Immensely pleased to have been given the opportunity to speak at the Scottish Energy Forum at the historic Geological Society in London yesterday. I would like to thank the organizers, sponsors and the audience.
I guess it is not unusual to find snowflakes in winter.
* Students demand declaration of climate emergency and divestment from fossil fuel companies;
* College suggests turning off heating as a direct measure to help.
* Students reply: “This is an inappropriate and flippant response by the bursar to what we were hoping would be a mature discussion. *It’s January and it would be borderline dangerous to switch off the central heating*”
* Me: LMAO Surely that is exactly the point (on a global scale)…. and yet the irony of the reply appears to be lost on even the brightest and best….
“Old” energy sucks as an asset class, yet not investing in it will undermine the driver of growth (cheap energy) that allows other sectors to soar. No individual investor is incentivized to support the common good.
In game theory, the Nash Equilibrium, named after the mathematician John F Nash Jr. (of “A Brilliant Mind” film fame), is a proposed solution of a non-cooperative game involving two or more players in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only their own strategy. source
To this we can add that the observation that such an equilibrium is often sub-optimal for all players, but as noted in the description, no player has any incentive to change. Players are “locked in” to a sub-optimal outcome.Continue reading “Brilliant Minds, Sub-Optimal Outcomes in Investing: Ignore Oil and Gas at Everyone’s Peril”
Summary: With a focus on “Greener, Cleaner and Cheaper” energy, we are overlooking the possible negative consequences of cheap energy. More expensive energy can be seen as a big negative as it will slow economic growth, but cheaper energy could accelerate degradation of planetary resources. Damned if you do, damned if you don’t?
About the publisher: Richard Norris is a leading business developer and advisor to energy investors, developers, bankers and the public sector.Continue reading “Future Energy – technology will save us”
Summary: Even in a “rapid transition” scenario the world will use over seven hundred billion barrels of oil in the next twenty years. This is more than 50% of the total oil produced since the inception of the industry in 1870. Since we have found and used most/all the cheap oil, inevitably the next 700 billion barrels will be more expensive. Peak Demand may be ahead, but “Peak Cheap Oil” is certainly behind us.
About the publisher: Richard Norris is a leading business developer and advisor to energy investors, developers, bankers and the public sector.Continue reading “What “Peak Demand” really looks like”
Cold, dull, wind-less autumn days should make us think about the reality of energy security in a world celebrating high levels of renewable electricity supply
On a frigid autumn day let’s cast our minds back to the blissful dog-days of summer and the rampant headlines about how coal was now not needed and more than 50% of the UK’s power (meaning electricity) was provided by renewables. There has been a remarkable growth in renewable energy in the UK and whilst not blessed with much sun, wind is more abundant. Good news indeed.Continue reading “The Cold Night of Forgetting*”
A “$5.2 trillion subsidy for fossil fuels” scream the headlines, followed rapidly by the conclusion that the subsidy-free “real” price to consumers should be much higher. The logic being that this artificially low price drives consumer demand of fossil fuels and thereby acts as a barrier to entry of renewables. The figures bandied about are eye-watering: US$5.2 trillion is 6.5% of global GDP… a very big number indeed. And this is a very emotive subject. So before getting onto the *real* fossil fuel subsidy, let’s take a moment to consider what is meant by “subsidy”.Continue reading “The real fossil fuel subsidy – its not what you think.”
Oil production companies are about as far from being part of the self-proclaimed “woke” set as you could imagine. A dinosaur industry with its head so far in the sand (to mix my metaphors) that it can’t even see that most of its assets will stay in the ground and be worthless. Woke people know that we will be 100% renewable by the middle of next month.
This week may not change public perception, but its a pretty big wake up call to all wokeists everywhere, if they bothered looking.Continue reading “Time to “woke” up, oil still matters”
There are many ways of looking at the voyage of the Malizia. In the first place it is a testament to Greta Thunberg’s integrity in following her principles. It may be a great adventure, it may be quite uncomfortable. Nature is pretty random. But overall, sailing trans-Atlantic is pretty cool, especially when on a peak-technology vessel with a highly experienced crew.
For many in the twittersphere, this is a beacon of hope, with the Voyage of the Malizia representing the future, with “zero-carbon” travel being proven. “If only everyone would do the same…” As/when they arrive in NY there will undoubtedly be a heroine’s welcome. If (and I sincerely hope not) they have to abandon and/or turn back, then I’m guessing that the “extreme” weather will be more proof of climate-change. Win-Win.
For the more cynical, the “zero-carbon” epithet so loved by headline writers is challenged on everything from Greta’s waterproof gear to the ultra-hi-tech four-million-dollar carbon-fibre race boat, to the various trans-atlantic flights of crew-members.Continue reading “The Voyage of the Malizia unintentionally debunking “zero-carbon” travel”
In 1977 James Schlesinger (first US Secretary of Energy) noted that the energy markets have only two modes: Complacency and Panic. To that I would now update.
Disdain, Complacency and Panic.
Currently there is disdain for oil; we don’t want it, its unnecessary and pretty soon we won’t need it.
But of course the reality is that not only do we still need oil, but the demand is growing. This doesn’t play well, and headline writers love to announce that “oil demand is dropping” when what they actually mean is that “the rate of growth (of oil demand) is decreasing” – why let facts get in the way of a good headline? The day will come when demand drops, but it’s not just yet.
Demand is expected to increase by 1.3mmbbls/d this year, which is less than the 1.7mmbbls/d increase in each of the previous three years. To put this into perspective, global demand was c. 89mmbbls/d in 2012 when I started working in equity investing, and passed 100mmbbls/day in 2018. Ten million barrels/day of extra demand is a very big increase in just 6 years. But as Spencer Dale of BP puts it: “demand is the boring uncle, supply is the excitable niece”.Continue reading “What if there was no US shale?”