Responsible Transitioning from Fossil Fuels – Part 2 November 29, 2021
Recently, we talked about the importance of having a PLAN to execute a phase-out of legacy sources of energy (i.e., fossil fuels) and replacing these sources with “renewables”. In that report, we cited an editorial from The Economist published in October. Another authoritative, albeit biased, source would also be worth listening to as it has equally responsible opinions to be shared. The editorial excerpted below is from Steve Toon, the Editor in Chief of Oil & Gas Investor, points out that the new criteria for measuring performance of oil & gas companies have shifted away from surviving the recent recession to something he called “value versus momentum”. I’m not sure what he’s even talking about, but he does point out – very importantly – that capital has been choked off into the oil & gas sector, and the net effect is that capacity (i.e., daily production) is dissipating. He explains that super-majors, especially European based companies like Equinor and Shell, are actually disinvesting in shale assets. He points out that the amount of capital being deployed into the sector is so low that required daily production volumes, needed for the next decade, are destined to fall short.
Just like The Economist warned in that October editorial, short squeezes are going to emerge because the transition plan to some sort of other energies is far from ready for prime time. So, from a policy point-of-view or an investor’s viewpoint, one’s focus ought to shift back to the Permian Basin’s plentiful oil & gas reserves.
First Keystone has industrial buildings ready-to-go for sale or lease in Pecos (the heart of the western Permian Basin) to serve those service & supply companies that will be crucial if these short squeezes are going to be abated.