Art B... you & Matt Simmons are right; but ->
... you're both about "10 years" too early.
ie:
research.cibcwm.com
In my most humble, non-industry professional, non-money manager/analyst... one man/one trader opinion:
...I'd suggest that the general thesis that both you & the Matt Simmonsites espouse; is about 10 years too early.
For the next decade OPEC is in charge; as their "Hubbert Curve mid-point" will not be reached untill the year 2013.
Where Matt Simmons is right; is on what US Government Policy should be - but, he's not right on his nearterm Oilpatch shareprice bullishness, as there is no way that XOM, CHV, or P; is going to spend a single Cap Ex $ that is conducive to US Energy Policy, but not to shareholders, or their NEAR TERM bottom line and untill commodity prices reach a sustained pain-threshold for US consumers... nothing is going to change & it's going to be 10+ years before OPEC can't step in & fill any global demand needs - so that pain/price threshold level won't be reached for another decade at least in my opinion.
These are global companies & the US is merely their most lucrative & captive customer... saving America is not Job #1 for Lee Raymond, Bob Allison, or C.R. Palmer... managing Cap Ex, minimizing costs, maximizing profits and SURVIVING is JOB #1...
Back in late 1998 with $10 Oil & predictions of an endless glut of $5 oil - no one came running to save the US Oilpatch from the brink of collapse... so don't expect Raymond, Allison,or Palmer to do anything other than manage their bottomline.
Clearly, the US needs to bring Energy Policy to the forefront; as we can't wait untill OPEC controls a degree of market share, to where whatever we do Energy Policywise, it matters little.
But, how do you convince the Oilpatch & Energy Industry to commit the type of LT Cap Ex $ necessary HERE & NOW, or more importantly; into $18 Oil & $2.35 Nat Gas over the next 5-10 years if prices revert to more historic means; to solve the building energy problem/shortage/crisis (whatever term you choose)when it's not in their best corporate interest to do so ?
Unless the US Government subsidizes the US Energy Companies, uses massive tax incentives etc... nothing is going to change.
American's need to decide if they want huge social & restrictive environmental programs, or cheap Oil & Gas... they can't have both. Drilling in Alaska & offshore Florida are solutions that haven't been welcomed with open arms by America... as in all things; it depends on the price to pain meter.
We got close this past winter with the Nat Gas/Winter Heating spike. We got close with $2 gasoline... but, close isn't enough to push the majority of Americans into politcally supporting the solutions necessary to America's Long Term Energy needs.
$50-60 Oil and sustained $10+ Nat Gas; along with $4-$5 gasoline will however... and imho; on a boom & bust cyclical basis - that's where we'll gradually work our way to. With those price levels occuring atop the boom to bust Oilpatch cycles within 10-12 years...
But, then & only then - at those price levels; will Energy ever become a political priority with the American people & thus - then & only then; will we ever have the political support & will; to create a LT Energy Policy Solution.
Untill then - it's all OPEC and I think that XOM et al - realize that... and that's why they refuse to make the type of longterm Cap Ex commitments here, that many think they should.
OPEC has the ability to open the spiggots here & crash Oil to $15; which would collapse the very type of LT Cap Ex projects necessary to address US Energy needs; so what do you think XOM, CHV, P et al are going to do - if/when Oil Prices contract here ? ... help solve the US problem, or cut costs, reign in Cap Ex & maximize profits ?
Bottomline; I think we will have at least another decade of Boom & Bust - volatile cycles ahead; untill OPEC reaches a production decline to where they no longer can step in to meet demand and prices ultimately reach a pain threshold level to where America bites the bullet...and $35 Oil, $10 Nat Gas and $2 gasoline weren't enough... we're 10-12 years away imo from both a real crisis & a real solution. |
