Episode 159 - Climate Policies Could Hand Power and Profits Back to OPEC ?| Dr. Dean Foreman with API

Energy Week

Column - Global passenger aviation’s uneven recovery from the pandemic: Kemp
www.reuters.com/article/us-global-aviation-kemp-column/column-global-passenger-aviations-uneven-recovery-from-the-pandemic-kemp-idUKKCN2DX1M1
- domestic travel in the US is up - TSA screened 2.1 million travelers on Sunday
- business travel people will put up with the restrictions and possibly getting stuck. Leisure won't pick up until the covid protocols go away
Climate Policies Could Hand Power and Profits Back to OPEC
https://foreignpolicy.com/2021/06/16/climate-goals-opec-oil-prices-energy-crisis-shortages-fossil-fuels/#
- NOCs are in position to make a lot of money as oil prices trend higher and western companies divest from fossil fuels
- balance of power is shifting towards Saudi Arabia, Russia, UAE, etc.
- Are shale producers de facto cahooting with OPEC by not producing more
- will investors continue to keep out of oil companies as oil prices get higher?
Why oil prices may shoot at least 15% higher: Goldman Sachs
https://finance.yahoo.com/news/why-oil-prices-may-shoot-at-least-15-higher-goldman-sachs-130028408.html
The Natural-Gas Glut Has Evaporated, Driving Prices Higher
https://www.wsj.com/articles/the-natural-gas-glut-has-evaporated-driving-prices-higher-11624134728
- Less drilling, drought meaning the demand for natural gas is up and the supply isn't keeping up
Dr. Dean Foreman - API Monthly Statistical Report
- The economy is coming back! The data show. Demand in April and May is within a hair of where it was in 2019, the highest demand in 11 years.
- $20 trillion of economic stimulus is doing something, perhaps, in a broad sense. Causing price inflation and showing up in petroleum demand
- Urban commuting picking up
- Trend that contrast is when we look at capex, investment and drilling activity
- NEVER been lower, even during Great Financial crisis in 2008.
- Many companies say they are "people limited" have to find employees.
- Is it just a US issue?
- MENA region is also not showing growth. Sovereign level too.
- Record demand recovery and also need to replace natural decline in oil wells. Record low
- Policy really matters - in Colorado new setback rules have pushed drilling to the edges of the basin. This is why breakeven price has risen there.
- Bakken basin shift isn't related to regulatory activity
- Private companies vs. public companies drilling: less questioning for private companies so they can ramp up faster. Public companies more capital discipline.
- Will US drilling be as nimble as they have been?
- Drilling activity isn't keeping up with EIA model for US drilling. They expect over 1 million bpd more from US and it doesn't look like that's happening.
- Brent/WTI price differential is less than $1 per barrel. Tells us that there's a pull for US crude as opposed to Brent and that is pushing the price differential down.
- Consumers aren't planning for continued rise in prices. Federal leasing moratorium, tax proposals, state regulations are factoring into price expectations in futures markets and that factors into our prices today.
- we know that people are driving less and flying less, but shift towards freight shipping is picking up the slack in oil consumption
- naphtha and other products are WAY up. enduring need for medical plastics and packaging to support online retailing.
- Instead of 13 million bpd of production in 2019, US is only around 11 million bpd and the difference is coming from imports.
- Even though we have very high oil exports in May, we're still importing more oil.
- We need more investment and policies that enable that. We are seeing the result of less investment in oil and gas resources right now.
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