Oil industry faces its "last hurrah"

Here I present a summary of one article "Oil industry faces its "last hurrah"", of Financial Times.

When Joe Biden spoke during last year's presidential election about leading the United States in an "oil transition", he did not expect to ask for more supplies from the world's oil producers just 12 months later. But the US president's administration has made repeated efforts to lower oil prices in recent weeks. First it was a trip to Riyadh for Jake Sullivan, Biden's national security adviser, where he asked Saudi Arabia to increase production. The White House even contacted US producers to ask how quickly they could increase production, an uncomfortable move for an administration that many oil executives consider hostile to their industry. On the eve of the COP26 climate summit, which began Sunday, Biden hinted at unspecified retaliation against Russia and Saudi Arabia if they did not increase oil production soon. The open threat did not persuade the oil exporting group OPEC + to adjust its production quotas in a meeting held yesterday. Oil prices, which are already over $80 a barrel, are at their highest level in seven years. While high natural gas prices in Europe and Asia have caused alarm, the rebound in oil is Mobil's main excuse. It marks a big change, all thanks to the recovery in oil prices triggered by supply cuts made by OPEC + members last year. In April 2020, the price of US oil fell below zero for the first time. With a peak of 13 million b / d in November 2019, almost 15 percent of world production, US production is expected to.

PUMP POLITICS

One year away from the midterm elections, the danger of higher oil price inflation for Biden is clear. A gallon of petrol in the United States now costs an average of $3.40 according to the AAA automotive group, half the price a consumer could pay in the United Kingdom, but 60% more than during the last months of Donald's presidency. Triumph. Decals of a Biden stating, stating, "I did that," are available on Amazon.com and, in recent weeks, have started to appear next to the price indicator on the concourse pumps. Biden's Republican opponents have taken advantage of rising petrol prices to argue that his energy policies are penalizing Americans. Sceptical capital markets, environmentally conscious shareholders, government regulation and a fundamental doubt about the long-term future of oil in a low-carbon world are holding back investment, oil market analysts say. "A spike in supply will likely occur before a spike in demand."

THE PANDEMIC'S SILVER LINING FADES

Stimulus spending and months of cheap oil sparked a revival in consumption at a rate almost as impressive as the drop during the pandemic. Between the second quarter of 2020 and 2021, world oil consumption increased by an unprecedented 12 million barrels per day, according to the IEA. BP now estimates that global consumption has already returned to 100 million barrels per day, compared to 2019 levels. In normal times, oil prices at more than $80 a barrel, about $30 above the long-term average price in real terms, would have already caused considerable erosion in demand. No one is reacting to higher oil prices as they could have done before the pandemic, he adds. Demand for Oil in the US Record natural gas prices in Asia, for example, have led some industrial consumers to buy oil for power generation.

SHALE COULD COME UP SHORT

The biggest market distortion is in supply, and nowhere is it more visible than in the US Oil company coffers are full of cash again. Last week, less than 24 hours after Darren Woods, Exxon-growth, they will punish them; Attitude could change in 2022 if oil prices remain high.

PRESSURE TO "NOT INVEST"

The rest of the world may not have a lot of new oil to produce either, from a peak of almost S1tn in capita upstream. Even during previous periods of rapid growth in oil demand, large capital projects like those in the Canadian oil sands have proven to be poor investments and have dragged down Big Oil's profits, he says. Wasting money on big developments now, when investors worry about assets stranded by the energy transition, is even less rational.