RE: Oil Price8 Feb 2022 20:58
I’ve said it before, but it’s been a while so I’ll say it again. I believe oil is going to $300.
I am increasingly convinced that we’re about to have a global energy crisis. Almost every day, we hear of a different policy plan to reduce energy production. We learn of new mandates, new taxes, more cancelled pipelines, more cancelled permits, more threats and more penalties. What we don’t hear about is where the replacement energy comes from. The wind doesn’t always blow and sometimes it is cloudy. My car won’t drive on unicorn farts and billions of people in 3rd world economies want a Western standard of life complete with a Western level of energy consumption.
3rd world nations intend to consume more. Western nations intend to consume more. China intends to consume more. At some point, declining production will slam into rapidly increasing demand. It will only be solved by higher energy prices.
We’ve seen the first few signs of the coming crisis. Various countries ran out of energy. These were regional problems with regional causes. However, the underlying problem was the same they reduced the “carbon economy” before they had sufficiently built out the “green economy.” Oddly, these warning signs have mostly been ignored, with the countries most afflicted, focused on continuing to purge traditional energy sources. Bizarrely, Western Europe wants to become reliant on a gas pipeline from what many regard as a rogue state - Trump was 100% right on saying they shouldn’t be under Russia’s thumb on gas, but useless career politicians will always do what useless career politicians do. When nations ignore a brewing crisis and focus on making it worse, it is likely to get worse, a whole lot worse.
When there is no solution to the problem and the politicians are causing the problem, market participants will panic. Look out!
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