It's a very, very good article. I am amazed how calmly these CEOs can talk about these things; they are very, very good at keeping things in perspective.
Some observations (data points from the article and then my comments, or vice versa). Again, I am inappropriately exuberant about almost everything when it comes to the oil and gas industry and an eternal optimist.
Before I get to the article: back in the 70's it appeared to me there was going to be a real shortage of oil, if not energy in general. Now, there is so much energy available that wind farms are being paid not to produce electricity in the US Pacific Northwest.
Perhaps for investors in select sectors, and perhaps for workers in select sectors, things look "bad" in the oil patch. For consumers, things could not look brighter in the US (except in California, as you will see in the article).
So, now the article, and how I read it.
Question: is the low price of oil "normal" for the US?
Answer: at $60 now, it's going to take somewhat higher prices to justify a lot of incremental drilling activity.
Question: are we running out of oil?
Question: did the Saudis intentionally drive down the price of oil to put shale oil producers out of business?
Answer: he never really answered the question, but he had a great historical perspective --
If you go back 30 years ago, at one point the Saudis cut production from 9 million barrels a day to 2 million. OPEC opened up surplus capacity of 15 million barrels a day that took 20 years to work off. Right now we're not in that situation. We have perhaps 2 million to 3 million barrels a day of surplus capacity.Question: what does the US need to do to become energy independent?
Answer: "oil, gas, nuclear energy, and the right policies" is what he said; this is what I "heard": "yada, yada, yada." I think the whole issue of the US becoming energy independent is over-rated; a distraction.
Question: how important is it to lift the crude oil export ban?
Answer: we need to export light crude oil and import heavy crude oil. Regular readers of the blog already knew this.
Question: what about pipelines?
Answer: yada, yada, yada.
Question: the climate change issue?
Answer: some data points --
- US accounts for just 15% of the world's greenhouse gas emissions
- the US has a very energy-efficient economy
- California has an aggressive set of laws (AB 32 and the Low Carbon Fuel Standard)
- California's laws that just went into effect could add $1/gallon to the price of gasoline
- California accounts for less than 1% of global greenhouse gas emissions
- data centers (very energy intense) are not being built in California
- Apple has moved data centers to North Carolina
- Microsoft has moved data centers to San Antonio (Texas)
Answer: yada, yada, yada
Answer: ain't gonna happen.
- the words "renewable, wind, solar, hydroelectric, Biden, Pocahontas, or Michelle" were not mentioned by either IBD or by the Chevron CEO
- California, accounting for 1% of global greenhouse gas emissions is enacting legislation like the state accounts for 99% of GGGE
- both Microsoft and Apple are moving data centers out of California
- the Chevron CEO doesn't think the crude oil export issue is worth discussing, which is about how I feel