Originally Posted by
JustNarced
High oil prices are already causing inventory builds, demand is being crushed. Diesel is actually down where I live.
Possibilities on energy:
1. Putin dies, Zelenski gets thrown under the bus. Russia gets Crimea Donbass and Luhansk. The war ends, Russia and NATO agree on some boundaries, Russia is forced to pay restitution and Russian oil is allowed back into western markets leading to another glut like 2020. Oil crashes back to <60 in time for a global recession. Russia (the new leader) pulls support for an invasion of Taiwan, China ends up with potentially a two-front war and realizes TSMC isn't worth it. BTC dies.
2. WW3, rationing and nationalization of oil exploration and production.
3. Dollar loses relevancy and oil continues to inflate higher.
4. Nothing changes through 2024 and oil companies need to replace oil borrowed from the SPR plus 15%. This more than offsets the reduction in usage from a recession and oil continues to explode higher. Most Americans are priced into smaller vehicles and mass transportation, 3/4 ton diesel trucks show up on used car lots.
Oil is not crashing below $60 unless there is another COVID19/Black Swan event. Same for Natural Gas and Coal. Even if there was no Russia/Ukraine war, Energy supplies will be significantly constrained for at least the next 2-3 years because of the years of underinvestment in the sector due to overemphasis on Green/Renewable Energy. Moreover, it will at least 2 years for growth capital expenses paid today to make a sizable increase in supply to drop Oil and Natural Gas prices. Nobody is doing growth capital expenses in Coal so that creates even more of an energy crunch. Going to be an interesting next couple of years