Nothing about the current situation lends me to think that demand will be higher this year than what the company had already forecast. Prices will go up, consumers will have less disposable income....meanwhile the company's 2nd highest cost (fuel) will shoot up. I mean I'm sure they'll try to pass higher costs along to the customer...I'm not saying it's game over, but I don't need a Robin Blue Note to tell me that landscape isn't what it was 3 weeks ago. I wouldn't want to be on the bottom of a certain airline partner's Seniority list at the moment.

 

Except that oil should be deflationary and its cost should decrease over time as we have better technology to extract more and more of it. The fact that it is increasing is a very bad sign.

 

No, not really. The easy and plentiful sources are becoming more scarce. It takes high tech ways of getting oil from more difficult places, just to meet demand. Some of those high tech, higher cost means of production were temporarily shut down when the price of oil crashed. They will now become economically viable again and will come back online in time. Won't happen tomorrow, or Thursday, but in the coming months/year they will be producing more oil again.

But, this is an unusual time as we have an open war going on in Europe. To expect no energy price disruption, or to be a bed wetter because you didn't expect an energy price disruption is ridiculous. Especially as the price of oil is no where near it's inflation adjusted all time high, not even close. The last time oil was LESS than it costs now, most other goods we bought cost half what it does now... So everything else has doubled in price since 2008, but oil hasn't even matched it's 2008 price.

And it's not a "sign", there is a major war going on and the state engaging in that war is a major oil producer. It's not a sign, it's a symptom of current events.

Change your diaper and your bed sheets.

 

You make some great points. Let them stand on their own. No need to be condescending.

 

I'm starting to read Peter Zeihan's "Absent Superpower," which opens with some fantastic information about shale. The general feel I get is that as long as we have a President who's beholden to the environmental religious orthodoxy of the left, we're in for a tough ride. So are the Ukrainians, but that's another topic. The short version is we have the ability to be largely energy independent in North America if that was politically palatable to the latte liberal crowd. But it's not, so here we are. Draw your own conclusions.

 

indeed. Coal can fill some of the void in the short term, if allowed. (Awaiting the stone throwing.)

 

The US was on track to produce a record amount of oil even before Ukraine crisis:

https://www.bloomberg.com/news/artic...uction-in-2023

The United States is the largest oil producer in the world:
https://www.bbc.com/news/58888451

There are literally hundreds of unused approved government drilling permits out there the oil companies haven’t used yet. I have two family members who work in this industry. This isn’t the left/Biden’s fault. The US oil companies let go tens thousands of employees under Trump because of the covid crisis fuel slump. They are still recovering from that, and the shale/fracking industry was already downtrodden before covid. It takes time to put all those contractors and resources back into action. It’s a multi-year process.

The US consumes roughly 18 million barrels a day and is capable of producing just over 16 million barrels a day. We could essentially be self reliant now! But the big oil companies are simply trying to use this crisis for their long term gain. We let them sell our oil away to other nations

 

And five months after oil hit $145 in 2008 it was at $31...............history.

 

Panic now, learn later. Although, probably will panic but not learn.

 

Oil spikes are short lived, unless OPEC decides to not increase quotas. Shifts in production and changes in logistics (this time Russia) don’t happen over night. It’s a global market (but not a free market) influenced by a cartel and the politics of the day. Price panics (usually) incentivize production where it’s easy. Prolonged price hikes incentivize new exploration and technology. The Saudis tried their darndest to kill the shale industry by increasing supply and suppressing prices.