Macro Dashes: There Is No Oil Shortage

May 19, 2022 10:44 AM ETBP, BPAQF, CRAK, CVX, F, F.PB, GM, MPC, VLO, XLE, XOM368 Comments

Summary

  • There is no physical oil shortage, only supply disruptions and market manipulation by OPEC+.
  • Oil will see "panic pumping" coming to multiple nations soon, for fear of stranded assets, driving oil back to $60-80/b in the next year or two.
  • Refining is a different story as there were permanent closures during Covid lockdowns that will never come back.
  • The fossil fuel investment plays are in refining, biofuels, carbon capture and natural gas pipelines - not primarily oil producers.
  • Remember, anything good for fossil fuels, is better for clean energy.
  • This idea was discussed in more depth with members of my private investing community, Margin of Safety Investing. Learn More »

Oil pump with solar panels and the sunset

pandemin/iStock via Getty Images

There is an idea out there, perpetuated by the breathy, tweety, trader community, that there is a shortage of oil. Nothing could be further from the truth.

Traders like to point at a reduction of

50+ Years Of Oil Reserves

50+ Years Of Proved Oil Reserves (BP)

50+ Year Of Oil Reserves

Global Proved Oil Reserves (BP)

Oil & Gas Discoveries

Oil & Gas Discoveries (Rystad)

Oil Bankruptcies

Oil Bankruptcies Since OPEC Flooded Market With Oil (Haynes & Boone)

OPEC Supply Cuts

OPEC Supply Cuts (Dallas Fed)

Oil Supply & Demand

Oil Supply and Demand (Dallas Fed)

Refining Capacity

U.S. Refinery Capacity (EIA)

CRAK vs XLE

CRAK vs XLE (Kirk Spano)

CRAK vs XLE 1 year

CRAK vs XLE (Kirk Spano)

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This article was written by

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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I own a Registered Investment Advisor - Bluemound Asset Management - however, publish separately from that entity for self-directed investors. Any information, opinions, research or thoughts presented are not specific advice as I do not have full knowledge of your circumstances. All investors ought to take special care to consider risk, as all investments carry the potential for loss. Consulting an investment advisor might be in your best interest before proceeding on any trade or investment.

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