Feeding The Energy Bull
The global energy industry is in a sorry state.
Oil and gas prices are stubbornly high while demand is faltering as the economy slides.
It shouldn’t be like this at all.
The old “the solution to high prices is high prices” and all that.
The situation is bad and
it could get much worse in the months ahead.
But you understand why it’s all happening, you’ll realize we could be looking at a decade-long bull market in all things energy.
Choking The Oil And Gas Industry
The current high-price/falling-demand energy market conundrum is totally explicable.
A cynic might say it’s all voluntary and part of an intentional plan.
And it’s starting to get exposed.
For example, Fox News’ website recently pointed out what’s going on at the major “choke point” in the oil industry.
They lay it out in
American Oil Refineries Shutter Amid Biden's Hostile Fossil Fuel Policies:
American refinery capacity has been on the decline in recent years, according to Fuels Market News latest Refinery Capacity Report.
The report found that operable atmospheric crude oil distillation capacity in the U.S. fell from 19 million barrels per calendar day at the start of 2020 to 18.1 million at the start of 2021.
It marked the first decrease in refinery capacity since 2017, the report noted.
That’s a refining capacity of 5%.
In the commodities world, that’s a massive disruption.
But that’s just the United States though.
Digging deeper, we see it’s just as bad worldwide.
The American Fuel & Petrochemical Manufacturers (AFPM), an admittedly biassed source, states:
The world lost a total of 3.3 million barrels of daily refining capacity.
With this realignment, and planned refinery openings and capacity expansions in Asia.
Trade press reports suggest China will overtake the United States as the country with the most refining capacity by year’s end.
The refineries are a major “choke point” for the oil and gas industry.
Right now all signs point to them getting strangled.
You know it.
The record low stockpiles of diesel know it.
But here’s the key.
How do you invest in it?
That’s where there’s a win/win situation in energy forming.
And there’s an outstanding real-world example of where the current chosen energy path is going to end.
The European Way
I get that all this sounds crazy.
The benefits of abundant, cheap energy to a society is undeniable.
And the benefits to politicians who can bring down gas prices is obvious too.
However, it appears they’re taking steps to prevent it.
It’s the only reasonable answer to it all.
They want higher gas prices.
They don’t care.
And we know where this ends.
Because European governments started their war on energy years ago.
They bet that solar and wind would replace oil, gas, and coal.
That bet didn’t pay off.
And they’re reaping the predictable consequences of it all today.
But they’re not giving up on it though.
Europe actually has a lot of natural gas.
As we pointed out in our
European energy crisis report from the summer, it’s not just the big North Sea oil and gas either:
The Groningen basin [in the Netherlands] contains an estimated 450 billion cubic meters of recoverable natural gas.
That’s enough natural gas to power Europe for well over two years from one field.
The Netherlands isn’t alone.
The United Kingdom has potentially huge natural gas resources that fracking may be able to unlock.
But they won’t even test and try.
One of the first actions of the new U.K. Prime Minister was to reinstate the fracking ban his predecessor had lifted for about a month.
Conclusion
here’s no other real explanation for this and this aside from some sinister combination of ideology, influence, and corruption.
The current era of high energy prices is completely voluntary.
But that’s an opportunity for investors too with a win/win situation.
If the hostile energy production policies continue, prices are going to remain high for a long time.
Oil and gas producers and refiners will be making steady earnings and dividends all along the way.
If the policies are reversed, another boom will take place.
Drillers, frackers, and small and high-growth energy companies (like small oil producers who aggressively ramp up production in good times) could be set for a major surge from current lows.
Either way, energy is set to be a top spot for investment returns for years to come.
