Energy Report: You May Not Want It

You may not want it but you’re going to need it. A frank bit of talk from BP’s (BP) chief executive Bernard Looney who stated the obvious about the realities of the green energy transition and some of the misconceptions about the peak in global oil demand. As reported by Bloomberg the CEO at the IP Energy Conference said when talking about the rush to move away from fossil fuels “You can't defy gravity; you can't go against the will of society... I want to be the one in the room working out how to give people the renewables they want." But when it comes to oil, he said, “People don't always want our product, but they need it... Oil and gas will be here for decades to come and is central to our business - fueling our transition into a lower carbon company.”

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Image Source: Unsplash

The rush to the energy transition is one of the reasons that we are seeing oil prices continue to surge. Yes, there are short-term factors like the Texas energy crisis that reduced production by over 5 million barrels a day but the real thrust supporting prices is the massive cutbacks in oil and gasoline cap x spending. Also, we are seeing many investors pull back from energy investment.

The surge in oil and gas prices so far has not seemingly caught the attention of the Biden Administration and their silence surrounding the oil and gasoline price surge is deafening.

OPEC is also not in a rush to stop the surge. Dow Jones reported that Saudi Arabia as expected will move to give back its additional 1 million barrel a day production cut but not all at once. Amena Bakr of Energy Intelligence reported that in the previous OPEC plus meetings it was agreed that the easing of the cuts will be “gradual” and a maximum volume of 500 thousand barrels of oil a day would be eased. BUT during the last meeting the group didn’t ease the cuts, so don’t be surprised if more than 500k hit the market this time at the next meeting.

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Old Time Investor 1 month ago Member's comment

Good read, thanks! Long $USO