>>>most severe correction in the energy equities, of the past 3-5 years<<<
An interesting thoughtful post.
I would just throw out a little history which may or may not have any meaningful comparison here.
Al Gore cracked the oil complex in August/September 2000 by releasing the SPR.
We then had the coldest winter....'00-'01...in probably 20 years. NG spiked to $10. Unheard of at the time. We also had the California energy crisis blossoming on very low NG storage and a hydro shortage in the PAC NW. Heating oil went through the roof. I wasn't able to start my trusty old Mercedes 240D (diesel) for ten days - and it had a block heater - Washington DC area. Crude spiked.
Crude and NG then pulled back a bit, and hen crested in June '01.
In the mean time, the internet had been melting down for a year, and Greenspan was wielding his rate cutting saber.
So we had a boom, then the Al Gore bust, and a peak about nine months later.
What was the same:
1) US entering a recession both times,
2) Long period of oil equity profits,
3) Political harassment
What was different:
1) Global recession today,
2) Much higher global demand growth,
3) Credit crisis - if anything will lead to less financing of drilling,
4) SUV density higher (just guessing but it sure looks that way when on the highway),
5) lots more NG fired generation,
6) lots more NG heated homes - which are further from job locations.
7) Supply dropping - at lest for crude
8) global NG prices are much higher and steady at these levels,
9) #8 stated differently - we have a global NG network given increased LNG capacity
10) Broad equities not in as much of a bubble as in 2000
Does any of this mean anything?? I think so.
NG never really caught up with crude in the classic 6:1 energy parity sense - now largely refuted. CHK should not be selling off this hard. Something wrong with that picture. |
