RE: courtesy of Ertex Investor village OBE mentioned Thanks for sharing.
He has done a good job in aggregating the oil supply/demand data, and pointing out the inevitable problem associated with relying on rapid decline shale production to fill global demand growth.
Peak oil production has been discussed for about 2 decades.
We were always discussing a place none of us had been - so none of us knew what it would look like.
We are there now.
Its a plateau, rather than a peak - what you choose to call it doesn't matter.
There is no sign that say you have arrived at the summit.
You have to look around for yourself to realize when you've made it to the top.
I've never climbed Mt. Everest. If I did, I imagine being at the top on a clear sunny day, and seeing all my surroundings below me.
However in reality, what if I climbed Mt. Everest, and found myself at the peak, but in the middle of thick clouds! It would not be as I imagined. I would not be certain I'd reached the peak, until after I started decending.
Thats what peak oil seems to look like.
Here we are at the peak - but its a plateau. Its also covered in clouds - making it hard to see.
The clouds are clouds of distraction. Things like peak demand, global warming, carbon emissions, electric cars, windmills etc - all of which make it harder to see you are standing at the peak.
The White Tundra presentation helps see through those clouds of distraction.
He does a particularly good job of highlighting the problems inherent in US oil production.
Have you ever climbed a mountain, thinking you were almost at the top - the steap incline starts to level off. You think you are almost there. You go a go a little further until you can see over the next ridge, only to see another steap climb ahead. What you thought was the top, was actually a step.
We got to one of those steps on the way to peak oil production a few years ago - and then US shale oil appeared. We were not at the top, there was another steep climb ahead.
Well now we have climbed to the top of that shale section, and now we are actually there at the top. A top that turned out to be the peak oil plateau.
Its in clouds. We have to rely on instrument data to know we are there.
US shale is over - its doing all it can to keep from falling. Its like treading water in the middle of the ocean. You're still alive, but its just a matter of time before you go under.
The signs are all there, but they are being covered - as we should have known they always would be - by global strategic petroleum releases, and optimistic forecasts of rescue, that are nothing more than wishful thinking.
Who would of thought that peak oil would have been peceeded by a global pandemic - that never occured to me.
A year or so ago, I asked on this board, what would $300 oil mean for OBE. If you didn't take it seriously then, maybe you should start to take it seriously now. Natural gas is $300 ish in Europe.
Its a question whose answer has poor visibility. If you think you know the answer, you maybe more ignorant than intelligent.
Another question whose answer has poor visibility, is what happens after we cross to the far side of the oil peak plateau?
For many years I thought peak oil would happen when the Ghawar Oil Field ran dry. It seems that was simiple minded. US shale oil turned out to be thin ice. We walked a long way from shore on that ice, and now its melting away below us. Some are running back to shore as fast as they can, while others are obliviously discussing carbon emissions, solar panels, windmills, the latest electric cars, imaginary currancy and a day of protest.
I don't know what happens next. I don't know how deep the water is under that thin ice. Are people going to drown when the ice disappears below them, or are they just going to get soaked, and uncomfortable?
The recent highs we've seen in North America for retail gasoline and diesel contained abnormally large refining margins. At normal margins, they equate to an oil price of $170 - 180 ish. It wasn't that bad. There must be demand distruction somewhere, but maybe its been confined to Sri Lanka
The price of gasoline is about double that of the US in Denmark or the UK etc. They manage OK
It seems as we start to decline from the oil peak, demand destruction is the only way to balance the market. The required reduced demand may come from the third world because their citizens have the least extra money to spend.
Also, gasoline price are subsidized in many third world countries. Those countries presumably will have trouble paying that subsidy as prices increase. Once the subsidy disappears, or declines, then local demand will drop.
Maybe various third world countries will absorb the decline themselves, saving the first world from their fate. Who knows.
As for the near term. The US strategic reserve release will end in Sepember (end of Sept if I remember correctly). Biden claimed US production would be 1 million barrels higher by then, and US production would take over where the SPR left off. Thats not going to happen.
When the US SPR release ends, there will be no material extra US oil production. Given the US Nov elections, it seems likely Biden will make another SPR release. It will give the world the oil it needs, but more people will start to see through the problem. There probably isn't a years worth of SPR left.
We may start to come down from the peak oil plateau within a year.
Its a good time to own oil assets.
More and more people are starting to notice that OBE is one of the cheaper oil assets out there.
Even White Tundra seems to have recently noticed OBE
As discussed elsewhere, Q2/22 was very important to OBE's share price. It made it clear to anyone who can read, there is an opportunity here.
There may be plenty of slow portfolio managers - but they all know what a $100 bill looks like. If you offer to sell them a $100 bill at a discount, they will take that deal.
When Quarterly reports are released, analysts go over them. When they see something that stands out, they take it to their investment committee. The portolio manager(s), listen to the analysts presentation, then reflect on what they've heard. If they like what they've heard, they make an allocation decision. Once they've decided how much of their portfolo to allocate, they start accumulating.
Q2 came out on Thursday. The meetings probably happenned on Friday. Over the weekend the portfolio managers reflected. At least one of them gave the go ahead to accumulate starting on Monday.