An Inconvenient Truth
January 26, 2023 Article by Jeffrey PriceThe Economist published a fascinating article, An Inconvenient Truth, on the worldwide crusade to contain global warming at a level of no more than 1.5°C (compared to pre-industrial averages) (https://www.economist.com/interactive/briefing/2022/11/05/the-world-is-going-to-miss-the-totemic-1-5c-climate-target). Indeed, this magic number has often been portrayed as something akin to a gigantic cliff. The Economist article quickly points out that this number is not a “cliff”; more importantly, the article points out that there is actually a gradual degradation in climate stability as the world creeps up toward the 1.5°C level and beyond. It continues on to point out that worldwide warming very well could overshoot that threshold, but be brought back by carbon containment and sequestration – pretty interesting stuff. Notably, the report points out that the 1.5°C line of demarcation is purely arbitrary, and indeed, that line was based in part on emotion and politics – once again, interesting.
Finally, the article points out several more inconvenient truths that fossil fuels have a role to play as does nuclear. This article should be mandatory reading for all – both left-wingers and dyed-in-the-wool global warming deniers would each gain an improved grasp of The Big Picture. Indeed, if oil and gas leaders acknowledged what is going on, that act would be a giant step towards rehabilitating the unwarranted villainous image of a vital industry.
In wading through this minefield of conflicting politics, we at First Keystone Pecos Industrial Park remain committed to providing infrastructure to support the U.S. domestic oil & gas industry by offering industrial land for sale in Pecos. It’s part of the solution…not part of the problem!
The opinions expressed above reflect only those of the author and do not represent those of the First Keystone Pecos Industrial Park organization. First Keystone welcomes responsible fact-based discourses on these topics.
Oil Prices Are Likely to Stay Steady This Year…With a Couple of Big Ifs
January 17, 2023 Article by Jeffrey PriceMost everyone asks this question: What’s the price of oil going to be? Indeed, there is an avalanche of articles that purport to cover this topic, but this article from the WSJ on January 16th was one of the best renditions of what “the market” will look like this year – https://www.wsj.com/articles/oil-prices-likely-stay-steady-this-year-11673555621. We recommend especially careful reading of the section on U.S. output. It provides statistical back-up to the points we have been making on this Blog for many months now that the U.S. shale industry has lagged in responding to the worldwide geopolitical situation and to the market itself. In fact, during the course of 2022, the U.S. shale sector came up well short of the EIA forecast for U.S. growth. And the reasons are exactly what we have been bemoaning: Senior management is fixated on shareholder payouts. In contrast, First Keystone Pecos Industrial Park continues to do its small part to support the “war effort” by constructing new warehouses for lease in the Delaware Basin that will support light industrial activities necessary for the oil & gas industry to function competitively.
It is really a shame that an industry that has a predilection to wrapping itself in the flag seems to be oblivious to the tragic situation going on in Eastern Europe. If they participated in a genuine wartime national effort, as was the case in the early 1940s, this industry would be galvanized into action instead of congratulating itself on record shareholder payouts. And the financial tragedy of their approach is that with Russian oil production appreciably reduced, any kind of upward production would translate into windfall profits for the industry. Anyway, we could go on and on, but this article is a must read!
The opinions expressed above reflect only those of the author and do not represent those of the First Keystone Pecos Industrial Park organization. First Keystone welcomes responsible fact-based discourses on these topics.
Crack in the Dike at OPEC
January 10, 2023 Article by Jeffrey PriceNo less an authority than Daniel Yergen has weighed in on the attempt by western democracies to force upon the Russians a bifurcated crude oil market. He did it via an Op-Ed piece in the Wall Street Journal published on December 26, 2022 (https://www.wsj.com/articles/putin-cant-count-on-the-global-oil-market-price-cap-revenue-production-cut-friedman-biden-eu-russia-energy-11672065849?reflink=desktopwebshare_permalink). It appears that the west has initially gained modest success in forcing the Russians to endure prices that are running roughly $15-$20 per barrel less than Brent Crude. This is not a massive discount, but it is an involuntary arrangement which is unprecedented price control. De facto it undermines OPEC’s power. Recently published statistics indicate the Russians have had to cut back production by roughly 2MM BOPD. This shift – thought to be dubious – is, at least initially, working.
What Yergen did not go into is the direction of the overall crude oil market in the next two or three years. That’s the more interesting issue because the fundamental signs are that new supplies are not being brought on fast enough to keep up with demand. That’s due in large part to lackluster CapEx plans across the U.S.-based shale producers; although Exxon is upgrading as it reports plans to increase output by 20% in the next few years. (Chevron has a similar story, too.) Demand, however, is The Wild Card because China’s abrupt reversal on Covid lockdowns is creating economic turmoil. The overriding issue for the near term is the degree to which the Chinese economy will slow down. And, no one can make a reliable prediction about that factor at this time. Offsetting possible softness from China is the struggle that the U.S. Government will face as it attempts to replenish the 180,000,000 barrels of crude that were utilized last year from the Strategic Petroleum Reserve.
Helping to ramp up U.S. production, we at First Keystone lodged in Pecos (Texas) continue to support the strengthening of the U.S.-based supplies of crude by offering state-of-the-art industrial buildings for lease in Pecos (Reeves County), TX. So, oil prices could be soft or they could soar! We’ll be monitoring these critical moving parts and keeping you informed as this new year plays out.
The opinions expressed above reflect only those of the author and do not represent those of the First Keystone Pecos Industrial Park organization. First Keystone welcomes responsible fact-based discourses on these topics.