10-28-2014, 10:06 AM
I think you are spot on, Eric. Once the prices drop enough, the production will see some lag and the smaller players could possibly see investments dry up - thus reducing the supply - bringing the prices back up.
Fusion announcement from LMT - I dont know what to make of it. Just because we havent figured it out in the last 40 years doesnt mean we cant figure it out now. But then again, lots of folks in the scientific community are skeptical about that announcement, so I will remain skeptical until I see some more follow up announcements/demos etc.
Considering that transport is still the biggest consuming sector of the oil industry, its good to keep an eye on where the transportation industry is headed. Headwinds for the oil sector include the drop in production prices for alternative fuels like electric/solar (Tesla obv leading the way there), and natural gas (I saw some reports of GE's plan to push natural gas conversion kits to fuel vehicles). Moreover, the auto industry is investing heavily in more efficient smaller yet powerful engines....if we even call them engines anymore (in Formula1, they are calling them Power Units now).
On the flip side, natural gas consumption by sector has Industrial usage as the largest sector (I have to dig in on which subsector and how/where its used), electricity generation (which could possibly see drops in consumption if utility companies start using more solar/wind farms), residential (no better way than nat gas to heat homes - I dont see a possible drop in consumption there).
Would love to hear some thoughts & comments on my outlook? Feel free to critique.
Fusion announcement from LMT - I dont know what to make of it. Just because we havent figured it out in the last 40 years doesnt mean we cant figure it out now. But then again, lots of folks in the scientific community are skeptical about that announcement, so I will remain skeptical until I see some more follow up announcements/demos etc.
Considering that transport is still the biggest consuming sector of the oil industry, its good to keep an eye on where the transportation industry is headed. Headwinds for the oil sector include the drop in production prices for alternative fuels like electric/solar (Tesla obv leading the way there), and natural gas (I saw some reports of GE's plan to push natural gas conversion kits to fuel vehicles). Moreover, the auto industry is investing heavily in more efficient smaller yet powerful engines....if we even call them engines anymore (in Formula1, they are calling them Power Units now).
On the flip side, natural gas consumption by sector has Industrial usage as the largest sector (I have to dig in on which subsector and how/where its used), electricity generation (which could possibly see drops in consumption if utility companies start using more solar/wind farms), residential (no better way than nat gas to heat homes - I dont see a possible drop in consumption there).
Would love to hear some thoughts & comments on my outlook? Feel free to critique.