Love your work, and thank you for shedding light on how the industry actually works. One other Substack I follow discusses monopolies and the work going on to try and reduce them. They just did a post on the oil industry and wanted to pass it along.
Sometimes they nail the central issues well. Other times I see they miss key points that at best complicate the issue.
Regarding the piece by Matt Stoller, I do think the key points were missed. The focus on the impact to oil and gas service providers and thus a decline in innovation is in my opinion a swing and a miss. As you know the industry consists of thousands of players in the upstream space, I just don't see a material impact to the service providers or innovation. I think what many are missing on this string of consolidation is that historically an uptick in industry consolidation comes during a low commodity price environment. What i think people may be missing is that 75-dollar oil in this day and age is in fact potentially a period of low prices and we just don't see it for what it is. With money leaving the industry and future demand continuing to rise I think most everyone agrees that future oil prices are all pointing up over the long term, and if that's the case, this is a low-price period even if we don't recognize it as such yet. In addition, this period of consolidation may very well be a response to what we all see coming and that is an attack on those institutions that do invest in fossil fuels, I believe these consolidations act as a hedge against that. If investment declines, then you need to find ways to operate more efficiently, create those money saving synergies, acquire plug and play assets, and generate more cash flow. That is what these consolidations do, they do all of that.
Apologies I just now saw you replied. Thanks for the information though.
Based on your previous videos you’ve talked about how the smaller oil drillers are the ones who suffer when oil prices are low (from the Trump “deal” especially). Are we seeing them have issues now at 75 a barrel? I agree this is going to be a low point in price. Before Obama opened up drilling/fracking I was certain we’d never see below 100 a barrel again.
It seems that even the people in power understand that we can’t just drop dependence on oil. Hence why Biden says one thing and then produces the most oil ever in our history.
And the right is hedging their bets with trying to sell off the reserves. If they lose the election, they can bash Biden for high gas prices and low reserves. If they win they’ll just open it back up and talk about how much they are doing to protect oil.
Anyways, thanks for all you do. It’s really eye opening on how the industry works and how the politicians actually manage it (or mismanage).
Love your work, and thank you for shedding light on how the industry actually works. One other Substack I follow discusses monopolies and the work going on to try and reduce them. They just did a post on the oil industry and wanted to pass it along.
Sometimes they nail the central issues well. Other times I see they miss key points that at best complicate the issue.
So wanted to see what you thought of this?
https://open.substack.com/pub/mattstoller/p/fear-and-consolidation-in-the-oil
Regarding the piece by Matt Stoller, I do think the key points were missed. The focus on the impact to oil and gas service providers and thus a decline in innovation is in my opinion a swing and a miss. As you know the industry consists of thousands of players in the upstream space, I just don't see a material impact to the service providers or innovation. I think what many are missing on this string of consolidation is that historically an uptick in industry consolidation comes during a low commodity price environment. What i think people may be missing is that 75-dollar oil in this day and age is in fact potentially a period of low prices and we just don't see it for what it is. With money leaving the industry and future demand continuing to rise I think most everyone agrees that future oil prices are all pointing up over the long term, and if that's the case, this is a low-price period even if we don't recognize it as such yet. In addition, this period of consolidation may very well be a response to what we all see coming and that is an attack on those institutions that do invest in fossil fuels, I believe these consolidations act as a hedge against that. If investment declines, then you need to find ways to operate more efficiently, create those money saving synergies, acquire plug and play assets, and generate more cash flow. That is what these consolidations do, they do all of that.
Apologies I just now saw you replied. Thanks for the information though.
Based on your previous videos you’ve talked about how the smaller oil drillers are the ones who suffer when oil prices are low (from the Trump “deal” especially). Are we seeing them have issues now at 75 a barrel? I agree this is going to be a low point in price. Before Obama opened up drilling/fracking I was certain we’d never see below 100 a barrel again.
It seems that even the people in power understand that we can’t just drop dependence on oil. Hence why Biden says one thing and then produces the most oil ever in our history.
And the right is hedging their bets with trying to sell off the reserves. If they lose the election, they can bash Biden for high gas prices and low reserves. If they win they’ll just open it back up and talk about how much they are doing to protect oil.
Anyways, thanks for all you do. It’s really eye opening on how the industry works and how the politicians actually manage it (or mismanage).
Will read, thank you Robert