Frank Holmes-Fossil Fuels Are Under Siege. Is Misinformation to Blame?

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It's becoming more and more difficult to be in the fossil fuel business. On both sides of the Atlantic, lawmakers and unelected bureaucrats are turning up the heat, so to speak, on companies over the issue of climate change.

In the U.S. House of Representatives, Democrats have launched an inquiry into whether oil companies have participated in so-called “climate disinformation.” This week, letters were sent to top executives of Exxon Mobil, BP, Chevron and Royal Dutch Shell seeking records, and hearings are scheduled for next month.

Meanwhile, the Securities and Exchange Commission (SEC) is expected to propose a series of new disclosure requirements all publicly traded companies must make, possibly as soon as year-end, to inform investors about potential climate risks associated with their business.

Josh Young: Delta variant and China’s economy are 'short-term concerns' for oil

 

Josh Young, CIO of Bison Interests, joins BNN Bloomberg for his outlook on the sell-off in oil. Young sees rising COVID-19 cases and weakness in the Chinese economy as "short-term concerns" and is buying more oil stocks on pullback from names like Baytex to SandRidge.

Smead Capital Management: Quail Pricing in Oil Assets

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On the insistence from a friend and a colleague, I watched the movie There Will Be Blood over the weekend. I’m a Daniel Day Lewis fan from his prior works like Gangs of New York, so was excited to watch this odd story. Lewis’s character Daniel Plainview is a silver speculator turned oilman who comes across an oil opportunity in Little Boston, CA. He takes his son (HW) to a property, owned by the Sunday family, that they are told contains oil. He tells the owner that they are going quail hunting, which wasn’t true. While hunting, HW stumbles upon an oil seepage confirming the oil is present on the land. They are both excited and the following scene ensues with his son:

HW (son): How much we gonna pay them?

Daniel (father): Who’s that?

HW (son): The Sunday Family

Daniel (father): We’re not going to give them oil prices. We’ll give them quail prices.

While we are not claiming to be getting our oil companies for birdfeed, it brings up the idea of distraction for the Sunday family in the movie and investors now. The Sundays had strangers show up looking to hunt quail, not knowing they were looking for oil. Outside of one family member believing there was a ruse, they were willing parties when the sale price was negotiated at what looked like low prices in the movie. These people had never seen oil drilled on their land, thus didn’t understand the opportunity that lied ahead.

Goehring & Rozencwajg Q2 2021 market commentary: The IEA Ushers in the Coming Oil Crisis

Goehring & Rozencwajg 

The fundamental problems facing global oil markets are much more severe than 2021’s spike in oil prices would suggest.

Our newest commentary, The IEA Ushers in the Coming Oil Crisis, provides an in-depth look at why global oil demand will not taper off due to ESG-related reasons, as the IEA predicts, and supply growth will likely remain restricted — a recipe for a dramatic oil deficit.

• Problems facing the oil supermajors: Exxon, Chevron, Royal Dutch Shell and Total
• Shrinking global oil inventories
• Tightness in the US natural gas markets
• Higher-than-expected Chinese agricultural demand

Harris Kupperman Interviews Josh Young Of Bison Interests

In this episode, Patrick Ceresna and Kevin Muir take a backseat and let fan-favourite Harris Kupperman aka Kuppy interview Josh Young from Bison Interests.  Josh has been hitting out of the park when it comes to his energy picks, and he comes back to the Market Huddle to give us his new picks.

MacroVoices #253 Art Berman: U.S. Oil Production Still Set for Steep Decline in 2021

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Erik Townsend and Patrick Ceresna welcome Art Berman to MacroVoices. Erik and Art discuss:

Saudi Arabia’s production cut decision and what this means

Will U.S. shale industry recover?

Expected decline in demand in oil

Analysis of current comparative inventory report

Pandemic and U.S. consumption recovery – what does this mean for gasoline?

Perspectives on previous prediction of a big decline in U.S. production in Q1

Can OPEC compensate for loss of U.S. production?

Lag times between getting the rig started to actual oil production and what this means

Price vs. Comparative inventory yield curve

Eric Nutall: Ninepoint Partners Energy Update November 2020

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Horizon Kinetics: Two Assessments of Energy: ‘The Market’ and Contrarian (fact-based) Investing

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Today we’re talking about energy. Not exclusively, but mostly. Specifically because many of you have been asking about how the fossil fuel divestment movement and green energy initiatives will impact the energy sector – more frequent questions, and more alarmed. Ifwe don’t address this, there might not be the mind space to hear anything else. The fear isthat there will be such a drastic collapse of oil and gas use, or that, as some have suggested, fossil fuel use will be non-existent by the year 2035, that it will create a permanent failure among energystocks; stranded assets, and all of that.

We see the investment reality entirely differently; entirely. The imminent danger is not the collapse of fossil fuel use; the imminent danger is an oil supply shortage and oil price shock. 

Goehring & Rozencwajg: Investing in the Uninvestable

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Today’s indisputable un-investable asset class is energy broadly and crude oil specifically. Oil has been (and remains) the most important input to economic growth in the post-World War II world. However, in the span of only a few short years, oil’s importance has gone from being widely accepted to thoroughly rejected. The financial press argues that oil should beavoided at all costs.

Investors are convinced that global oil demand has already peaked and will decline steadily going forward. In such a world, the oil industry’s billions of dollars of upstream capital investments would become economically unviable or “stranded.” Environmentalists meanwhile are beginning to clamor for the oil industry to pay “damages” for the carbon released over the last 50 years, leaving investors to ponder whether energy assets are actually liabilities.

Jesse Felder Podcast: Leigh Goehring On The Generational Opportunity In Energy Stocks Today

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You could say that natural resources run in Leigh Goering’s blood. The son of two oil and gas engineers, Leigh has spent nearly his entire life studying markets and investments related to commodities. Over the past 30 years, he has become one of the most brilliant and passionate analysts and money managers in the industry. In this conversation, Leigh shares the details of his macro and micro research process and how he applies them to investing in natural resource stocks. He also details the case for a coming energy crisis and why energy stocks present investors with a generational opportunity today. Below are several notes and links related to this episode:

Goehring & Rozen: On the Verge Of An Energy Crisis

Goehring & Rozencwajg:

2020 Second Quarter Coomentary

How quickly can oil supply be brought back to meet recovering demand?

That is the critical question investors are asking, and the one we strive to answer in this quarter’s in-depth commentary. While most investors believe the lost production will be easily brought back online, our models tell us something vastly different. While OPEC+ production will likely rebound, non-OPEC+ supply will be extremely challenged. Instead of recovering, our models tell us that non-OPEC+ production is about to decline dramatically from today’s already low levels.