#Energy Supplies Face #Disruptions and Upward #Prices

 Editor's Comments

As expected world oil supplies are coming under stress as shortages and production issues take hold. On the demand side, we are seeing a return to pre-pandemic levels which calculates into the obvious conclusion - Higher Prices. But of course, what is on everyone's mind is how high will they go? Estimates from leading Banks are calling for prices of $120 a barrel particularly if there is a conflict in Ukraine in the next few weeks

While the waters in the near-term energy markets are muddy - one consequence is certain - long-term prices will go up over the next 25 years as depletion and diminishing production returns from the large reserves come into play. It is not hard to imagine benchmark crude prices exceeding $1000 a barrel bringing about unprecedented hyperinflation that would be devastating to the economy and valuations in stocks and bonds, real estate, commodities, and currencies.

To put it simply we are heading into rough seas - albeit wisely forecasted in 1972, but denied by the various vested economic and political interests who sought a business as usual approach. Today, we confront the consequences of the unknown, unknowns - meaning all bets are off.

T A McNeil

CEO Founder

First Financial Insights

February 18, 2022

Supply #Shortages Are Wreaking #Havoc On The Energy #Industry

By David Blackmon for OilPrice.com - Feb 17, 2022,

• The energy sector is facing shortages on all sides, with commodity prices soaring around the world and very little hope that it will be solved in the near term.
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• Frac sand is the latest vital material that the energy industry can’t get enough of, a shortage that will hinder the ability of U.S. shale producers to increase production and bring down oil prices.
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• This global energy shortage of everything is a result of years of bad planning and underinvestment, and consumers could suffer the consequences for years to come.

Energy-related news has been filled lately with reports about shortages of, well, everything. Oil prices have spiked into the mid-$90s per barrel as explosive demand outstrips supply. Global supplies of diesel are shrinking as the refining industry lacks the capacity to keep up with demand. 

The price for natural gas in the U.S. is up 25% over the past week, largely as a result of Europe’s thirst for the commodity now creating shortages in Asia and other parts of the world. We see daily reports of supply shortages impacting key minerals like copper, lithium, as well as commodities like steel and aluminum, all of which are critical elements for facilitating supplies of fossil fuels and renewables.

The situation has become so dire that it prompted Jeff Currie, global head of commodities research at Goldman Sachs, to warn on Monday that “I’ve been doing this 30 years and I’ve never seen markets like this...This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.” In January, Currie warned that oil prices could rise above $100 per barrel by summer due to the tight market. With prices already approaching that level in mid-February, it now seems he was being overly optimistic. 

On top of all these mineral shortages, it seems the domestic U.S. oil and gas industry can now add frac sand to its list of materials in low supply. Reuters reported Tuesday that drillers in the Permian Basin and elsewhere are experiencing difficulties in obtaining enough of the stuff to keep their fracking programs moving ahead according to plan. 

"We can't get enough sand,” the story quotes Michael Oestmann, CEO of Permian operator Tall City Exploration as saying, “We're running less than the number of (fracking) stages we could pump in a day because we've run out of sand every day. Ultimately it will slow everyone down if it doesn't resolve itself."

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ENERGY MARKETS FACE UNCERTAIN GEOPOLITICAL ISSUES