be dismissed. So we may yet be a year or three away from any material inflation due to a secular fall in the US$. But its coming.

                      The other thing that will inflate the price of oil and natural gas will be the high cost of the alternative energy sources. There will be all sorts of propaganda published about how costs have come down to par with carbon energy sources, how technology is on the verge of a breakthrough that will create a step function down in the cost, that we are just around the corner from the "tipping point" at which widespread adoption is imminent. I've been listening to this stuff for many years now. And without the government gaming the markets (for the benefit of the folks that bankroll their re-election campaigns and green energy projects) it ain't happenin'. Like every jurisdiction that has force fed citizens a diet of green energy, costs are going to rise. A lot. And that will help inflate the cost of the conventional alternatives.

                      I remain amazed at the incredibly cheap price for inflation protection today. It reminds me of the "old economy" stocks that were being thrown away at distress prices in 1999 and early 2000 while everyone stampeded into profitless internet startups. Many of those despised companies with sound balance sheets and real businesses proved incredibly good buys during the subsequent inflationary run to the financial crisis blow off. Two decades later we might be getting another chance at a similar play.
                      Last edited by GRG55; 08-26-20, 01:11 AM.

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                      • #12
                        Re: Oils well that ends well

                        The way I see it, the current low prices are designed to boot Trump out so that Biden will win and the USA will be once again "mercenary for hire" (for whoever can pay the new administration) to fight the Yemen war.

                        But if Trump wins, prices will still recover once the pandemic is over. Either way, oil prices will not remain low forever. But if Biden wins, oil prices could go a lot higher when he starts a new war in the middle east.
                        Last edited by touchring; 08-26-20, 03:44 AM.

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                        • #13
                          Re: Oils well that ends well

                          I agree with GRG55's write up, but I see Ev's as like E10 they blending with Gas-O-line.
                          Demand will rise for hydrocarbons from the "3rd World" (which IS catching up with the indebted West)....Ev's simply reduce demand a bit.



                          Mike
                          Last edited by Mega; 08-26-20, 05:28 AM.

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                          • #14
                            Re: Oils well that ends well

                            Smart guy, wonder what the solar cells cost?

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                            • #15
                              Re: Oils well that ends well

                              The British will do fine,
                              Though they made it much harder for themselves by existing the EU.

                              North Sea was best pissed away in shoreing up the welfare state.

                              Who needs cars when you can do the job from home, going into the office everyday is a big waste of time and resources.

                              "In some parts of the northern hemisphere, it feels almost like a normal summer: city centres are quiet, schools are on holiday, offices closed. But this illusion conceals deeper uncertainty about what happens next. Assuming those offices reopen next month, will workers return? If not, why not? The answers so far seem to depend where you live. Polls struggle to keep up with the pandemic but two recent surveys suggest a difference of opinion between the US and UK, and other countries. The ManpowerGroup What Workers Want survey of eight countries, published this week but carried out in June, suggests staff in the US and UK were more negative then about returning to the workplace than their counterparts in Germany, France, Italy, Mexico, Singapore and Spain.That nervousness is reflected in the number who have returned to work, according to another poll by AlphaWise last month for Morgan Stanley. At that stage, only 34 per cent of UK office workers said they had gone back to their usual workplace, compared with 83 per cent in France."

                              https://www.ft.com/content/84463da4-...0-f79ed86eedef

                              i

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