Thread: Cost of fuel...
View Single Post
Old 03-31-2022, 09:08 PM   #180
Senior Member
Join Date: May 2021
Posts: 247
Thanks: 38
Thanked 80 Times in 56 Posts

Originally Posted by John Mercier View Post
We achieved energy independence largely through the extreme capital investment that allowed for supply growth to be higher than demand growth.
Demand growth was then initiated with the ban on Venezuelan petroleum products, and increases in the amount of export to historic levels.

With US demand higher, and European demand absorbing more, the prices are going to be higher until the global demand drops.

Companies involved in exploration and extraction are not going to hire and train new crews, or expend massive capital on inflated equipment prices and fractured supply lines... as investors we expect a ROI, and that means really good dividends for the coming years - not more investment into heady over-the-top expansion.
John, excellent points. I'd add that all exploration and R&D are not the same. The major investment and focus on fracked and other new tech over the past decade plus proved to be only financially viable in times of higher oil prices, and the half life of the wells is very short, so they don't have anywhere near as much time and quantity to amortize the investment over. I don't think we'll see that extreme push again, even given the high current oil prices. They are able to sit back, do what they do, and operate at massively profitable levels.
LikeLakes is offline