follow us like us subscribe contact us
Loading, please wait

Energy

  • This Week In Energy: 2015 Will Not See A Cuba, Mexico Oil Boom

    Mexico’s sweeping energy reforms and Washington’s normalization of relations with Cuba are both great victories of 2014, but issues of security dull the potential for major projects in Mexico, while downward spiraling oil prices render deep-sea Gulf of Mexico projects too expensive. The news earlier this week that the US would finally normalize diplomatic relations with Cuba following the release of an American government subcontractor and a swap of intelligence assets opens up a plethora of commercial opportunities for American business, but it will be some time before oil and gas are ready to take advantage of this. Plummeting oil…

  • Basic Arithmetic Letting Oil Companies Down

    Sesame Street is better at math than the oil companies are right now. Virtually every midsized oil exploration and production company has recently claimed not only to maintain production levels for 2015, but to increase production in the next year, all while slashing capital expenditure budgets to the bone. That math doesn’t compute at all: Where is the Sesame Street “Count” when you need him? It really is as simple as 1, 2, 3…. This week after capex slashes were reported from several US oil companies, including a stunning 75% drop in the budget of Abraxas energy (AXAS), Canadian oil…

  • Strike While The Majors Are Cheap

    This big collapse in the price of oil that has occurred in the second half of this year is the result of a combination of factors. Dollar strength as other major economies, such as Japan and Europe, face problems has played a part, as has some worry about a slowing of global growth. If the numbers are to be believed, though, the single biggest factor has been the increase in supply as unconventional wells, most notably in the U.S., have come on stream. Understanding that this is principally a supply shock is important for investors as it determines strategy for…

  • The Latest Hot Spot For Offshore Oil

      Oil prices may be lower than they have been in over a half decade, but that hasn’t slowed the interest in Canada’s oil reserves off of its east coast. A consortium of companies just submitted a bid for the parcels off the coast of Newfoundland, Canada’s largest ever bid for offshore blocks. Led by ExxonMobil (NYSE: XOM), the group bid $559 million for the rights to 266,000 hectares in the Flemish Pass, a stretch of water east of St. John’s. ExxonMobil has a 40 percent working interest, with Suncor Energy (NYSE: SU) and ConocoPhillips Canada Resources (NYSE: COP) each…

  • Subtle Signs Emerging That A Bottom Is Near

    Crude Oil OutlookOversupply continued to make it hard for crude oil to find a bottom last week although technical analysis factors did manage to help halt the slide at $53.94 at least temporarily. The bottoming action was strong enough to take out the previous day’s high for the first time since November 21. This doesn’t mean much to the big picture, but prolonged short-covering rallies have started from this simple chart formation. Other than bouncing off a five-year low, the crude oil market was very tame this week. Volatility was low and the price action was orderly. This may be…

  • Low Oil Prices Killing Off Fuel Subsidies

    Instead of letting fuel prices fall, several countries are taking advantage of lower oil prices by scrapping fuel subsidies. Oil prices are at a five-year low, dropping by half in about six months. In much of the world, this has been an enormous boon to the economy. In the U.S., average gasoline prices have fallen to $2.47 per gallon as of December 18 according to AAA, down more than $1 per gallon since June. The average American will see a 3.5 percent boost in disposable income this holiday season compared to a year ago. People with lower incomes feel the…

  • NY Governor Bans Fracking In His State

    The state of New York will ban hydraulic fracturing, or fracking, because of the potential it holds for creating a public health risk and its questionable economic benefits. Gov. Andrew Cuomo essentially had removed himself from the decision-making process, saying he would rely solely on aides with expertise on the issue, including Environmental Commissioner Joe Martens and Acting Health Commissioner Howard Zucker. “I don’t think I even have a role here,” Cuomo said at a news conference. At an open cabinet meeting in Albany, the state’s capital, Zucker said he based his decision to ban frackin on a single question:…

  • Violence In South Sudan Threatens Chinese Oil Investment

    On December 15, 2013, fierce fighting broke out in South Sudan’s capital, Juba. Rebel forces loyal to Machar targeted South Sudan’s oil fields, and what started as a clash, quickly escalated to a civil war. Violence swept the country, killing tens of thousands people and displacing over one million. The UN estimates that almost a third of the population, 4 million people, is now in dire need of humanitarian assistance. The promise of nation-building seems to be a distant memory as South Sudanese leaders viciously struggle to claim power. Months of ongoing political tensions between President Kiir and Machar has…

  • Natural Gas Overwhelmingly Replaces Coal

    A new Breakthrough analysis looks at regional power generation data and finds that cheap natural gas has overwhelmingly displaced coal generation, not other sources of low-carbon energy, such as renewables, nuclear, or hydro. In fact, in regions where gas generation has grown, nuclear and hydro generation has either remained stable or risen. Growth of non-hydro renewables, by contrast, can account for little of the decline in coal generation, the analysis finds. Ultimately, the growth of natural gas generation, along with reduced electricity demand, is responsible for the vast majority of reduced emissions in the US power sector since 2007. The…

  • Oil Price Scenarios For 2015 And 2016

    A couple of weeks ago I had a post titled The 2014 Oil Price Crash Explained. In this post I use the empirical supply and demand dynamic described in that earlier post (Figure 1) to try and constrain the oil price a year from now and in 2016. The outcome is heavily dependent upon assumptions made about supply and demand and the behavior of OPEC and the banking sector. Three different scenarios are presented with December 2015 prices ranging from $45 to $100 / bbl. Those hoping for a silver bullet forecast will be disappointed. Individuals must judge the scenarios…