Author: Kevin Olson

Shift In Big Oil

In the past couple weeks, the world’s top five oil firms (BP, Chevron, ExxonMobil, Royal Dutch Shell and Total) reported combined losses of $53 billion for the second quarter. This week, BP announced it would cut production by the equivalent of a million barrels of oil per day until 2030 as part of a plan to reach “net zero” greenhouse emissions by mid-century. As the global pandemic continues to batter industries worldwide, it appears the coronavirus has sped up big oil’s shift to green.

Setbacks in Solar Energy from COVID-19

The extraordinary growth in solar energy has been stopped in its tracks as a result of the global pandemic. Many new projects that would have made 2020 the largest growth year for the sector to date have been put on hold for the foreseeable future. Luckily, the stalled growth of the solar sector is just that – projects have simply been put on hold. As the world transitions to a new post-pandemic society, growth in solar power generation will resume its upward trajectory. While two decades of growth in the solar energy sector has been stunted by the coronavirus pandemic, the outlook for the future remains positive.

Second Quarter Misery

Oil majors around the world have begun to release their second quarter earnings and the results are dismal. Royal Dutch Shell reported a staggering $18 billion quarterly loss, Total reported an $8 billion loss, Chevron at $8 billion as well, and while much less severe than their peers, ConocoPhillips reported $1 billion in losses. More reports will be released in the coming days but the true effects of the global pandemic and price war are starting to show and it does not look great for the oil and gas industry.

The True Cost of Renewable Energy

Instead of a push towards renewable energy, the world should be focused on a push towards clean energy. Those two terms are often used interchangeably especially when green energy advocacy groups are pressuring policymakers to campaign for the use of wind, solar, and electric vehicles. But as the world pushes towards clean energy during the green revolution and begins the transition to renewables, we must ask ourselves: with the shift away from fossil fuels, what is the true cost of clean, green, renewable energy?

Money Burning A Hole In Your Pocket

Chevron finally pulled the trigger with their unspent Anadarko money from last year, purchasing Noble Energy in an all stock deal for ~$13 billion. This acquisition ends a long drought of deals and puts Chevron back in the news almost two years after putting Anadarko in play and ultimately standing aside to let Occidental buy it. This also marks the largest transaction in the oil industry since the start of the global pandemic.

Oil Profitability Around the World

The cost to produce a barrel of oil varies throughout the world and impacts the determination of global benchmark prices. If only a portion of global supply is economic at current commodity prices, global demand will be what influences the price floor. Once inventories are drawn down, supply/demand economics will drive up the price of oil to ensure supply can meet demand. Be sure to check out the periodical below for an in depth analysis of the economic price to produce a barrel of oil around the world, and why global demand will be the driver for oil prices to set a $55-60/bbl floor for the foreseeable future.

Expect the Unexpected

During the OPEC+ meeting on Wednesday, members made the decision to uphold the agreed upon production cuts from their April meeting. With 107% compliance with output cuts in June and economies restarting worldwide causing oil demand to quickly pick up steam, most experts expected a reduction in the agreed upon 7.7 million barrel per day cut for August. Sometimes you just have to expect the unexpected.

Did the Federal Bailout Simply Delay The Inevitable for Oil and Gas Companies?

At the end of March during the peak of the pandemic, the Federal Reserve was authorized to buy tens of billions of dollars in corporate bonds from the energy industry. These actions, paired with those taken by the Federal Government to save the oil and gas industry, were met with harsh criticism because the industry was struggling long before the global pandemic and seemed to simply be delaying the inevitable.

Three Strikes and You’re Out

Three major blows were inflicted on U.S. pipelines in just a two day span. First, Dominion Energy and Duke Energy canceled the Atlantic Coast natural gas pipeline project on the same day the U.S. District Court for the District of Columbia ordered the Dakota Access pipeline to be shut and emptied. The following day, the U.S. Supreme Court ordered that construction of the long-delayed and once-resurrected Keystone XL project cannot begin. For it’s one, two, three strikes you’re out in this brutal, unforgiving game.

Post-COVID Global Oil Demand Series – Part 4: Global Oil Demand

Hydrocarbons are the largest global energy source, and demand for them has been growing rapidly in the past decade. Unfortunately, that progress was stunted with the recent global pandemic that shut down economies and societies worldwide. As the world recovers from the coronavirus, hydrocarbons will be in high demand in order to fuel the progress of the human race. The final piece of our four part series on post-COVID oil demand will investigate the overall change in global oil demand in a post-COVID world.

Summer Heat

The summer heat has brought plenty of excitement to the oil and gas industry. Feuding investment companies argue if oil demand will ever reach pre-pandemic levels, natural gas prices fall to 25 year lows, and one shale pioneer had to take a break from the heat and file for bankruptcy protection all while employment rates began to skyrocket.

Post-COVID Global Oil Demand Series – Part 3: Personal Transportation

Transportation allows people and ideas to move from place to place and is the backbone for advancing society. Unfortunately, the global pandemic has hindered the movement of people in the first half of 2020. As individuals begin to venture back out into the world, the transportation sector, and by association the consumption of hydrocarbons that fuel these vehicles, will be completely changed. Fear and social distancing guidelines will force individuals away from mass transit. Reduced options and capacity will force individuals away from air travel. Both will result in increased personal vehicle travel well into the future. Part three of our four part series on post-COVID oil demand will investigate the change in global oil demand for fuel used in personal transportation.

You’re Hot Then You’re Cold…

Just last week we reported that JP Morgan was predicting $100 Oil “in the observable future” and “could see the price of oil hit $190 a barrel by 2025”. Well, those predictions have been revised in the past week and now they predict “oil may never hit $100 again” as a result of the price war, the ongoing pandemic, decimated demand, and U.S. Shale resilience. Talk about being indecisive! In other more exciting news, two leading oil price reporting agencies launched a new U.S. crude benchmark to rival WTI, how cool!

Post-COVID Global Oil Demand Series – Part 2: Freight Transport

The coronavirus pandemic has ushered in a new age and as the world begins to adjust to the new normal, demand for commodities like oil and natural gas has and will continue to change. Due to lockdown orders and social distancing guidelines, many individuals altered their in person shopping habits to online ordering. As a result, the freight industry has been able to remain busy during the pandemic ensuring goods reach their final destination in a timely manner. This demand does not appear to be going away anytime soon. Part two of our four part series on post-COVID oil demand will investigate the change in global oil demand for fuel used in freight transportation.

Unprecedented Fall of U.S. Oil

As the world continues on its long road to recovery from the global pandemic, oil demand is slowly on the rise. Unfortunately, domestic oil production is falling fast with current rates the lowest they have been since March of 2018 and predictions for July would put levels at their lowest since 2013. Has the price war and pandemic destroyed the U.S. Oil Industry?