Well, supposedly, it’s been a very, very, VERY bad week for oil – according to all of the talking heads who like to look at the energy markets from the outside in, without any real understanding of what’s actually happening.
Exxon lost a third board seat to the committed Greenies from Engine 1, and one of the new folks looks particularly serious, having spent most of her career working in bio-fuels from a company located in……….in FINLAND.
OH YEAH – this is going to work out GREAT – she’s gonna fit RIGHT IN in Texas. (Woo-hoo!)
Shell are now court-mandated to change their emission targets for 2030 – and take them down from their already proposed 20% less to a whopping 45% less.
From my viewpoint, there are a few problems with that.
First, CAN a court tell a private company what their environmental commitments should be? If there are regulations on the books, well, that’s law and needs to be followed. But I was taught that courts don’t make laws, they enforce them.
And anyway, how do you enforce such a mandate? You’d have to wait until 2030 to prove that Shell didn’t follow the court’s order, right? I mean, can you sue them in 2025, or 2029, or even two months before January 1, 2030? They could still make it to the mandated finish line with hours to spare, couldn’t they?
And then, even if Shell doesn’t (won’t) make these court-imposed emission targets in 2030, how are you going to determine damages? Are you going to measure the increases in Dutch emphysema and try to allocate Shell’s responsibility in that? Measure climate temperature rises? That sounds like a helluva difficult (and long and expensive and useless) lawsuit.
Bottom line, I am greatly unconvinced of the impact these environmental actions against big oil are going to have on the plans already in place for big oil. Despite the multiple fever dreams I’m reading in the press.
And here’s the real point, which I think I’ve mentioned before:
Why would big oil change their plans? They’ve just endured 7 years of the worst fossil fuel markets in their long history; forced bankruptcies, restructurings, extended debt commitments – and LOSSES.
NOW, they’re about to walk into the biggest oil and gas supply SHORTAGE this world has seen since around 2003 –
You think they’re about to start building solar farms NOW? Nah, they need to make back some of the MONEY they’ve lost in the past 7 years – selling OIL and GAS, not bio-fuels.
And they will – by ignoring all of these environmentalist distractions.
Now, on to the trades:
This last week, we’ve seen oil go higher in each of the last 10 sessions. Not each was an up day, but even the down days had a positive bias. Too much, too fast, my trader’s spidey sense tells me.
In the real world, where oil traders play, there are still nothing but great signs and excitement about the rest of 2021.
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dan@dandicker.com