By Laura Gangi Pond @ Shutterstock.com
Prices of gasoline and heating oil are rising as ‘woke’ Wall St. money managers (covered extensively by Your Survival Guy) have chosen to starve the oil industry of investment.
They’re using investor dollars to advance their own personal political causes, and the end result is hurting American families, while enriching authoritarian regimes like those in the Middle East, Russia, and Venezuela.
The Wall Street Journal reports:
Some investors are wagering that Wall Street’s preference for green energy will depress spending on oil extraction, setting the stage for supply shortages and higher fuel prices.
The bets come as money managers line up trillions of dollars for wind, solar and other renewable programs and expenditures on oil projects tumble. The drop in fossil-fuel spending is becoming so severe that energy companies could struggle to quench the world’s thirst for oil, some analysts say.
Crude is still expected to remain in high demand over the next decade to make transportation fuels and petrochemicals used for plastics and other household products. U.S. consumption has surged lately following the worst of the coronavirus pandemic, and output cuts by the Organization of the Petroleum Exporting Countries have given prices a further boost.
U.S. crude hit $71.48 a barrel Monday, its highest level in more than 2½ years, and has roughly doubled since the end of October. Some traders are using options, which allow the holder to buy or sell an asset at a specific price in the future, to wager on prices hitting $100 by the end of next year.
Even after OPEC and its allies lift output in the months ahead, some analysts think production will struggle to catch up to demand, which the International Energy Agency projects will rise at least through 2026. Spending on oil extraction fell last year to about $330 billion, less than half the total from its 2014 record, according to research firm Wood Mackenzie. That figure is expected to rise just modestly this year and in the years ahead.
Leigh Goehring, managing partner at commodities-focused investment firm Goehring & Rozencwajg Associates, said he thinks prices will soar in coming years as consumption tops production capacity for a sustained period for the first time ever. His firm lifted its investments in energy producers during last year’s crash and has maintained those holdings.
“This is the basis for the next oil crisis,” he said. “We’re in uncharted territory.”
Analysts say an oil-price surge could happen like this: As more people resume travel following the pandemic, demand is expected to rise. That would allow OPEC to ease supply restrictions and lower global inventories of crude. If consumption continues climbing beyond 2022 as many expect, the world would then need more oil from the same companies currently being told by investors to limit spending, resulting in a supply shortfall.
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