Oil & Gas, Anyone?
Did you notice high gas prices? So did the oil and gas producers. The Baker Hughes Rig Count hit 601 for the U.S. on January 14. That’s a 61% increase over the 373 total a year ago. Pioneer Natural Resources is all in, dropping its hedges and buying back its own stock.
With low oil production, reduced reserves, and climbing demand, prices have steadily risen.
West Texas Intermediate (WTI) Crude (FEB, ’22) traded over $84 today.
Oil and Gas producers are restarting or redoubling their commitments.
Bloomberg reported that, “Pioneer Natural Resources Co., the biggest oil producer in the Permian Basin, closed out almost all its hedges for this year, indicating a bullish outlook for crude prices.”
The Roller Coaster Ride That Got Us Here
Under President Obama (D), oil prices traded in the $90-$100 range for years. At those prices, companies could justify developing “unconventional” oil extraction techniques.
Fracking and horizontal drilling proved to be powerful solutions. By late 2014, world oil supply was rising much faster than demand. And prices came down hard.
2015 trading opened at $52.61.
The Trump Plan
President Trump’s (R) term began on January 20, 2017. Four days later, he expedited the Keystone XL pipeline. March 24, he issued a presidential permit, approving Keystone. WTI Crude traded at 50.60 on March 26.
Trump continued to get government out of the way of the oil industry. By December, 2018 — for the first time in over 70 years — the U.S. exported more oil than we imported.
December 09, 2018 Crude closed at 51.20.
Roughly a year later, Crude closed at 63.05 on December 29, 2019.
Then COVID-19 hit.
COVID Kills Oil Prices
The Center for Disease Control reported the first official U.S. cases of COVID in January, 2020.
Almost every kind of production slowed or stopped. Lockdowns were introduced. Travel came to a halt.
Demand for oil was non-existent. So was oil production.
President Trump declared a national emergency on March 13, 2020. Three days later, we began the eternal “15 days to slow the spread.”
Oil trading collapsed. Nobody needed or wanted oil.
By April 20, 2020 oil producers were so strapped, that they were actually paying people to take oil off their hands. There was no place to put it.
The price for May 2020 WTI went negative (-$37.63/bl) one day before expiry.
Biden Goes Green; Oil Thrives
January 20, 2021 President Joe Biden (D) signed an executive order, revoking the permit for the Keystone XL Pipeline.
January 24, 2021 Crude closed at $52.20.
Now that he’s boxed in, Biden is wandering around, asking for someone to sell us oil.
Even at today’s $84/bl, that’s not working.
If oil producers are all in, can jobs be far behind?
Team Biden has closed off most useful energy options.
When the Communist Chinese aren’t sending us the latest virus, they are publicly plotting our collapse. Oh, and 80% of battery materials are owned by Communist China.
Biden killed the Keystone project.
All that’s left is an abundance of gas and oil right under our feet.
Conveniently, prices are high and the need is clear.