Mr. Brumley, Wow, what its an honor and pleasure to hear from you. I believe the role independent producers like yourself have played in bettering all of our lives is not sufficiently appreciated. Regards, Arjun
Arjun…..where might we look for “stranded” assets / assets that could be resuscitated in a SuperSpike world? We all laughed at the TMS back in the day, for example….but people gave it value in 2013! What is Floyd Wilson up to these days? :-)
David, great question! And I am probably not a good person to ask in that my history and biases are geared much more toward the super-cap going concern type companies. With things like the TMS, I was never early enough to then jump on board for the momentum trade, which is definitely not my thing. I do think deepwater exploration and oil sands make a comeback, but that is a pretty boring recommendation. Not sure who still knows SMID E&P. Someone like Josh Young of Bison (on Twitter) strikes me as the type of investor on top of the smaller companies. There must be others.
josh young and shubham garg (whitetundrasg on twitter) are incredible resources. Shubham does weekly zoom presentations on both macro and specific companies.
Great post Arjun! We just hosted an industry event with Mr. Simpson in attendance. Would like to gauge your interest for next year...prob best offline. Thx.
Great post. Good to call out the industry on methane as well as flag natural gas as being a huge boon to reducing carbon. But please Mr. Murti, if you have not done so already, emphasize the central role that nuclear needs to play in reducing carbon emissions. That Germany would keep shuttering its nuclear fleet absolutely boggles the mind. Indeed Germany’s transition to renewables should be one hell of a cautionary tale (pre-Ukraine), i.e., burning more coal, rising prices, less resilient grid and geopolitical vulnerability. It makes one wonder if the Green Party is run by 12 year olds or complete fanatics. California is blindly going down the same path because, well the lost souls out here seem to need a new god.
Thank you J J. Yes, the goal of Super-Spiked is not to be an apologist for Oil & Gas or to pretend there is no responsibility on its part to doing better on emissions or other environmental areas...methane being top of the list. On the other hand, the industry has few defenders...and there is a need to recognize the massive societal benefits we have received and will continue to receive from the energy it produces.
On nuclear, I share your sentiments. I am not a nuclear expert which is why I tend to mention it but not feature it in these notes. That said, it is really hard to understand how we can efficiently decarbonize while still providing energy abundance for all without nuclear.
Wow...my goodness thanks for your thoughtful reply. I understand your desire not to be an apologist for the industry, but appreciate you having the courage to say “massive societal benefits” have also been derived from energy produced by hydrocarbons. I also don’t think people fully understand the potential societal costs of renewables, e.g., high energy costs are a massively regressive tax on all but the rich. I hope we get to a place where we can, say, acknowledge that coal helped to lift hundreds of millions of Chinese and Indians out of poverty while also acknowledging the attendant risks of burning coal at scale and the associated emissions. Finally there is a disturbing neo-Malthusian thread that runs through sectors the environmental movement that somehow we would achieve nirvana if somehow we could magically have a few billion less people on earth. I was born in the 60s and whether it was Paul Ehrlich with his Population Bomb apocalyptic vision or Extinction Rebellion there has always been an unhelpful hysteria that the “end is near, repent consumers.” I have many issues with our mindless consumption based modern world but constraining access to affordable reliable energy is at best misguided, at worst inhumane.
I just finished reading the original: Malthus' "An Essay on The Principle of Population". Good to understand the psychology that drives the "end of the world" thinking.
Q: What was that line about “streaming” referring to?
Regarding the Trudeau govt, they currently have an arrangement with the NDP to keep them in power until 2025. The Conservatives in my opinion will have to find a way to get back to appealing to centrists if they want a good chance of supplanting the Liberals. Part of which means abandoning their short-sighted anti-climate orientation.
Also, how does a potential recession and fast EV uptake impact future oil demand? My base case is that we’ve hit a long-term plateau based on low economic growth and rapid EV sales growth.
Jason, thank you very much. The "streaming" was a reference to the challenges Netflix and its peers faced last week...big hit to share prices as growth has slowed and investors are questioning whether the field is saturated with too much competition and potentially weaker structural profitability.
Thank you for the helpful clarification on Trudeau's term.
When there is not enough oil or energy supply, the only choice really is recession to curb demand. It is why I prefer the "super volatility" term. The structural undersupply is not on track to go away any time soon, so we will keep bumping up against demand limits.
On EVs, I am bullish EVs long-term but these things take time. The big driver of "peak oil demand" forecasts in the 2020s has been an assumed ramp in mpg which there is no evidence of occurring (we miss fuel economy targets by 80%-90%). The impact of EVs I see as more of a post-2030 type thing. I myself am a super happy EV driver. We are just getting into the growth pains with EV in terms of material cost inflation, etc. But regardless, they are a long-term thing. Fuel economy or efficiency will be the big disappointment this decade.
And sorry for long answer, but when or if oil spikes to $150 or higher numbers, that is the type of thing that can accelerate fuel economy gains...just needs to happen first. I have written some about this in previous posts but need to do a more dedicated update in a future post.
Do you follow Gregor Macdonald at all? You two come at these issues from somewhat different angles and it occurred to me that the occasional discussion between the two of you could be quite interesting to read.
This is sobering and correct imo
https://openinsights.substack.com/p/the-energy-shortage-is-about-to-get?r=37dyt&utm_medium=ios
Thank you for the nice salute, jon brumley
Mr. Brumley, Wow, what its an honor and pleasure to hear from you. I believe the role independent producers like yourself have played in bettering all of our lives is not sufficiently appreciated. Regards, Arjun
Another great post
thank you Andrew
Arjun…..where might we look for “stranded” assets / assets that could be resuscitated in a SuperSpike world? We all laughed at the TMS back in the day, for example….but people gave it value in 2013! What is Floyd Wilson up to these days? :-)
David, great question! And I am probably not a good person to ask in that my history and biases are geared much more toward the super-cap going concern type companies. With things like the TMS, I was never early enough to then jump on board for the momentum trade, which is definitely not my thing. I do think deepwater exploration and oil sands make a comeback, but that is a pretty boring recommendation. Not sure who still knows SMID E&P. Someone like Josh Young of Bison (on Twitter) strikes me as the type of investor on top of the smaller companies. There must be others.
josh young and shubham garg (whitetundrasg on twitter) are incredible resources. Shubham does weekly zoom presentations on both macro and specific companies.
Great post Arjun! We just hosted an industry event with Mr. Simpson in attendance. Would like to gauge your interest for next year...prob best offline. Thx.
thanks Derren! if you reply to an email you will get me directly 1:1.
Great post. Good to call out the industry on methane as well as flag natural gas as being a huge boon to reducing carbon. But please Mr. Murti, if you have not done so already, emphasize the central role that nuclear needs to play in reducing carbon emissions. That Germany would keep shuttering its nuclear fleet absolutely boggles the mind. Indeed Germany’s transition to renewables should be one hell of a cautionary tale (pre-Ukraine), i.e., burning more coal, rising prices, less resilient grid and geopolitical vulnerability. It makes one wonder if the Green Party is run by 12 year olds or complete fanatics. California is blindly going down the same path because, well the lost souls out here seem to need a new god.
Thank you J J. Yes, the goal of Super-Spiked is not to be an apologist for Oil & Gas or to pretend there is no responsibility on its part to doing better on emissions or other environmental areas...methane being top of the list. On the other hand, the industry has few defenders...and there is a need to recognize the massive societal benefits we have received and will continue to receive from the energy it produces.
On nuclear, I share your sentiments. I am not a nuclear expert which is why I tend to mention it but not feature it in these notes. That said, it is really hard to understand how we can efficiently decarbonize while still providing energy abundance for all without nuclear.
Thank you again for your kind words and comments.
Wow...my goodness thanks for your thoughtful reply. I understand your desire not to be an apologist for the industry, but appreciate you having the courage to say “massive societal benefits” have also been derived from energy produced by hydrocarbons. I also don’t think people fully understand the potential societal costs of renewables, e.g., high energy costs are a massively regressive tax on all but the rich. I hope we get to a place where we can, say, acknowledge that coal helped to lift hundreds of millions of Chinese and Indians out of poverty while also acknowledging the attendant risks of burning coal at scale and the associated emissions. Finally there is a disturbing neo-Malthusian thread that runs through sectors the environmental movement that somehow we would achieve nirvana if somehow we could magically have a few billion less people on earth. I was born in the 60s and whether it was Paul Ehrlich with his Population Bomb apocalyptic vision or Extinction Rebellion there has always been an unhelpful hysteria that the “end is near, repent consumers.” I have many issues with our mindless consumption based modern world but constraining access to affordable reliable energy is at best misguided, at worst inhumane.
And Michael Schellenberger’s Apocalypse Never
I just finished reading the original: Malthus' "An Essay on The Principle of Population". Good to understand the psychology that drives the "end of the world" thinking.
Roosters of the Apocalypse is also good
Very interesting post. Thank you.
Q: What was that line about “streaming” referring to?
Regarding the Trudeau govt, they currently have an arrangement with the NDP to keep them in power until 2025. The Conservatives in my opinion will have to find a way to get back to appealing to centrists if they want a good chance of supplanting the Liberals. Part of which means abandoning their short-sighted anti-climate orientation.
Also, how does a potential recession and fast EV uptake impact future oil demand? My base case is that we’ve hit a long-term plateau based on low economic growth and rapid EV sales growth.
Jason, thank you very much. The "streaming" was a reference to the challenges Netflix and its peers faced last week...big hit to share prices as growth has slowed and investors are questioning whether the field is saturated with too much competition and potentially weaker structural profitability.
Thank you for the helpful clarification on Trudeau's term.
When there is not enough oil or energy supply, the only choice really is recession to curb demand. It is why I prefer the "super volatility" term. The structural undersupply is not on track to go away any time soon, so we will keep bumping up against demand limits.
On EVs, I am bullish EVs long-term but these things take time. The big driver of "peak oil demand" forecasts in the 2020s has been an assumed ramp in mpg which there is no evidence of occurring (we miss fuel economy targets by 80%-90%). The impact of EVs I see as more of a post-2030 type thing. I myself am a super happy EV driver. We are just getting into the growth pains with EV in terms of material cost inflation, etc. But regardless, they are a long-term thing. Fuel economy or efficiency will be the big disappointment this decade.
And sorry for long answer, but when or if oil spikes to $150 or higher numbers, that is the type of thing that can accelerate fuel economy gains...just needs to happen first. I have written some about this in previous posts but need to do a more dedicated update in a future post.
Do you follow Gregor Macdonald at all? You two come at these issues from somewhat different angles and it occurred to me that the occasional discussion between the two of you could be quite interesting to read.
I don't follow him and name doesn't ring a bell but will check him out. Thanks for suggestion.