The cumulative blitz on energy exploration and production over the past six years has been $5.4 trillion, yet little has come of it.
The epicentre of irrational behaviour across global markets has moved to the fossil fuel complex of oil, gas and coal. This is where investors have been throwing the most good money after bad.
They are likely to be left holding a clutch of worthless projects as renewable technology sweeps in below radar, and the Washington-Beijing axis embraces a greener agenda.
Data from Bank of America show that oil and gas investment in the US has soared to $200bn a year. It has reached 20pc of total US private fixed investment, the same share as home building. This has never happened before in US history, even during the Second World War when oil production was a strategic imperative.
……. The cumulative blitz on exploration and production over the past six years has been $5.4 trillion, yet little has come of it. Output from conventional fields peaked in 2005. Not a single large project has come on stream at a break-even cost below $80 a barrel for almost three years.
……. A large chunk of US investment is going into shale gas ventures that are either underwater or barely breaking even, victims of their own success in creating a supply glut. One chief executive acidly told the TPH Global Shale conference that the only time his shale company ever had cash-flow above zero was the day he sold it – to a gullible foreigner.
The Oxford Institute for Energy Studies says the Eagle Ford Dry Gas field, the Marcellus WC T2 and “C” Counties, Powder River, Cotton Valley, among others, are all losing money at the current Henry Hub spot price of $4.50. “The benevolence of the US capital markets cannot last forever,” it said.
SRSrocco’s Remarks: As you can see from the chart above, private investment in U.S. oil and gas is at an all-time high at nearly 20% of the overall total. Furthermore, as investment in oil and gas peaked higher (1920, 1945, 1982 & presently), investment in residential construction declined substantially.
There is a great deal of debate how things unfold from here on out. Some believe “Renewables”such as wind and solar are going to save the day. I disagree. Renewables are not an alternative to the fossil fuel industry, rather they are “DERIVATIVES” of the fossil fuel industry.
Wind turbines or solar panels are not manufactured out of thin air… a great deal of oil, natural gas and coal are consumed in the process.
I will be also including data on the changing climate in the future. We must remember, after the sun, the climate is the next largest source of energy (wind, rain, weather & etc) after the sun.
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