High Oil and Gas Prices Are Here For A While – get used to it…
Today we’re talking about oil. I know it’s not that exciting, but you know what, it affects everything else we need to talk about it. Because we heard a certain politician who happens to run the country, sort of make a comment about how there’s 9000 permits and the oil people should be drilling.
We’re going to talk about why they’re not, why they may not and when they may or may not in the future. I can’t wait to get into this little subject. Because you know what, you can listen to the press, and you can listen to the politicians. But if you use your own common sense, you’ll get a complete understanding of what’s going on in the oil market. So, you know, oil is now topped $120 a barrel, if you use Brent North Sea crude as your gauge or its top $212 a barrel. If you use you know, the Texas Intermediate crude, West Texas, Texas crude, the stuff we make here in the United States, and the price is not letting up, right? And what everybody’s trying to do is get you distracted, and they’re telling you what it is. And what it is, I’m going to give you the facts here. So, you can make your own decision. And I don’t care what side of the political spectrum you’re on, I let you make your decision. I’m not going to try to skew it. But I will, let’s say, use common sense.
First of all, let’s start with an economics discussion. Right? When there’s a scarcity of something, the price of it will go up. If there’s demand for it. Well, we need oil, right? We drive every day, most of us don’t have that $50,000, $60,000, $70,000 up to 100,000 to buy a Tesla, or a Porsche for $200,000 electric car. Most of us have, you know, gas powered cars that’s been created over the last 100 plus years, right? It’s not like it’s a big surprise that we use oil here, right? But the politicians want you to think that it’s a bad thing. And all of a sudden, it’s killing the environment, which, in my opinion, not a lot of proof that it’s the oil that’s killing the environment. But you know, we can say that the Earth is getting warmer, and it’s because of co2 emissions, we can have that debate. And that debate happens to be winning in the political climate that we have today. But that’s not serving you. So, if you’re on that side of the debate, then you’re one of the people that’s like, “let’s get let’s get more electricity.” Well, when you get more electricity, going to electric cars, that money that’s got to be produced somewhere, right? So, without debating that, let’s talk about oil, right? Because we’re not all going to start driving electric cars tomorrow, you can’t just turn it around. Tesla doesn’t have enough of them. None of the other companies are making enough of them. And so, we’re faced with the reality that we are an oil-based world, not just country, it’s not the United States, that’s going to change the climate, it’s the whole world, right? And the whole world has to communicate and cooperate on this, and they’re not. And that’s okay. So, we have the reality we have to face. We can’t just wish and hope. I hope you don’t look out of your garden, go, I hope there’s no weeds, I hope there’s no weeds, I wish there weren’t any weeds, you have to acknowledge that there’s weeds in the garden, and then you got to pull them. So, let’s pull some of those weeds today.
Let’s start with the fact that the world is industrializing, more and more. So, we don’t hear much about it in the West. But African nations are industrializing, like at exponential rates. All these little countries in Africa that we kind of left for dead. And, remember we saw commercials about people starving over there. These are economies that are now flourishing, right? So, let’s go with that one. Let’s go with some of these other economies in Asia that are now flourishing because China has gotten to be pretty expensive as a producer that’s going to Vietnam and Cambodia and Laos and other Asian nations that are now taking part in the industrialization of their own countries to supply the west with goods just like China did. So now there’s more competition. What that means is; anytime there’s productive productivity and production and an economy that advances the economy. I mean, if you think about an economy of 1000 years ago, it’s not like they were driving around in cars or anything like that. Only the rich people even had horses if there were horses, right? And it wasn’t like everybody was cruising around using energy. I mean, they had candles if you were rich. So now we’ve got all this abundance of energy. Why? Because of petroleum, right? And we have solar energy, and we have wind energy, and we have nuclear energy, and we have all these other energies, coal energy, and that’s supplied the industrialization of our country of Europe, of Asia and all these other big western and eastern countries that have gone so far.
But now the other rest of the world is catching up. You think they’re going to all move over to electric cars and pay twice the price of an electric car when they can use a combustion engine? No. So, it’s the industrialization of the world that’s going to keep oil prices up. If you think oil prices are going back down in the next couple years, I’m pretty sure you got another thing coming. Right? Because they’re not, because that’s one factor. That’s let’s start with that.
Number two, in this country, and in a lot of Western countries, there’s a lot of bad juju around oil, right? If your oil, you’re bad, and you’re killing the environment, and you’re creating global warming, and we’re going to regulate you, we’re going to pass this $97 billion, a trillion-dollar Green New Deal, and we’re going to, regulate you out of business. And when new regimes come in, they put in regulations to prevent you from drilling and doing all these other things. And then they come out and say, “Yeah, but we got 9000 permits that people are not using to drill. Why aren’t these little companies using the drill?” What would you do if you had regulations staring you in the face if you had the rest of the world, and Greta Thunberg, and you had climate deals being made around the world that some countries don’t have to abide by, but we have all of a sudden do? Like, would you go out and invest millions and billions of dollars in exploring and producing more oil in a country that doesn’t want you to? I don’t think I would. I wouldn’t want to do anything in a country that doesn’t want me to, right? If they’re going to vilify me and make me the bad guy, I’m not going to do any favors for them. And now the government is saying we need to produce more oil, I don’t understand why. Well, they’re not using the 9000 oil wells that they have? First of all, it takes a couple of years to even know if there’s oil there, and to even get the oil produced in those things. And so, oil has been depressed, and not depressed, while the price compared to these prices. But it’s been a lot cheaper over the last couple of years. So, there hasn’t been a lot of incentive. And then as the new regimes come in, they’re like, “well, we’re not going to go up, produce more oil now. Because now they don’t want us to, because they’re telling us they’re going to regulate us out of business, they’re going to make us make our cars be much more efficient, which means we’re going to sell oil.” Why would it want to produce and spend money, when we don’t even know how much longer we’re going to be able to produce? There’s too much uncertainty, you can’t have it both ways. Either you’re going to vilify them, and you’re going to be upset that your oil is going to be expensive, or you’re going to say, “You know what, we need oil, let’s encourage them to get oil and let’s mean time, you know, make it so that people buy electric cars or whatever”, right? And they they’ve been doing there’s a $7,500 tax incentive to buy make you buy an electric car. That’s what made Tesla what it is today, if you bought an electric car, you got $7500 bucks. Like right off the bat, that’s our money that we paid Tesla owners to buy those cars, Elon Musk is no dummy. He did that on purpose, right? That’s how the company became a trillion-dollar company. It’s not brain surgery.
And then it takes, on top of it, a long time to get to get those things producing. And then after you produce them, they might say, “You know what, we don’t want your oil anymore anyway.” And let’s not forget this oil has gone from, let’s say, $46 a barrel a couple of years ago, to $112 a barrel, more than doubled. If you’re still producing the same amount of oil, you produced before you just doubled your money, you doubled your sales. Why would you go out there and incur all these costs, when you could just double your sales, then you know what we do? We let them buy their stock back. So that drives the stock up. All the people that work there are getting stock options. So, they’re all getting rich, right? Because they’re taking the money from the extra money they make from the oil, they’re driving their stocks up, which is completely legal. You may not like it, but it’s legal. And there’s really nothing wrong with it. But instead of investing back in the earth, I wouldn’t invest back there. I drive my stock up so that I get rich, right? They have shareholders; the shareholders aren’t all bad people. You might own some Exxon and some Valero and some BP. I mean, I don’t know what you own. But if you own some of those, you’re probably happy that they’re making more money, right? So, you can’t blame them for trying to make more money and using whatever system they’re going to use. Like you put all these pieces together. I don’t think you want to be in the oil business. And if you are, you’re fine making twice as much money as you were making last year before. And then they’re going to blame Ukraine.
Let me just read you here how much we get Russian crude oil, and petroleum product exports to the United States represent 8% of all its imported oil, and less than 2% of the US supply. So, if you want to go over there go well, we have a Russian war with Ukraine. Yes, it does enter into it because the demand for oil goes up in the rest of the world. Europe really gets a ton of its oil from Russia. And so that conflict is creating an increase in price over there. I’m not doubting that. I’m just saying we can’t say that because there’s a Russian thing going on that’s why it’s gone up.
Then we’ve got OPEC, like OPEC is the Saudi Arabia and Yemen and, and Kuwait and UAE and all these people that produce oil they get together, and they go, “why would we want to make more oil when the whole world needs us to produce oil”, and they’re willing to pay twice as much because they got to, they have to pay, right? They don’t want to produce it over in their country, they think, “Oh, the oil in their country only has a cloud above its country.” Like if you make oil in the United States, it only affects global warming over the United States, like people think about it, it’s a world, right?
And then China doesn’t even show up to the last climate accord. And they’re the ones that are burning the most amount of coal. So, this is all a bunch of BS, guys. I don’t care what side of the aisle you lean on, or you land on. But you got to understand it’s not all you think it is. Some of it is common sense. I hope you’re picking up what I’m putting down here on common sense, but oil is a supply and demand thing.
And then finally, I’m going to tell you, like I always do, all these things, it goes back to the Fed. And we’ve been printing and printing and printing in the last few years. We’ve printed more money in the last 10 years, than 80% of the time we’ve been in existence in the United States. And if you look at the curve, it’s going parabolic on how much money we’ve printed, and that means that that money is sloshing around the economy. Okay, that’s demand. People are going to want to drive bigger cars or want to travel to places, buy airline tickets, you know, use oil. Because I don’t know if you noticed, but pretty much everything around us is plastic, right? You get in your car, and the whole thing is plastic. You can look around your house, it’s plastic. You look at your monitors, your laptops, they’re all plastic. What do you think that comes from the plastic fairy? It comes from oil, petroleum, right? So, it’s all going to go up. And it’s all going to continue to go up. And you’re going to continue to pay more unless we drill. And we give incentives for these companies to drill and want to be here.
But we’re driving the price of everything up, right with the Fed. And spending all this money as governments do all around the world. And we’re driving up the cost of things, this is not going away. And the last thing I’ll say is that this is a tax on poor people, right? Rich people can handle paying as they’re flying around in private jets, they can handle buying airplane tickets, they can handle driving big cars, and paying. You know, I paid $82 to fill up my car today. And you know, two months ago, it was $52. And it’s going up and it’s staying up. It’s a tax on the poor. Anybody that needs their car to go to work and come home is going to pay more for that. Right for that trip. Anybody that wants to go buy an egg? Well, that egg came because somebody drove it to that store where they used petroleum/fuel, diesel and gas in the truck to drive it to the store. But if that price goes up, then all of a sudden, you’re paying more for the eggs. Like it all works together. But it all starts with the Fed. It starts with the responsibility of the government. That’s why our debt is exploding. That’s why our dollar is debasing at a rapid rate. That’s why I think Bitcoin is going to be the future. Maybe what? Maybe, you know, other commodities like oil and gas and agriculture, and real estate and gold, silver and platinum will be as well. So, you’ve got to start thinking about your future because everything is changing. Everything is changing, and it’s changing because of oil. So don’t believe the BS politicians spew at you about why people aren’t drilling. Use your own common sense. And figure out your own wealth strategy when it comes to oil. And when it comes to putting other things together for your own wealth future.
- By Heather MacKay
- In Blog
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