What Are People Doing with their Oil and Natural Gas Stocks

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TheDDC
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by TheDDC »

Blueskies123 wrote: Tue Jun 01, 2021 8:46 pm Generation of electricity using natural gas with highly efficient $100 million turbines and delivering it through a smart gride to a house and then a new electric car is much more efficient than delivering gasoline to gas stations and then burning gasoline in internal combustion cars, many of them often very old, leaking and smoking cars and trucks.
Soon, in my opinion, you will see oil demand start to slump, (but not natural gas).
I would tend to agree. Natural gas is also far superior when it comes to heating things as a whole in an efficient, reliable manner. I use natural gas to heat my home, heat water, and for drying clothes. In terms of raw energy production, natural gas is the biggest game in town besides nuclear (to a lesser extent), wind, and solar. In some areas, hydro power could be a factor as well. I will say that I am surprised at the low cost of wind/solar as I recently switched my energy supplier to a 100% renewable company. In our state we are able to choose our supplier. That said, I do not know how well wind and solar can scale. I do hold a few shares of Williams (WMB), though nothing significant.

In the end it will all come down to price and the market. People won't give up ICEs until it is a cheaper option that the market sorts out (without duress from government). Here's the one question I have about EVs: What does one do in a multi-day power outage where we are expected to drive/evacuate? Storing energy via cells for long term use is not efficient, nor practical. Storing it in gas cans is. :)

-TheDDC
Rules to wealth building: 75-80% VTSAX piled high and deep, 20-25% VTIAX, 0% given away to banks, minimize amount given to medical-industrial complex
helloeveryone
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Joined: Sun Sep 04, 2016 5:16 pm

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by helloeveryone »

Random Poster wrote: Wed Jun 02, 2021 3:46 pm
helloeveryone wrote: Wed Jun 02, 2021 2:59 pm "In hopes that the company gets bought out and I make a bit of money off of the shares. "
Curious as to how this works...

So if company X buys your former company - do the shares of stocks you owned in your stock account disappear and you get the price per stock that the buyout company paid? (ie - it's an automated process?)
Depends on how the buyout is structured.

If it is an all-cash deal, then the shares disappear and cash shows up in the settlement account.

If it is an all-stock deal, then the shares disappear and the buyout company stock shows up instead.

If it is a mix of cash/stock, then you get some of both of the above.

Usually.

But, yes, it is an automated process, once the buyout closes.
Thank you! and capital gains or losses would get reported as part of both processes?
DTalos
Posts: 707
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by DTalos »

gch wrote: Tue Jun 01, 2021 9:16 pm I think the best long term play (as you mentioned) is NG pipelines. As renewables start making up more of the electric supply, NG will become even more volatile. Companies with those NG assets will be able to capitalize on that volatility. Case in point go look at Kinder Morgan and Energy Transfers Q1 profits from Winter Storm Uri.
OKE and KMI are both into pipelines, but interestingly, OKE's share price has risen 32.5% in the last 52 week vs KMI, which has risen 14.61% in the last 52 weeks. Why the discrepancy?
Random Poster
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by Random Poster »

helloeveryone wrote: Wed Jun 02, 2021 6:34 pm
Thank you! and capital gains or losses would get reported as part of both processes?
Yes, they should.
Topic Author
MrCheapo
Posts: 165
Joined: Tue Dec 22, 2020 3:43 pm

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by MrCheapo »

rockylou wrote: Wed Jun 02, 2021 4:53 pm I have chevron and Exxon stock my mother gifted to me about 15 years ago. I would like to sell but I can’t determine the cost basis as my mother is now deceased and I have no paperwork as she had the stock for a very long time. I figured I would leave to my sons when I die and then they can sell with a new cost basis but wondering if I should sell now and take a tax hit?
Chevron and Exxon are not MLPs they are C-corps. Are they held in an after-tax account? Then you'll just play regular capital gains. If you inherit her basis then just look at the cost 15 years ago.
Barsoom
Posts: 471
Joined: Thu Dec 06, 2018 9:40 am

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by Barsoom »

MrCheapo wrote: Tue Jun 01, 2021 5:47 pm Thank you for sharing your insider perspective.

Kudos for people for trying to fight climate change, but I can't help but thinking that grid charged EVs are not going to have such impact on oil and won't be more than 20% of total cars on the road unless things change a lot.
Another thing to consider is that there are many emerging economies that don't have the density of car ownership that we see here in the USA or in Europe.

Consider this homemade chart from the internet (there are many just like it, but I chose this one for the colors):

Image

These countries in Africa and southeast Asia will grow in car ownership, but they won't have the electrical infrastructure to support leaping straight to electric cars. These countries will likely begin with combustion engine automobiles that will require gasoline for a long time to come. Companies like Exxon are multinationals, and will serve the needs of Africa and AsiaPac cars if USA demand for gasoline falls.

-B
jello_nailer
Posts: 431
Joined: Sun Apr 07, 2019 10:20 pm

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by jello_nailer »

DTalos wrote: Wed Jun 02, 2021 7:04 pm
gch wrote: Tue Jun 01, 2021 9:16 pm I think the best long term play (as you mentioned) is NG pipelines. As renewables start making up more of the electric supply, NG will become even more volatile. Companies with those NG assets will be able to capitalize on that volatility. Case in point go look at Kinder Morgan and Energy Transfers Q1 profits from Winter Storm Uri.
OKE and KMI are both into pipelines, but interestingly, OKE's share price has risen 32.5% in the last 52 week vs KMI, which has risen 14.61% in the last 52 weeks. Why the discrepancy?
IIRC Mr Kinder cut the dividend dramatically about a year ago and KMI was crushed. I think I remember he did that not long after saying he would never cut the dividend. Once I round tripped it I got out.

If I'm wrong feel free to correct my memory.
Topic Author
MrCheapo
Posts: 165
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by MrCheapo »

Your spot on. Richard Kinder is well named, he can be a real D*&k .....
jello_nailer wrote: Wed Jun 02, 2021 8:25 pm
DTalos wrote: Wed Jun 02, 2021 7:04 pm
gch wrote: Tue Jun 01, 2021 9:16 pm I think the best long term play (as you mentioned) is NG pipelines. As renewables start making up more of the electric supply, NG will become even more volatile. Companies with those NG assets will be able to capitalize on that volatility. Case in point go look at Kinder Morgan and Energy Transfers Q1 profits from Winter Storm Uri.
OKE and KMI are both into pipelines, but interestingly, OKE's share price has risen 32.5% in the last 52 week vs KMI, which has risen 14.61% in the last 52 weeks. Why the discrepancy?
IIRC Mr Kinder cut the dividend dramatically about a year ago and KMI was crushed. I think I remember he did that not long after saying he would never cut the dividend. Once I round tripped it I got out.

If I'm wrong feel free to correct my memory.
Last edited by MrCheapo on Thu Jun 03, 2021 11:21 am, edited 1 time in total.
Valuethinker
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by Valuethinker »

MrCheapo wrote: Tue Jun 01, 2021 3:21 pm
btenny wrote: Tue Jun 01, 2021 11:15 am I have owned Exxon Mobile stock since 1980. The dividends helped me put my kids through college. The stock now pays me more dividends per year than I paid for the stock. I have purchased more stock twice when the stock went on sale. The added stock I bought last year is up 50%. I am not sure I will ever sell any. But I am sure that climate change is affecting this business big time and may reduce company value in the future.

I used to own some MLP stock but the CEO converted the company from a REIT to a standard stock company without any stockholder vote or advance warning. This screwed me and all the stock holders and gave all of us big tax problems. The new company stock price crashed and we all suffered a significant capital loss from the REIT price. I will never own a MLP again.
Thanks for sharing. I bought Exxon, Chevron, BP, Shell etc all at 50% discount to their current prices. If I was sure they'd be around 40 years like (mirroring your situation) I'd have no trouble holding them. But the huge push for EVs has me concerned that the days of oil producers are limited and I should take profits now.

Just yesterday the administration floated resetting to zero, Tesla and Nissan's $7500 tax rebate allotment and increasing it to $12,500 if the car is made in a union US facility. If you make one type of car $12,500 cheaper than another then its hard to see the competitors being bought.

Thanks

P.S. I don't want this discussion to turn political, but clearly a major issue with owning oil producers (at least) is the current political push for EVs.
I don't think looking at the USA in isolation gives you a good picture.

About 2/3rds of world oil consumption goes towards vehicular transportation, directly or indirectly.

There are over 1 billion cars in the world, 99.9% powered by petrol or diesel Internal Combustion Engines. Plus of course commercial trucks, delivery vans etc.

EVs are less than 1% of total sales. To add to that, half of sales worldwide now are SUV-type vehicles -- bigger w higher fuel consumption (although still efficient compared to your full-size 1970s sedan, say).

Whilst it is true that countries like the UK plan to ban the sale of ICE cars (but not of hybrids, at least initially) by 2030, the creation of a charging infrastructure for 32m passenger vehicles (in the UK, a country about the size and GDP of California w say 2x the population) is absolutely daunting. Petrol engined cars are going to be around for a while yet as annual sales are less than 5% of that total "car park" of 32m.

The growth in oil demand since 2000 has largely been in the Emerging Markets. China primarily. It's even harder to roll out EVs in countries like India that don't have a reliable grid.

So developed market demand for oil will probably be static to shrinking (but the move to SUVs and higher Vehicle Miles Travelled means that that is not true of USA, currently). But EM demand looks like it will grow.

So it's really a 2030+ story rather than now til then. So the question is does the market fully discount that possibility of falling demand post 2030?

My gut is that as conventional oil fields deplete at 4-8% of production pa (fall), it's getting harder and more expensive to replace that oil - at a time when for the time being demand is likely to keep rising. That underpins the reserves of current oil producers. So they are well positioned.

I think it would be a mistake to avoid that part of the market that is accounted for by oil & gas companies. The principle of indexation to the market as a whole still rules. Let the market figure out which ways supply, demand, price are going and the implications for individual companies.
Valuethinker
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by Valuethinker »

TheDDC wrote: Wed Jun 02, 2021 5:00 pm
Blueskies123 wrote: Tue Jun 01, 2021 8:46 pm Generation of electricity using natural gas with highly efficient $100 million turbines and delivering it through a smart gride to a house and then a new electric car is much more efficient than delivering gasoline to gas stations and then burning gasoline in internal combustion cars, many of them often very old, leaking and smoking cars and trucks.
Soon, in my opinion, you will see oil demand start to slump, (but not natural gas).
I would tend to agree. Natural gas is also far superior when it comes to heating things as a whole in an efficient, reliable manner. I use natural gas to heat my home, heat water, and for drying clothes. In terms of raw energy production, natural gas is the biggest game in town besides nuclear (to a lesser extent), wind, and solar. In some areas, hydro power could be a factor as well. I will say that I am surprised at the low cost of wind/solar as I recently switched my energy supplier to a 100% renewable company. In our state we are able to choose our supplier. That said, I do not know how well wind and solar can scale. I do hold a few shares of Williams (WMB), though nothing significant.

In the end it will all come down to price and the market. People won't give up ICEs until it is a cheaper option that the market sorts out (without duress from government). Here's the one question I have about EVs: What does one do in a multi-day power outage where we are expected to drive/evacuate? Storing energy via cells for long term use is not efficient, nor practical. Storing it in gas cans is. :)

-TheDDC
Wind and solar are actually about the easiest technologies to scale -- add another turbine (they keep getting bigger, so the spacing is important) or lay out another row of solar panets. The main problem is local opposition to windfarms or giant solar farms and the bolstered connections to the grid (ie high voltage transmission towers & substations) that are sometimes required. But the growth in wind capacity in Europe is now offshore, which attracts relatively little opposition. Both the Baltic Sea and the North Sea have large shallow continental shelfs, and thus offshore wind is basically a re-use of the technology & services the offshore oil & gas industry has been providing for 50 years.

Southern Europe the wind is generally not as reliable (although it is so in Spain) but you have perfect conditions for solar. Main challenge then is what do you do at night?

US has some of the best onshore and offshore resources (wind and sun) in the world. However the Continental Shelf is much more limited so new technologies are required in some cases for offshore wind (floating & moored rather than fixed turbines).

Re EVs:

- yes there are issues if there's a multi day outage. However, most people don't keep gasoline at home, I don't think? And petrol pumps don't work if there is no electricity.

Severe weather events are perhaps more common in USA than most of Europe and the grid is probably somewhat less reliable. Nonetheless for most people, most of the time, even in the USA, it's not going to be a big issue? One has a charged up car, and the Governor tells you to bug out, you drive to some place safe, recharge there?

In principle a 10kw PV home solar system could charge a 35kwhr car battery in about a day (assuming 50% of peak capacity x10kw x 8 hours). So too could a backup generator.

- agree re cost. It's hard to buy something with a lower Total Cost of Ownership/ Lifecycle cost if it is more expensive up front. But people will over time come to make that calculation.

Parenthetically there is a huge amount of work going on ($1bn+ trials) for using hydrogen in place of natural gas-- in Europe, for domestic or for industrial purposes. The pipes can be modified to take that, and in fact hydrogen was a constituent of the old "town gas" system of making gas for municipal use from coal-- systems which were later converted to the cleaner & more efficient natural gas.

https://en.wikipedia.org/wiki/History_o ... th_America

Hydrogen should be a safer fuel than natural gas (methane) in that it's less likely that a slow leak will lead to buildup (H2 molecules just disperse themselves) and it's less of an explosive when ignited.

The decarbonisation of home heating is not a simple problem but there's a lot of money at stake so solutions will be found. Well insulated homes can switch to heat pumps - the latest Japanese ones cope well with temperatures down to c 10 degrees F (at which point your HP has an efficiency of 1.0 as basically an electric bar heater (at more common air temperatures, HPs can achieve efficiencies of over 4.0 ie 1kwhr electricity gives you 4 kwhr of heat). However homes which are less well insulated that won't work (HPs run best "low and slow" whereas gas furnaces run "high and fast"). Hydrogen may well be an important solution to the conundrum.

The theory is that at times of excess generation, renewables can be used to create hydrogen (or ammonia) via electrolysis of water. Then that can be fed into the gas system, to be burned either by households or by gas turbines that act as peak power providers. There are a number of cost and scale challenges to get there, but it's certainly technically possible.

Hydrogen is also likely to be an important fuel for large vehicles (via fuel cells). Japan and South Korean car makers have done a lot of work on this.

** the deserts in western China might have a higher wind resource. I'd have to look at a map. The Chinese are building High Voltage DC lines to bring that power to the eastern states where all the industry & people are. The US has fewer HV DC lines (they have lower visual impact than AC lines) but they are common in other large countries with big distances to cover (e.g. Russia, Brasil, China, Quebec).
jello_nailer
Posts: 431
Joined: Sun Apr 07, 2019 10:20 pm

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by jello_nailer »

MrCheapo wrote: Wed Jun 02, 2021 10:34 pm Your spot on. Gary Kinder is an .....
jello_nailer wrote: Wed Jun 02, 2021 8:25 pm
DTalos wrote: Wed Jun 02, 2021 7:04 pm
gch wrote: Tue Jun 01, 2021 9:16 pm I think the best long term play (as you mentioned) is NG pipelines. As renewables start making up more of the electric supply, NG will become even more volatile. Companies with those NG assets will be able to capitalize on that volatility. Case in point go look at Kinder Morgan and Energy Transfers Q1 profits from Winter Storm Uri.
OKE and KMI are both into pipelines, but interestingly, OKE's share price has risen 32.5% in the last 52 week vs KMI, which has risen 14.61% in the last 52 weeks. Why the discrepancy?
IIRC Mr Kinder cut the dividend dramatically about a year ago and KMI was crushed. I think I remember he did that not long after saying he would never cut the dividend. Once I round tripped it I got out.

If I'm wrong feel free to correct my memory.
I thought it was Houston guy, Rich Kinder but it doesn't matter when you're blindsided!
Topic Author
MrCheapo
Posts: 165
Joined: Tue Dec 22, 2020 3:43 pm

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by MrCheapo »

Great insight about international markets. Then that raises the question, if your thesis is correct, shouldn't be investing in multi-nationals who can meet the international demand not domestic oil producers?
Valuethinker wrote: Thu Jun 03, 2021 3:26 am
MrCheapo wrote: Tue Jun 01, 2021 3:21 pm
btenny wrote: Tue Jun 01, 2021 11:15 am I have owned Exxon Mobile stock since 1980. The dividends helped me put my kids through college. The stock now pays me more dividends per year than I paid for the stock. I have purchased more stock twice when the stock went on sale. The added stock I bought last year is up 50%. I am not sure I will ever sell any. But I am sure that climate change is affecting this business big time and may reduce company value in the future.

I used to own some MLP stock but the CEO converted the company from a REIT to a standard stock company without any stockholder vote or advance warning. This screwed me and all the stock holders and gave all of us big tax problems. The new company stock price crashed and we all suffered a significant capital loss from the REIT price. I will never own a MLP again.
Thanks for sharing. I bought Exxon, Chevron, BP, Shell etc all at 50% discount to their current prices. If I was sure they'd be around 40 years like (mirroring your situation) I'd have no trouble holding them. But the huge push for EVs has me concerned that the days of oil producers are limited and I should take profits now.

Just yesterday the administration floated resetting to zero, Tesla and Nissan's $7500 tax rebate allotment and increasing it to $12,500 if the car is made in a union US facility. If you make one type of car $12,500 cheaper than another then its hard to see the competitors being bought.

Thanks

P.S. I don't want this discussion to turn political, but clearly a major issue with owning oil producers (at least) is the current political push for EVs.
I don't think looking at the USA in isolation gives you a good picture.

About 2/3rds of world oil consumption goes towards vehicular transportation, directly or indirectly.

There are over 1 billion cars in the world, 99.9% powered by petrol or diesel Internal Combustion Engines. Plus of course commercial trucks, delivery vans etc.

EVs are less than 1% of total sales. To add to that, half of sales worldwide now are SUV-type vehicles -- bigger w higher fuel consumption (although still efficient compared to your full-size 1970s sedan, say).

Whilst it is true that countries like the UK plan to ban the sale of ICE cars (but not of hybrids, at least initially) by 2030, the creation of a charging infrastructure for 32m passenger vehicles (in the UK, a country about the size and GDP of California w say 2x the population) is absolutely daunting. Petrol engined cars are going to be around for a while yet as annual sales are less than 5% of that total "car park" of 32m.

The growth in oil demand since 2000 has largely been in the Emerging Markets. China primarily. It's even harder to roll out EVs in countries like India that don't have a reliable grid.

So developed market demand for oil will probably be static to shrinking (but the move to SUVs and higher Vehicle Miles Travelled means that that is not true of USA, currently). But EM demand looks like it will grow.

So it's really a 2030+ story rather than now til then. So the question is does the market fully discount that possibility of falling demand post 2030?

My gut is that as conventional oil fields deplete at 4-8% of production pa (fall), it's getting harder and more expensive to replace that oil - at a time when for the time being demand is likely to keep rising. That underpins the reserves of current oil producers. So they are well positioned.

I think it would be a mistake to avoid that part of the market that is accounted for by oil & gas companies. The principle of indexation to the market as a whole still rules. Let the market figure out which ways supply, demand, price are going and the implications for individual companies.
olyveoil
Posts: 75
Joined: Thu Feb 04, 2021 8:47 am

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by olyveoil »

alfaspider wrote: Wed Jun 02, 2021 2:55 pm
MrCheapo wrote: Wed Jun 02, 2021 2:51 pm
alfaspider wrote: Wed Jun 02, 2021 8:34 am
I think we are going to get a lot more than 20%. The issue is that EVs are going to be far superior from a performance, comfort, and cost standpoint in pretty short order. Climate change will have little to do with it. The last holdouts are going to be those who live in apartments that don't provide charging, but those folks won't be the new car buying demographic anyways.

The 6 hour charge time at home is irrelevant. For non-road trip use, the current crop of EVs has plenty of range for any daily driving duties except for extreme edge cases. Home charging is just a matter of plugging the car in overnight. With current range, a lot of folks will be charging every week at most. For road trips, quick charging stations are increasingly proliferating. Grid strain won't be an issue because most charging happens overnight when grid load is lower anyways. Plus, the grid will have over a decade to upgrade to handle any additional loads. We've already gone through the process of having to make the grid more robust with the proliferation of air conditioning in the 1950s and 1960s.

Cars that get 200 miles of range off a 20 minute quick charge are just becoming available (along with chargers that can do that). Most folks are going to want to get a snack and a bathroom beak anyways after 200 miles of driving.

Hate to say it, but I agree with Musk that "hydrogen is dumb"- at least for personal use automobiles. The issue is that hydrogen can only efficiently be produced by processing natural gas. But you could just run the vehicle on natural gas directly, which is much easier to store and which already has an infrastructure. You can make hydrogen out of water with electricity, but that's a lot less efficient process than charging a battery. With quick EV charging, there's really no advantage to hydrogen. Where hydrogen has potential is eventually useful is for heavy machinery and air travel. You can't really run a jet engine on natural gas (as far as I understand), but hydrogen jet engine prototypes exist.

We need to keep in mind, however, that personal transport is not the majority of oil demand. Even we completely stopped using fossil fuels for transport and electricity generations, we'd still use quite a bit of fossil fuels. But the demand would stop its historic lockstep with economic growth.
That's a fair point about the cost and convenience. Filling up for free is nice. But if even 10% of the population of EVs do you really think all those charging stations will be free to everyone? Also, the nice benefits of HOV lane access, preferred parking all go away if you have a lot of EVs.

I didn't know about the 20 minute quick charge for 200 miles. That would be a game changer. What company does them?
Public charging stations will be like gas stations (they already are).

As far as quick charges, the precise rate of charge depends on the specific model, but the Tesla v3 Superchargers and the Electrify America 350kw DC quick chargers approach these rates. Typically, you want an EV with 300 miles of range for quickest charge, because the quickest charging can happen between 20% and 80%.
Not even close.
olyveoil
Posts: 75
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by olyveoil »

alfaspider wrote: Wed Jun 02, 2021 3:38 pm
MrCheapo wrote: Wed Jun 02, 2021 3:30 pm
alfaspider wrote: Wed Jun 02, 2021 2:55 pm Public charging stations will be like gas stations (they already are).

As far as quick charges, the precise rate of charge depends on the specific model, but the Tesla v3 Superchargers and the Electrify America 350kw DC quick chargers approach these rates. Typically, you want an EV with 300 miles of range for quickest charge, because the quickest charging can happen between 20% and 80%.
I'm not sure about how ubiquitous they will be, there are a lot of gas stations. Also a lot of the nice things about EVs like free charging, HOV access, priority parking can't scale can they?

To be sure, I'm glad they are trying out alternative to fossil fuels, it just seems the nice aspects of EV won't scale if even 10% of people have them.
There's already electricity run to every business in the country, so it won't be hard to make chargers ubiquitous. You are correct that there won't be as many stations as there are gas stations for the simple reason that most people will be charging at home. Public chargers will be mostly for road trips.

You are correct that things like HOV access and priority parking won't scale, but these are minor fringe benefits relative to the other advantages of EV ownership that will grow with time (lower cost, lower noise, better performance). I analogize EVs to digital watches compared to gas powered vehicles as mechanical watches. When digital watches first came out, they were expensive novelties. Now, a mechanical watch is a luxury item mostly owned by collectors. Most fundamental components of EVs are cheaper and easier to manufacture than internal combustion cars. What keeps them expensive is less economy of scale and high battery pack prices. Those obstacles are starting to fall away.
Both these things cannot be true.

However, what keeps them inexpensive is tax credits.
Barsoom
Posts: 471
Joined: Thu Dec 06, 2018 9:40 am

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by Barsoom »

MrCheapo wrote: Thu Jun 03, 2021 11:22 am Great insight about international markets. Then that raises the question, if your thesis is correct, shouldn't be investing in multi-nationals who can meet the international demand not domestic oil producers?
I'd keep an eye on what Shell and Total do. Those European companies are moving more swiftly into the renewable energy space than Exxon and other American oil companies. See what happens to their dividends, as the strength of holding Exxon is their "dividend aristocrat" status, meaning they've grown their dividends for over 25 years. Exxon pays out a healthy 5+% whether their stock is up or down, so it will become a question of whether the dividend becomes unsustainable in an extended down market. If you're planning to hold the stock, then the high cash earnings make up for a lower paper value in a down market.

-B
CommitmentDevice
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by CommitmentDevice »

I'm intentionally tilted away from oil and natural gas stocks. (Reasons = values + beliefs about macro trends related to cc). My portfolio is mostly VSGX and ESGV, with some EAGG and BGRN.
alfaspider
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by alfaspider »

olyveoil wrote: Thu Jun 03, 2021 12:10 pm
alfaspider wrote: Wed Jun 02, 2021 3:38 pm
MrCheapo wrote: Wed Jun 02, 2021 3:30 pm
alfaspider wrote: Wed Jun 02, 2021 2:55 pm Public charging stations will be like gas stations (they already are).

As far as quick charges, the precise rate of charge depends on the specific model, but the Tesla v3 Superchargers and the Electrify America 350kw DC quick chargers approach these rates. Typically, you want an EV with 300 miles of range for quickest charge, because the quickest charging can happen between 20% and 80%.
I'm not sure about how ubiquitous they will be, there are a lot of gas stations. Also a lot of the nice things about EVs like free charging, HOV access, priority parking can't scale can they?

To be sure, I'm glad they are trying out alternative to fossil fuels, it just seems the nice aspects of EV won't scale if even 10% of people have them.
There's already electricity run to every business in the country, so it won't be hard to make chargers ubiquitous. You are correct that there won't be as many stations as there are gas stations for the simple reason that most people will be charging at home. Public chargers will be mostly for road trips.

You are correct that things like HOV access and priority parking won't scale, but these are minor fringe benefits relative to the other advantages of EV ownership that will grow with time (lower cost, lower noise, better performance). I analogize EVs to digital watches compared to gas powered vehicles as mechanical watches. When digital watches first came out, they were expensive novelties. Now, a mechanical watch is a luxury item mostly owned by collectors. Most fundamental components of EVs are cheaper and easier to manufacture than internal combustion cars. What keeps them expensive is less economy of scale and high battery pack prices. Those obstacles are starting to fall away.
Both these things cannot be true.

However, what keeps them inexpensive is tax credits.
Not at all.

The actual factory assembly process of an E.V. is much more simple. There are far fewer components, and fewer moving parts to design. Electric motors are cheaper to manufacture than gasoline motors. Economies of scale aren't quite where they are for gas cars yet, but they are approaching it.

At the present time, lithium battery packs are expensive, but have been a very steady downward curve over the past decade:

Image

That curve is what is allowing mass manufacturers like Ford to offer vehicles like the F150 at a reasonable price. Yes, tax credits move the value curve forward for consumers, but we are beginning to approach price parity even without credits. $100/kwh is where many analysis believe the crossover point for price parity on mass market electric cars are.

To be clear, I'm not here to be an apologist for electric cars, but I think it would be unwise not to consider their impending dominance when considering the oil industry. Most major automakers are scaling up EV plans quickly. The announcements to phase out gas are not window dressing- this is serious CapX devoted to the EV switch.
Last edited by alfaspider on Thu Jun 03, 2021 12:48 pm, edited 1 time in total.
alfaspider
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by alfaspider »

olyveoil wrote: Thu Jun 03, 2021 12:05 pm
alfaspider wrote: Wed Jun 02, 2021 2:55 pm
MrCheapo wrote: Wed Jun 02, 2021 2:51 pm
alfaspider wrote: Wed Jun 02, 2021 8:34 am
I think we are going to get a lot more than 20%. The issue is that EVs are going to be far superior from a performance, comfort, and cost standpoint in pretty short order. Climate change will have little to do with it. The last holdouts are going to be those who live in apartments that don't provide charging, but those folks won't be the new car buying demographic anyways.

The 6 hour charge time at home is irrelevant. For non-road trip use, the current crop of EVs has plenty of range for any daily driving duties except for extreme edge cases. Home charging is just a matter of plugging the car in overnight. With current range, a lot of folks will be charging every week at most. For road trips, quick charging stations are increasingly proliferating. Grid strain won't be an issue because most charging happens overnight when grid load is lower anyways. Plus, the grid will have over a decade to upgrade to handle any additional loads. We've already gone through the process of having to make the grid more robust with the proliferation of air conditioning in the 1950s and 1960s.

Cars that get 200 miles of range off a 20 minute quick charge are just becoming available (along with chargers that can do that). Most folks are going to want to get a snack and a bathroom beak anyways after 200 miles of driving.

Hate to say it, but I agree with Musk that "hydrogen is dumb"- at least for personal use automobiles. The issue is that hydrogen can only efficiently be produced by processing natural gas. But you could just run the vehicle on natural gas directly, which is much easier to store and which already has an infrastructure. You can make hydrogen out of water with electricity, but that's a lot less efficient process than charging a battery. With quick EV charging, there's really no advantage to hydrogen. Where hydrogen has potential is eventually useful is for heavy machinery and air travel. You can't really run a jet engine on natural gas (as far as I understand), but hydrogen jet engine prototypes exist.

We need to keep in mind, however, that personal transport is not the majority of oil demand. Even we completely stopped using fossil fuels for transport and electricity generations, we'd still use quite a bit of fossil fuels. But the demand would stop its historic lockstep with economic growth.
That's a fair point about the cost and convenience. Filling up for free is nice. But if even 10% of the population of EVs do you really think all those charging stations will be free to everyone? Also, the nice benefits of HOV lane access, preferred parking all go away if you have a lot of EVs.

I didn't know about the 20 minute quick charge for 200 miles. That would be a game changer. What company does them?
Public charging stations will be like gas stations (they already are).

As far as quick charges, the precise rate of charge depends on the specific model, but the Tesla v3 Superchargers and the Electrify America 350kw DC quick chargers approach these rates. Typically, you want an EV with 300 miles of range for quickest charge, because the quickest charging can happen between 20% and 80%.
Not even close.
You misunderstand. They are like gas stations in that you pay for a certain amount of electricity, similar to how you pay for a certain amount of gasoline. Of course they have not reached the level of ubiquity and convenience of gas stations yet, but the network is building out rapidly.
Topic Author
MrCheapo
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by MrCheapo »

But his/her point was that developing countries will need oil (not renewables) so that's a future for oil and gas stocks.

My point was that the US oil producers in the Permian etc basins are not catering to that market. Ergo invest in large multi-national focusing on oil production.
Barsoom wrote: Thu Jun 03, 2021 12:12 pm
MrCheapo wrote: Thu Jun 03, 2021 11:22 am Great insight about international markets. Then that raises the question, if your thesis is correct, shouldn't be investing in multi-nationals who can meet the international demand not domestic oil producers?
I'd keep an eye on what Shell and Total do. Those European companies are moving more swiftly into the renewable energy space than Exxon and other American oil companies. See what happens to their dividends, as the strength of holding Exxon is their "dividend aristocrat" status, meaning they've grown their dividends for over 25 years. Exxon pays out a healthy 5+% whether their stock is up or down, so it will become a question of whether the dividend becomes unsustainable in an extended down market. If you're planning to hold the stock, then the high cash earnings make up for a lower paper value in a down market.

-B
alfaspider
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by alfaspider »

MrCheapo wrote: Thu Jun 03, 2021 12:49 pm But his/her point was that developing countries will need oil (not renewables) so that's a future for oil and gas stocks.

My point was that the US oil producers in the Permian etc basins are not catering to that market. Ergo invest in large multi-national focusing on oil production.
Barsoom wrote: Thu Jun 03, 2021 12:12 pm
MrCheapo wrote: Thu Jun 03, 2021 11:22 am Great insight about international markets. Then that raises the question, if your thesis is correct, shouldn't be investing in multi-nationals who can meet the international demand not domestic oil producers?
I'd keep an eye on what Shell and Total do. Those European companies are moving more swiftly into the renewable energy space than Exxon and other American oil companies. See what happens to their dividends, as the strength of holding Exxon is their "dividend aristocrat" status, meaning they've grown their dividends for over 25 years. Exxon pays out a healthy 5+% whether their stock is up or down, so it will become a question of whether the dividend becomes unsustainable in an extended down market. If you're planning to hold the stock, then the high cash earnings make up for a lower paper value in a down market.

-B
Oil is a pretty global market. You can sell Permian oil to Africa. Natural gas much less so.
Barsoom
Posts: 471
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by Barsoom »

MrCheapo wrote: Thu Jun 03, 2021 12:49 pm But his/her point was that developing countries will need oil (not renewables) so that's a future for oil and gas stocks.

My point was that the US oil producers in the Permian etc basins are not catering to that market. Ergo invest in large multi-national focusing on oil production.
Barsoom wrote: Thu Jun 03, 2021 12:12 pm
MrCheapo wrote: Thu Jun 03, 2021 11:22 am Great insight about international markets. Then that raises the question, if your thesis is correct, shouldn't be investing in multi-nationals who can meet the international demand not domestic oil producers?
I'd keep an eye on what Shell and Total do. Those European companies are moving more swiftly into the renewable energy space than Exxon and other American oil companies. See what happens to their dividends, as the strength of holding Exxon is their "dividend aristocrat" status, meaning they've grown their dividends for over 25 years. Exxon pays out a healthy 5+% whether their stock is up or down, so it will become a question of whether the dividend becomes unsustainable in an extended down market. If you're planning to hold the stock, then the high cash earnings make up for a lower paper value in a down market.

-B
Exxon is a multi-national that produces in the Permian and elsewhere. And yes, smaller E&P companies without a downstream component are suffering.

Oil is a fungible product. Just because it is extracted from the Permian basin, it can be traded for a tanker in the Indian Ocean in the morning, and that tanker can be traded for oil in Australia in the afternoon.

Multinationals try to build refineries near their production sites, but they also trade products in one part of the world for equivalent products in another part of the world that are nearer to refineries in foreign countries. It's cheaper to trade for closer oil than to ship it from the field to the refinery.

My point still is that European majors are betting on declining combustion engine autos, while domestic majors are expecting combustion engines to be around for a lot longer. The chart I posted showing automobiles in emerging countries is where the action will move to as those countries continue to develop. I don't think they will jump immediately to EVs; Europe may get there fast but Africa and Southeast Asia will not.

-B
Topic Author
MrCheapo
Posts: 165
Joined: Tue Dec 22, 2020 3:43 pm

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by MrCheapo »

Has the USA ever been a large net exporter of Oil? I know it has for Gas particularly to Asia but Oil?
alfaspider wrote: Thu Jun 03, 2021 1:05 pm
MrCheapo wrote: Thu Jun 03, 2021 12:49 pm But his/her point was that developing countries will need oil (not renewables) so that's a future for oil and gas stocks.

My point was that the US oil producers in the Permian etc basins are not catering to that market. Ergo invest in large multi-national focusing on oil production.
Barsoom wrote: Thu Jun 03, 2021 12:12 pm
MrCheapo wrote: Thu Jun 03, 2021 11:22 am Great insight about international markets. Then that raises the question, if your thesis is correct, shouldn't be investing in multi-nationals who can meet the international demand not domestic oil producers?
I'd keep an eye on what Shell and Total do. Those European companies are moving more swiftly into the renewable energy space than Exxon and other American oil companies. See what happens to their dividends, as the strength of holding Exxon is their "dividend aristocrat" status, meaning they've grown their dividends for over 25 years. Exxon pays out a healthy 5+% whether their stock is up or down, so it will become a question of whether the dividend becomes unsustainable in an extended down market. If you're planning to hold the stock, then the high cash earnings make up for a lower paper value in a down market.

-B
Oil is a pretty global market. You can sell Permian oil to Africa. Natural gas much less so.
olyveoil
Posts: 75
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by olyveoil »

alfaspider wrote: Thu Jun 03, 2021 12:37 pm
olyveoil wrote: Thu Jun 03, 2021 12:10 pm
alfaspider wrote: Wed Jun 02, 2021 3:38 pm
MrCheapo wrote: Wed Jun 02, 2021 3:30 pm
alfaspider wrote: Wed Jun 02, 2021 2:55 pm Public charging stations will be like gas stations (they already are).

As far as quick charges, the precise rate of charge depends on the specific model, but the Tesla v3 Superchargers and the Electrify America 350kw DC quick chargers approach these rates. Typically, you want an EV with 300 miles of range for quickest charge, because the quickest charging can happen between 20% and 80%.
I'm not sure about how ubiquitous they will be, there are a lot of gas stations. Also a lot of the nice things about EVs like free charging, HOV access, priority parking can't scale can they?

To be sure, I'm glad they are trying out alternative to fossil fuels, it just seems the nice aspects of EV won't scale if even 10% of people have them.
There's already electricity run to every business in the country, so it won't be hard to make chargers ubiquitous. You are correct that there won't be as many stations as there are gas stations for the simple reason that most people will be charging at home. Public chargers will be mostly for road trips.

You are correct that things like HOV access and priority parking won't scale, but these are minor fringe benefits relative to the other advantages of EV ownership that will grow with time (lower cost, lower noise, better performance). I analogize EVs to digital watches compared to gas powered vehicles as mechanical watches. When digital watches first came out, they were expensive novelties. Now, a mechanical watch is a luxury item mostly owned by collectors. Most fundamental components of EVs are cheaper and easier to manufacture than internal combustion cars. What keeps them expensive is less economy of scale and high battery pack prices. Those obstacles are starting to fall away.
Both these things cannot be true.

However, what keeps them inexpensive is tax credits.
Not at all.

The actual factory assembly process of an E.V. is much more simple. There are far fewer components, and fewer moving parts to design. Electric motors are cheaper to manufacture than gasoline motors. Economies of scale aren't quite where they are for gas cars yet, but they are approaching it.

At the present time, lithium battery packs are expensive, but have been a very steady downward curve over the past decade:

Image

That curve is what is allowing mass manufacturers like Ford to offer vehicles like the F150 at a reasonable price. Yes, tax credits move the value curve forward for consumers, but we are beginning to approach price parity even without credits. $100/kwh is where many analysis believe the crossover point for price parity on mass market electric cars are.

To be clear, I'm not here to be an apologist for electric cars, but I think it would be unwise not to consider their impending dominance when considering the oil industry. Most major automakers are scaling up EV plans quickly. The announcements to phase out gas are not window dressing- this is serious CapX devoted to the EV switch.
A (if not THE) fundamental component of an EV is the battery pack, is it not?
olyveoil
Posts: 75
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by olyveoil »

alfaspider wrote: Thu Jun 03, 2021 12:39 pm
olyveoil wrote: Thu Jun 03, 2021 12:05 pm
alfaspider wrote: Wed Jun 02, 2021 2:55 pm
MrCheapo wrote: Wed Jun 02, 2021 2:51 pm
alfaspider wrote: Wed Jun 02, 2021 8:34 am
I think we are going to get a lot more than 20%. The issue is that EVs are going to be far superior from a performance, comfort, and cost standpoint in pretty short order. Climate change will have little to do with it. The last holdouts are going to be those who live in apartments that don't provide charging, but those folks won't be the new car buying demographic anyways.

The 6 hour charge time at home is irrelevant. For non-road trip use, the current crop of EVs has plenty of range for any daily driving duties except for extreme edge cases. Home charging is just a matter of plugging the car in overnight. With current range, a lot of folks will be charging every week at most. For road trips, quick charging stations are increasingly proliferating. Grid strain won't be an issue because most charging happens overnight when grid load is lower anyways. Plus, the grid will have over a decade to upgrade to handle any additional loads. We've already gone through the process of having to make the grid more robust with the proliferation of air conditioning in the 1950s and 1960s.

Cars that get 200 miles of range off a 20 minute quick charge are just becoming available (along with chargers that can do that). Most folks are going to want to get a snack and a bathroom beak anyways after 200 miles of driving.

Hate to say it, but I agree with Musk that "hydrogen is dumb"- at least for personal use automobiles. The issue is that hydrogen can only efficiently be produced by processing natural gas. But you could just run the vehicle on natural gas directly, which is much easier to store and which already has an infrastructure. You can make hydrogen out of water with electricity, but that's a lot less efficient process than charging a battery. With quick EV charging, there's really no advantage to hydrogen. Where hydrogen has potential is eventually useful is for heavy machinery and air travel. You can't really run a jet engine on natural gas (as far as I understand), but hydrogen jet engine prototypes exist.

We need to keep in mind, however, that personal transport is not the majority of oil demand. Even we completely stopped using fossil fuels for transport and electricity generations, we'd still use quite a bit of fossil fuels. But the demand would stop its historic lockstep with economic growth.
That's a fair point about the cost and convenience. Filling up for free is nice. But if even 10% of the population of EVs do you really think all those charging stations will be free to everyone? Also, the nice benefits of HOV lane access, preferred parking all go away if you have a lot of EVs.

I didn't know about the 20 minute quick charge for 200 miles. That would be a game changer. What company does them?
Public charging stations will be like gas stations (they already are).

As far as quick charges, the precise rate of charge depends on the specific model, but the Tesla v3 Superchargers and the Electrify America 350kw DC quick chargers approach these rates. Typically, you want an EV with 300 miles of range for quickest charge, because the quickest charging can happen between 20% and 80%.
Not even close.
You misunderstand. They are like gas stations in that you pay for a certain amount of electricity, similar to how you pay for a certain amount of gasoline. Of course they have not reached the level of ubiquity and convenience of gas stations yet, but the network is building out rapidly.
I understand completely. Charging stations are not even close to gas stations currently. Not.
even. close.
Not in number of locations; not in convenience; not in ease of access; not in reliability.
gougou
Posts: 370
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by gougou »

alfaspider wrote: Thu Jun 03, 2021 12:37 pm
olyveoil wrote: Thu Jun 03, 2021 12:10 pm
alfaspider wrote: Wed Jun 02, 2021 3:38 pm
MrCheapo wrote: Wed Jun 02, 2021 3:30 pm
alfaspider wrote: Wed Jun 02, 2021 2:55 pm Public charging stations will be like gas stations (they already are).

As far as quick charges, the precise rate of charge depends on the specific model, but the Tesla v3 Superchargers and the Electrify America 350kw DC quick chargers approach these rates. Typically, you want an EV with 300 miles of range for quickest charge, because the quickest charging can happen between 20% and 80%.
I'm not sure about how ubiquitous they will be, there are a lot of gas stations. Also a lot of the nice things about EVs like free charging, HOV access, priority parking can't scale can they?

To be sure, I'm glad they are trying out alternative to fossil fuels, it just seems the nice aspects of EV won't scale if even 10% of people have them.
There's already electricity run to every business in the country, so it won't be hard to make chargers ubiquitous. You are correct that there won't be as many stations as there are gas stations for the simple reason that most people will be charging at home. Public chargers will be mostly for road trips.

You are correct that things like HOV access and priority parking won't scale, but these are minor fringe benefits relative to the other advantages of EV ownership that will grow with time (lower cost, lower noise, better performance). I analogize EVs to digital watches compared to gas powered vehicles as mechanical watches. When digital watches first came out, they were expensive novelties. Now, a mechanical watch is a luxury item mostly owned by collectors. Most fundamental components of EVs are cheaper and easier to manufacture than internal combustion cars. What keeps them expensive is less economy of scale and high battery pack prices. Those obstacles are starting to fall away.
Both these things cannot be true.

However, what keeps them inexpensive is tax credits.
Not at all.

The actual factory assembly process of an E.V. is much more simple. There are far fewer components, and fewer moving parts to design. Electric motors are cheaper to manufacture than gasoline motors. Economies of scale aren't quite where they are for gas cars yet, but they are approaching it.

At the present time, lithium battery packs are expensive, but have been a very steady downward curve over the past decade:

Image

That curve is what is allowing mass manufacturers like Ford to offer vehicles like the F150 at a reasonable price. Yes, tax credits move the value curve forward for consumers, but we are beginning to approach price parity even without credits. $100/kwh is where many analysis believe the crossover point for price parity on mass market electric cars are.

To be clear, I'm not here to be an apologist for electric cars, but I think it would be unwise not to consider their impending dominance when considering the oil industry. Most major automakers are scaling up EV plans quickly. The announcements to phase out gas are not window dressing- this is serious CapX devoted to the EV switch.
$100/KWH is where EVs have price parity with ICE cars in developed countries. In many developing countries such as China a new ICE car can cost less than $5K in tier 3 cities, and you just can't make a EV that cheap with similar ranges. Those are also the places with low car ownership, which will drive growth for ICE cars.

Also $100/KWH battery is probably still several years away. So we are probably 10 to 20 years away from EVs dominating new car sales in developed countries. And to be honest, I don't even know whether EV will dominate new car sales in any country, and I definitely would not invest in any companies that depend on the projection of EV dominance.

Meanwhile, chronic underinvestment in oil fields means that we'll deplete oil reserves due to natural declines, greatly reducing oil supply. The next up cycle for oil is probably going to happen within a decade.
btenny
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by btenny »

Yes EVs will make big inroads into the US and European CAR markets soon and reduce oil consumption in that segment. But that is only 30-40% of the transportation oil markets. EVs do not work for planes or boats or tractors or lots of trucks. AND the transportation segment is only 60-70% of oil consumption. The rest is used for plastics and industrial uses and non-transportation uses (home heat/electric generation). So net net EVs will only reduce oil consumption by 20-25%. Yes that is a big hit but the remaining market is still huge...... See charts and links below.

https://www.google.com/search?q=transpo ... V5IPeZHykM

https://www.eia.gov/todayinenergy/detail.php?id=40752
Valuethinker
Posts: 42622
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by Valuethinker »

MrCheapo wrote: Thu Jun 03, 2021 11:22 am Great insight about international markets. Then that raises the question, if your thesis is correct, shouldn't be investing in multi-nationals who can meet the international demand not domestic oil producers?
All the Multinational Oil Companies (MNOCs) have the same problem - the National Oil Companies. That is, in the early 20th century the 7 Sisters (predecessors of Exxon BP Shell Total ENI etc) could lock up cheap oil reserves in Third World countries.

Nowadays countries don't let that happen. If the MNOCs are brought in, they pay big royalties. State owned oil companies (NOCs) are the bulk of the world's largest producers. In places like Russia where the likes of Exxon and Shell spent big to get a foothold, Putin's regime has basically taken that back from them.

You have situations like Shell in Nigeria where they are still able to extract their economic rent (excess profits) from the situation - but that is rarer and rarer. Emerging market nations will bring you in for your technology and expertise, but they strike much tougher bargains than they did 70 years ago.

In the case of the US there are no new conventional oil reserves to exploit (well, Alaska, but that has lots of issues). What there is is good old Yankee knowhow - the emergence over the last 25 years of a technology-driven shale oil business.

US conventional (lower 48) oil production peaked in 1972, and was on a long downward trend from there. Then, out of nowhere even to many forecasters, it started rising again. The US is now almost a net oil exporter, a situatio it has not been in since the 1940s (as well as the world's largest producer of oil it is the world's largest consumer of oil).

So it's actually the mid sized Exploration and Production companies which are most geared to this. The oil majors have spent big money to try to get a foothold in this technology and the various shale regions.

The price of oil and where it goes to be refined and consumed is basically completely global. It matters only at the margin whether the oil is being produced in the Permian basin or offshore or in Nigeria.

The argument for investing in the MNOCs is that they have massive resources of existing production rights and technology and people and that they should be able to profit from the long, slow, unwinding of the oil industry.

For the history of all this, Daniel Yergin's books The Prize (history of world oil industry to 1990), the Quest (since then) and his latest are essential reading. The Prize is the first book anyone studying oil is sent to read.
Valuethinker
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Joined: Fri May 11, 2007 11:07 am

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by Valuethinker »

MrCheapo wrote: Thu Jun 03, 2021 7:46 pm Has the USA ever been a large net exporter of Oil? I know it has for Gas particularly to Asia but Oil?
When you say Gas to Asia, did you mean gasoline (what i call petrol)? Refined products like gasoline move around the world in specialised tankers. It all depends where the refineries are, and the customers.

The US was the world's largest crude oil producer, and exporter, in the 1940s. As demand grew (basically the number of cars the Baby Boomer parents were buying) and production fell it became a net oil importer in the 1950s, I think, and was so until just a couple of years ago, when due to fracking it again became a net oil exporter.

On natural gas the US has never been a significant exporter.

As conventional US gas production fell, it became clear around 2000 the US was facing a major shortfall. A number of Liquid Natural Gas (liquified down to -173 degrees C, moved in huge special ships with their own terminals at beginning and end of journey) import ports (to regasify the gas and put it into the pipes) were built.

Then fracking really kicked in, and a huge US gas surplus. Some of those LNG ports have now been converted to export to serve world markets. This is the first time the US has been a net natural gas exporter. The Asian market is supplied, but I don't know if there are any LNG export facilities on the West Coast? That means the ships have to go from the Gulf of Mexico through the Panama Canal, and that places a limit on their size. These are *huge* undertakings, these ships.

I believe the US now even exports to Mexico - formerly a major US supplier.

(the US has always exported gas to eastern Canada, AFAIK; imports from western Canada, but some gas is supplied to Quebec and Maritimes, AFAIK).
NoRegret
Posts: 304
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Location: California

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by NoRegret »

Valuethinker wrote: Fri Jun 04, 2021 11:45 am
MrCheapo wrote: Thu Jun 03, 2021 11:22 am Great insight about international markets. Then that raises the question, if your thesis is correct, shouldn't be investing in multi-nationals who can meet the international demand not domestic oil producers?
All the Multinational Oil Companies (MNOCs) have the same problem - the National Oil Companies. That is, in the early 20th century the 7 Sisters (predecessors of Exxon BP Shell Total ENI etc) could lock up cheap oil reserves in Third World countries.

Nowadays countries don't let that happen. If the MNOCs are brought in, they pay big royalties. State owned oil companies (NOCs) are the bulk of the world's largest producers. In places like Russia where the likes of Exxon and Shell spent big to get a foothold, Putin's regime has basically taken that back from them.

You have situations like Shell in Nigeria where they are still able to extract their economic rent (excess profits) from the situation - but that is rarer and rarer. Emerging market nations will bring you in for your technology and expertise, but they strike much tougher bargains than they did 70 years ago.

In the case of the US there are no new conventional oil reserves to exploit (well, Alaska, but that has lots of issues). What there is is good old Yankee knowhow - the emergence over the last 25 years of a technology-driven shale oil business.

US conventional (lower 48) oil production peaked in 1972, and was on a long downward trend from there. Then, out of nowhere even to many forecasters, it started rising again. The US is now almost a net oil exporter, a situatio it has not been in since the 1940s (as well as the world's largest producer of oil it is the world's largest consumer of oil).

So it's actually the mid sized Exploration and Production companies which are most geared to this. The oil majors have spent big money to try to get a foothold in this technology and the various shale regions.

The price of oil and where it goes to be refined and consumed is basically completely global. It matters only at the margin whether the oil is being produced in the Permian basin or offshore or in Nigeria.

The argument for investing in the MNOCs is that they have massive resources of existing production rights and technology and people and that they should be able to profit from the long, slow, unwinding of the oil industry.

For the history of all this, Daniel Yergin's books The Prize (history of world oil industry to 1990), the Quest (since then) and his latest are essential reading. The Prize is the first book anyone studying oil is sent to read.
Thanks for that bit of history and overview of the oil industry. I ramped up my investment there since late last year. Been focusing on oil services (OIH) and exploration & production (XOP) rather than integrated (XLE).

What are your opinions on the refiners? They obviously benefited from the reopening trade and used to from shale. I’m less certain going forward.
Market timer targeting long term cycles -- aiming for several key decisions per asset class per decade
justsomeguy2018
Posts: 1258
Joined: Wed Oct 03, 2018 8:11 pm

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by justsomeguy2018 »

MrCheapo wrote: Tue Jun 01, 2021 9:13 am So like a lot of people I picked up oil and natural gas stocks (for the purpose of this discussion lets treat them separately) at a great discount last year when oil was negatively priced and the HH pricing of NG was under $2.

Fastfoward a year and WTI is now approaching $70 and NG in the middle of summer is well above $3! Of course energy stocks have trading up immensely.

So what are people doing? What's your end game? Supercycle in energies or not?

My situation is that these are stocks "in addition" to my core investments for retirement so:

a) For MLP stocks I'm going to let them ride and collect the dividends.
b) For upstream oil producers I'm waiting until they get within 30% of 2015 peak pricing (top of the last super-cycle) and then selling. I see oil as playing an important but diminishing role in the US's future economy.
c) For pipeline and natural gas companies I'm holding for the long term as I see fewer pipelines been built and NG increasing in usage.
I have an extremely tiny, miniscule investment in XOM and XLE.

I should probably sell them at some point, but I have this rationale that by holding them I won't get as mad whenever gas prices go up, since I should get a slice of the profits made.
quantAndHold
Posts: 5659
Joined: Thu Sep 17, 2015 10:39 pm

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by quantAndHold »

I sold out all my oil and gas in 2014. I personally think investing in fossil fuels is like sitting on melting icebergs. It might not look like a whole lot is happening, and you might be able to keep afloat for awhile by hopping from iceberg to iceberg, but in the end, the icebergs will all melt. I’d rather invest in an industry that has a future. I may not always know what that is, but i know it ain’t this.
Yes, I’m really that pedantic.
Topic Author
MrCheapo
Posts: 165
Joined: Tue Dec 22, 2020 3:43 pm

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by MrCheapo »

quantAndHold wrote: Sat Jun 05, 2021 1:31 am I sold out all my oil and gas in 2014. I personally think investing in fossil fuels is like sitting on melting icebergs. It might not look like a whole lot is happening, and you might be able to keep afloat for awhile by hopping from iceberg to iceberg, but in the end, the icebergs will all melt. I’d rather invest in an industry that has a future. I may not always know what that is, but i know it ain’t this.
I agree that the industry is in long term decline, but those of us who bought last year doubled and even tripled our investments which are now earning 5-8% yields.

So the big question is, how long will this go on for? There seems to be two ways this can play out:

a) In a 6-12 month period production ramps up and prices comes down
b) This is a beginning of a super-cycle in energy and prices (and yields) will stay elevated for a few years.
gougou
Posts: 370
Joined: Thu Sep 28, 2017 7:42 pm

Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by gougou »

MrCheapo wrote: Sat Jun 05, 2021 10:17 am
quantAndHold wrote: Sat Jun 05, 2021 1:31 am I sold out all my oil and gas in 2014. I personally think investing in fossil fuels is like sitting on melting icebergs. It might not look like a whole lot is happening, and you might be able to keep afloat for awhile by hopping from iceberg to iceberg, but in the end, the icebergs will all melt. I’d rather invest in an industry that has a future. I may not always know what that is, but i know it ain’t this.
I agree that the industry is in long term decline, but those of us who bought last year doubled and even tripled our investments which are now earning 5-8% yields.

So the big question is, how long will this go on for? There seems to be two ways this can play out:

a) In a 6-12 month period production ramps up and prices comes down
b) This is a beginning of a super-cycle in energy and prices (and yields) will stay elevated for a few years.
It seems that most people somehow just agree oil is dead, and oil consumption will decline in the near future. However oil consumption has been going up every single year before covid and is likely to make record high in 2022 according to EIA. I’m not sure why all of a sudden so many people became so good at predicting the future that’s at least several years away. I’m happy to be a contrarian in this case.

Oil stocks are still trading at cheap valuations. Many companies trade at less than 10x cashflow, some even less than 5x. I’m pretty sure I’ll see my investments made whole before I see the decline of oil. When a supercycle eventually comes, the return will be enormous.
TheDDC
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by TheDDC »

quantAndHold wrote: Sat Jun 05, 2021 1:31 am I sold out all my oil and gas in 2014. I personally think investing in fossil fuels is like sitting on melting icebergs. It might not look like a whole lot is happening, and you might be able to keep afloat for awhile by hopping from iceberg to iceberg, but in the end, the icebergs will all melt. I’d rather invest in an industry that has a future. I may not always know what that is, but i know it ain’t this.
Why do you think this? We are sitting on huge untapped petroleum reserves, and natural gas has pretty sizable capacity left. Are you claiming no one knows when we'll run out or what?

-TheDDC
Rules to wealth building: 75-80% VTSAX piled high and deep, 20-25% VTIAX, 0% given away to banks, minimize amount given to medical-industrial complex
DTalos
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by DTalos »

Barsoom wrote: Thu Jun 03, 2021 2:16 pm
MrCheapo wrote: Thu Jun 03, 2021 12:49 pm But his/her point was that developing countries will need oil (not renewables) so that's a future for oil and gas stocks.

My point was that the US oil producers in the Permian etc basins are not catering to that market. Ergo invest in large multi-national focusing on oil production.
Barsoom wrote: Thu Jun 03, 2021 12:12 pm
MrCheapo wrote: Thu Jun 03, 2021 11:22 am Great insight about international markets. Then that raises the question, if your thesis is correct, shouldn't be investing in multi-nationals who can meet the international demand not domestic oil producers?
I'd keep an eye on what Shell and Total do. Those European companies are moving more swiftly into the renewable energy space than Exxon and other American oil companies. See what happens to their dividends, as the strength of holding Exxon is their "dividend aristocrat" status, meaning they've grown their dividends for over 25 years. Exxon pays out a healthy 5+% whether their stock is up or down, so it will become a question of whether the dividend becomes unsustainable in an extended down market. If you're planning to hold the stock, then the high cash earnings make up for a lower paper value in a down market.

-B
Exxon is a multi-national that produces in the Permian and elsewhere. And yes, smaller E&P companies without a downstream component are suffering.

Oil is a fungible product. Just because it is extracted from the Permian basin, it can be traded for a tanker in the Indian Ocean in the morning, and that tanker can be traded for oil in Australia in the afternoon.

Multinationals try to build refineries near their production sites, but they also trade products in one part of the world for equivalent products in another part of the world that are nearer to refineries in foreign countries. It's cheaper to trade for closer oil than to ship it from the field to the refinery.

My point still is that European majors are betting on declining combustion engine autos, while domestic majors are expecting combustion engines to be around for a lot longer. The chart I posted showing automobiles in emerging countries is where the action will move to as those countries continue to develop. I don't think they will jump immediately to EVs; Europe may get there fast but Africa and Southeast Asia will not.

-B

Europen oil majors have not performed as well as US oil majors over the last 6 months.

Even smaller companies like MRO and DVN have done better.
DTalos
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by DTalos »

Do pipeline companies like KMI and OKE perform as well stick price wise as US oil majors when oil and natural gas prices increase?
TheDDC
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by TheDDC »

DTalos wrote: Sun Jun 06, 2021 8:30 pm Do pipeline companies like KMI and OKE perform as well stick price wise as US oil majors when oil and natural gas prices increase?
Yes... Look at Williams (WMB), a natural gas pipeline construction company. I bought a few shares back in 2018 with less than $300 of play money. Their stock price dropped like a rock as gas and oil prices dropped. Now it appears it's nearing a break even. I was considering dumping it but now I may hold for a while if gas and oil prices keep rising.

-TheDDC
Rules to wealth building: 75-80% VTSAX piled high and deep, 20-25% VTIAX, 0% given away to banks, minimize amount given to medical-industrial complex
alfaspider
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by alfaspider »

gougou wrote: Thu Jun 03, 2021 9:37 pm
alfaspider wrote: Thu Jun 03, 2021 12:37 pm
olyveoil wrote: Thu Jun 03, 2021 12:10 pm
alfaspider wrote: Wed Jun 02, 2021 3:38 pm
MrCheapo wrote: Wed Jun 02, 2021 3:30 pm

I'm not sure about how ubiquitous they will be, there are a lot of gas stations. Also a lot of the nice things about EVs like free charging, HOV access, priority parking can't scale can they?

To be sure, I'm glad they are trying out alternative to fossil fuels, it just seems the nice aspects of EV won't scale if even 10% of people have them.
There's already electricity run to every business in the country, so it won't be hard to make chargers ubiquitous. You are correct that there won't be as many stations as there are gas stations for the simple reason that most people will be charging at home. Public chargers will be mostly for road trips.

You are correct that things like HOV access and priority parking won't scale, but these are minor fringe benefits relative to the other advantages of EV ownership that will grow with time (lower cost, lower noise, better performance). I analogize EVs to digital watches compared to gas powered vehicles as mechanical watches. When digital watches first came out, they were expensive novelties. Now, a mechanical watch is a luxury item mostly owned by collectors. Most fundamental components of EVs are cheaper and easier to manufacture than internal combustion cars. What keeps them expensive is less economy of scale and high battery pack prices. Those obstacles are starting to fall away.
Both these things cannot be true.

However, what keeps them inexpensive is tax credits.
Not at all.

The actual factory assembly process of an E.V. is much more simple. There are far fewer components, and fewer moving parts to design. Electric motors are cheaper to manufacture than gasoline motors. Economies of scale aren't quite where they are for gas cars yet, but they are approaching it.

At the present time, lithium battery packs are expensive, but have been a very steady downward curve over the past decade:

Image

That curve is what is allowing mass manufacturers like Ford to offer vehicles like the F150 at a reasonable price. Yes, tax credits move the value curve forward for consumers, but we are beginning to approach price parity even without credits. $100/kwh is where many analysis believe the crossover point for price parity on mass market electric cars are.

To be clear, I'm not here to be an apologist for electric cars, but I think it would be unwise not to consider their impending dominance when considering the oil industry. Most major automakers are scaling up EV plans quickly. The announcements to phase out gas are not window dressing- this is serious CapX devoted to the EV switch.
$100/KWH is where EVs have price parity with ICE cars in developed countries. In many developing countries such as China a new ICE car can cost less than $5K in tier 3 cities, and you just can't make a EV that cheap with similar ranges. Those are also the places with low car ownership, which will drive growth for ICE cars.

Also $100/KWH battery is probably still several years away. So we are probably 10 to 20 years away from EVs dominating new car sales in developed countries. And to be honest, I don't even know whether EV will dominate new car sales in any country, and I definitely would not invest in any companies that depend on the projection of EV dominance.

Meanwhile, chronic underinvestment in oil fields means that we'll deplete oil reserves due to natural declines, greatly reducing oil supply. The next up cycle for oil is probably going to happen within a decade.
You can also make really cheap EVs for the developing world if you throw away crash safety standards and don't care about high performance. He's an article about a $1,000 electric car sold in the Chinese market:

https://jalopnik.com/heres-what-the-wor ... 1843904305

It's obviously extremely limited, but sufficient for many of the tasks that are handled by "tuk tuks" in developing parts of Asia. The vast majority of drivers- especially those in the developing world- do not need long range. Traffic in the developing world moves VERY slow by developed standards- almost nobody is commuting more than 50 miles round trip, and road trips are far less common.

$100k/Kwh has actually been reached for large orders in China. We are almost certainly within 2-5 years of that milestone on a widespread basis.

Again, I work in the oil industry and agree that there's been chronic underinvestment that will lead to high prices in the short and medium term. Nor would I invest in EV companies. Just because EVs will take over doesn't necessarily mean there's a ton of profit to be had. Most companies formed in the early days of the automobile merged or went bust. But I also would look to the oil industry for great profits over a 20 year period. We still use a lot of coal, but the coal industry has hardly been a great one to be in over the last decade as usage as declined.
gougou
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by gougou »

alfaspider wrote: Mon Jun 07, 2021 8:51 am
gougou wrote: Thu Jun 03, 2021 9:37 pm
alfaspider wrote: Thu Jun 03, 2021 12:37 pm
olyveoil wrote: Thu Jun 03, 2021 12:10 pm
alfaspider wrote: Wed Jun 02, 2021 3:38 pm

There's already electricity run to every business in the country, so it won't be hard to make chargers ubiquitous. You are correct that there won't be as many stations as there are gas stations for the simple reason that most people will be charging at home. Public chargers will be mostly for road trips.

You are correct that things like HOV access and priority parking won't scale, but these are minor fringe benefits relative to the other advantages of EV ownership that will grow with time (lower cost, lower noise, better performance). I analogize EVs to digital watches compared to gas powered vehicles as mechanical watches. When digital watches first came out, they were expensive novelties. Now, a mechanical watch is a luxury item mostly owned by collectors. Most fundamental components of EVs are cheaper and easier to manufacture than internal combustion cars. What keeps them expensive is less economy of scale and high battery pack prices. Those obstacles are starting to fall away.
Both these things cannot be true.

However, what keeps them inexpensive is tax credits.
Not at all.

The actual factory assembly process of an E.V. is much more simple. There are far fewer components, and fewer moving parts to design. Electric motors are cheaper to manufacture than gasoline motors. Economies of scale aren't quite where they are for gas cars yet, but they are approaching it.

At the present time, lithium battery packs are expensive, but have been a very steady downward curve over the past decade:

Image

That curve is what is allowing mass manufacturers like Ford to offer vehicles like the F150 at a reasonable price. Yes, tax credits move the value curve forward for consumers, but we are beginning to approach price parity even without credits. $100/kwh is where many analysis believe the crossover point for price parity on mass market electric cars are.

To be clear, I'm not here to be an apologist for electric cars, but I think it would be unwise not to consider their impending dominance when considering the oil industry. Most major automakers are scaling up EV plans quickly. The announcements to phase out gas are not window dressing- this is serious CapX devoted to the EV switch.
$100/KWH is where EVs have price parity with ICE cars in developed countries. In many developing countries such as China a new ICE car can cost less than $5K in tier 3 cities, and you just can't make a EV that cheap with similar ranges. Those are also the places with low car ownership, which will drive growth for ICE cars.

Also $100/KWH battery is probably still several years away. So we are probably 10 to 20 years away from EVs dominating new car sales in developed countries. And to be honest, I don't even know whether EV will dominate new car sales in any country, and I definitely would not invest in any companies that depend on the projection of EV dominance.

Meanwhile, chronic underinvestment in oil fields means that we'll deplete oil reserves due to natural declines, greatly reducing oil supply. The next up cycle for oil is probably going to happen within a decade.
You can also make really cheap EVs for the developing world if you throw away crash safety standards and don't care about high performance. He's an article about a $1,000 electric car sold in the Chinese market:

https://jalopnik.com/heres-what-the-wor ... 1843904305

It's obviously extremely limited, but sufficient for many of the tasks that are handled by "tuk tuks" in developing parts of Asia. The vast majority of drivers- especially those in the developing world- do not need long range. Traffic in the developing world moves VERY slow by developed standards- almost nobody is commuting more than 50 miles round trip, and road trips are far less common.

$100k/Kwh has actually been reached for large orders in China. We are almost certainly within 2-5 years of that milestone on a widespread basis.

Again, I work in the oil industry and agree that there's been chronic underinvestment that will lead to high prices in the short and medium term. Nor would I invest in EV companies. Just because EVs will take over doesn't necessarily mean there's a ton of profit to be had. Most companies formed in the early days of the automobile merged or went bust. But I also would look to the oil industry for great profits over a 20 year period. We still use a lot of coal, but the coal industry has hardly been a great one to be in over the last decade as usage as declined.
Here's an example of what I am referring to as a cheap ICE car (selling for 32.8k yuan which is about $5k USD):

https://www.autohome.com.cn/3676/#level ... aid=101594

I don't think tiny cars with less than 100 miles of range can have a substantial market anywhere. These tiny EVs are not "rigid demand" for most people so these won't be the first car and/or the only car a family has. In Chinese small towns, families usually just have one or two long range cars for trips plus a few electric scooters to get around locally. The electric scooters already have a high adoption rates. If EVs don't get to 300 to 400 miles of range plus a low price tag in the $5k to $10k they just won't have a significant market share. And you could estimate that the battery probably needs to be at least 75KWh which costs $10k today, plus all the other parts and a profit margin will make the car cost $15k to $20k at the minimum.

And I don't think you need to bash the car safety standard in developing countries. I think we are just overpaying for compliance, taxes, local production etc, and we outsourced the dirty work of mining and battery production so it appears EVs are getting close to price parity in the developed countries.

Finally, I think the death of oil has been greatly exaggerated, and this may be a generational opportunity to invest in oil & gas companies that are still trading at low valuations.
alfaspider
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by alfaspider »

gougou wrote: Mon Jun 07, 2021 2:56 pm
alfaspider wrote: Mon Jun 07, 2021 8:51 am
gougou wrote: Thu Jun 03, 2021 9:37 pm
alfaspider wrote: Thu Jun 03, 2021 12:37 pm
olyveoil wrote: Thu Jun 03, 2021 12:10 pm
Both these things cannot be true.

However, what keeps them inexpensive is tax credits.
Not at all.

The actual factory assembly process of an E.V. is much more simple. There are far fewer components, and fewer moving parts to design. Electric motors are cheaper to manufacture than gasoline motors. Economies of scale aren't quite where they are for gas cars yet, but they are approaching it.

At the present time, lithium battery packs are expensive, but have been a very steady downward curve over the past decade:

Image

That curve is what is allowing mass manufacturers like Ford to offer vehicles like the F150 at a reasonable price. Yes, tax credits move the value curve forward for consumers, but we are beginning to approach price parity even without credits. $100/kwh is where many analysis believe the crossover point for price parity on mass market electric cars are.

To be clear, I'm not here to be an apologist for electric cars, but I think it would be unwise not to consider their impending dominance when considering the oil industry. Most major automakers are scaling up EV plans quickly. The announcements to phase out gas are not window dressing- this is serious CapX devoted to the EV switch.
$100/KWH is where EVs have price parity with ICE cars in developed countries. In many developing countries such as China a new ICE car can cost less than $5K in tier 3 cities, and you just can't make a EV that cheap with similar ranges. Those are also the places with low car ownership, which will drive growth for ICE cars.

Also $100/KWH battery is probably still several years away. So we are probably 10 to 20 years away from EVs dominating new car sales in developed countries. And to be honest, I don't even know whether EV will dominate new car sales in any country, and I definitely would not invest in any companies that depend on the projection of EV dominance.

Meanwhile, chronic underinvestment in oil fields means that we'll deplete oil reserves due to natural declines, greatly reducing oil supply. The next up cycle for oil is probably going to happen within a decade.
You can also make really cheap EVs for the developing world if you throw away crash safety standards and don't care about high performance. He's an article about a $1,000 electric car sold in the Chinese market:

https://jalopnik.com/heres-what-the-wor ... 1843904305

It's obviously extremely limited, but sufficient for many of the tasks that are handled by "tuk tuks" in developing parts of Asia. The vast majority of drivers- especially those in the developing world- do not need long range. Traffic in the developing world moves VERY slow by developed standards- almost nobody is commuting more than 50 miles round trip, and road trips are far less common.

$100k/Kwh has actually been reached for large orders in China. We are almost certainly within 2-5 years of that milestone on a widespread basis.

Again, I work in the oil industry and agree that there's been chronic underinvestment that will lead to high prices in the short and medium term. Nor would I invest in EV companies. Just because EVs will take over doesn't necessarily mean there's a ton of profit to be had. Most companies formed in the early days of the automobile merged or went bust. But I also would look to the oil industry for great profits over a 20 year period. We still use a lot of coal, but the coal industry has hardly been a great one to be in over the last decade as usage as declined.
Here's an example of what I am referring to as a cheap ICE car (selling for 32.8k yuan which is about $5k USD):

https://www.autohome.com.cn/3676/#level ... aid=101594

I don't think tiny cars with less than 100 miles of range can have a substantial market anywhere. These tiny EVs are not "rigid demand" for most people so these won't be the first car and/or the only car a family has. In Chinese small towns, families usually just have one or two long range cars for trips plus a few electric scooters to get around locally. The electric scooters already have a high adoption rates. If EVs don't get to 300 to 400 miles of range plus a low price tag in the $5k to $10k they just won't have a significant market share. And you could estimate that the battery probably needs to be at least 75KWh which costs $10k today, plus all the other parts and a profit margin will make the car cost $15k to $20k at the minimum.

And I don't think you need to bash the car safety standard in developing countries. I think we are just overpaying for compliance, taxes, local production etc, and we outsourced the dirty work of mining and battery production so it appears EVs are getting close to price parity in the developed countries.

Finally, I think the death of oil has been greatly exaggerated, and this may be a generational opportunity to invest in oil & gas companies that are still trading at low valuations.
The disparate safety standards between the developing and developed world are clearly more than just regulatory red tape. Just look at a crash test comparison of the Nissan Tsuru (Mexican market) vs the Nissan Versa (U.S. Market):

https://www.youtube.com/watch?v=85OysZ_ ... annel=IIHS

I'm not saying that just to bash them, but it's the reality that the market they serve demands low cost, and the local governments do not require highs minimum standards out of fear that U.S./European standards would result in their citizens simply being priced out of the market.

I think China doesn't really qualify as "developing world" these days. There's a vast difference between your example of someone in a small town in China whose family already owns multiple(!) vehicles and someone in India whose transport is currently limited to their feet. Indeed, EV scooters are probably the first wave, but EV cars have plenty of uses. The claim that people aren't interested in EVs until they can go 300 miles may be true for China, but in the markets I'm thinking of, most people have not traveled that far in their entire lifetime.

The biggest obstacle to mass electrification is going to be poor electric infrastructure. An EV is not an attractive proposition in a place that faces regular blackouts.
DTalos
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by DTalos »

jello_nailer wrote: Wed Jun 02, 2021 8:25 pm
DTalos wrote: Wed Jun 02, 2021 7:04 pm
gch wrote: Tue Jun 01, 2021 9:16 pm I think the best long term play (as you mentioned) is NG pipelines. As renewables start making up more of the electric supply, NG will become even more volatile. Companies with those NG assets will be able to capitalize on that volatility. Case in point go look at Kinder Morgan and Energy Transfers Q1 profits from Winter Storm Uri.
OKE and KMI are both into pipelines, but interestingly, OKE's share price has risen 32.5% in the last 52 week vs KMI, which has risen 14.61% in the last 52 weeks. Why the discrepancy?
IIRC Mr Kinder cut the dividend dramatically about a year ago and KMI was crushed. I think I remember he did that not long after saying he would never cut the dividend. Once I round tripped it I got out.

If I'm wrong feel free to correct my memory.

OKE up big today on high volume, while KMI lagged. Interesting dichotomy.
gougou
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by gougou »

DTalos wrote: Sun Jun 06, 2021 8:30 pm Do pipeline companies like KMI and OKE perform as well stick price wise as US oil majors when oil and natural gas prices increase?
They outperform, but they won’t be as well as oil producers. When the stuff you move is worth more money you expect to make more money, and you expect to move more of it and have better growth opportunities.
DTalos
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by DTalos »

Of the U.S. and European oil majors, which one in your opinion is the most diversified (upstream, midstream and downstream) and multinational?
DTalos
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Re: What Are People Doing with their Oil and Natural Gas Stocks

Post by DTalos »

What caused the price of WTI crude oil today to suddenly plunge by around $1.38 a barrel shortly after noon EDT and then rapidly recover?
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