Denintex....cwei
by: broke_retird 12/30/03 01:39 am
Msg: 59234 of 59236
Quite a bit of discussion has been taking place regarding the lack of arctic air and how this will affect ng prices.The weather map 6 to 30 days out looks quite decent, with colder than normal temps on tap for much of the MW and NE and a purple mass of arctic air hovering above us in Canada. But this aside, a myopic focus on arctic v. cold weather can be very misleading. The fundamentals of energy investment are no longer under the historic grip of a 7 day weather map, which can and does change in a single day. Rather o/g stocks have been going up for months because of a greater WS understanding of the s/d dynamics now at work -- that with each passing year, the world is coming closer to a s/d train wreck that will not go away because of a 7 day warming trend.
This collision course has resulted because of an interaction of events occurring over many years, which will take many years to correct. These include: 1) basin production exhaustion, on/offshore; 2) declining Cnd. production and exports; 3) over-reg of o/g industries, including drilling, exploration and refining; 4) under investment in those industries; 5) lack of alternative energy research and development; 6) worldwide population increases; 7) rising oil thirsty economies, China/India, with China increasing demand 500,000 bbls a day, every year; 8) a NA Big Oil, deep pocket exodus from the land gas basin, which supplies 75% of US need; 9) dwindling OPEC surplus capacity; 10) an increasingly volatile Mideast, with terrorist threat now an energy pricing component. The US now finds itself in competition with other economies for a resource it has taken for granted as plentiful and cheap, but that is now neither, for that resource is now coming from fewer wells with faster depletion and with less world-wide drilling and fewer prospects for drilling. 15 years ago the world consumed 58 million bbls a day -- in ‘04, a projected 79 million bbls. The competition we now have for this resource is evident in the weekly petro stats, which per last week found US oil stocks at a 29-year low; total commercial petro inventories, 62.9 million below the 5 year average. And despite a non-arctic winter, (winter is only 1 week old) ng supplies last week dipped below the 5-year average. Our investment is not about a 7 day warming trend, or arctic v. cold air; to the extent unfavorable weather results in less drilling, the supply situation will simply worsen. The collision course of supply and demand has been set in place through a series of events that has taken years to bring to maturity, for which there is no quick fix, and that now has WS’s attention, which will continue to bid up our o/g holdings for years to come as the energy situation becomes even more dire. Don’t let your attention be diverted by a 7 day warming trend over NY.
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Above from the TMR board, which took a piece from a guy named denintex from the CWEI board. States the case for downplaying short-term weather wrt intermediate and long-term E&P investing better than I ever could. |
