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BillB

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There Are Fears About an Oil Spike Above $150

(Bloomberg) -- Oil investors may regret urging companies to cough up cash now instead of investing in growth for later as the dearth of exploration is setting the stage for an unprecedented crude price spike, according to Sanford C. Bernstein & Co.

Companies have been compelled to focus on boosting returns and shareholder distributions at the expense of capital expenditures aimed at finding new supplies, analysts including Neil Beveridge wrote in a note Friday. That’s causing reserves at major producers to fall and the industry’s reinvestment ratio to plunge to the lowest in a generation, paving the way for oil prices to surpass records reached last decade, according to Bernstein.

 
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“Investors who had egged on management teams to reign in capex and return cash will lament the underinvestment in the industry,” the analysts wrote. “Any shortfall in supply will result in a super-spike in prices, potentially much larger than the $150 a barrel spike witnessed in 2008.”

The world’s oil majors including Royal Dutch Shell Plc and BP Plc navigated the price crash of 2014 by cutting costs, selling assets and taking on debt to help satisfy investors with hefty dividends. The biggest, Exxon Mobil Corp., was punished by shareholders earlier this year after compounding disappointing results with a massive spending plan and a lack of buybacks.

 https://www.bloombergquint.com/business/2018/07/06/oil-spike-above-150-feared-as-investors-demand-cash-over-growth
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BobBarney

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President Obama has a solution to the Gulf oil spill: $7-a-gallon gas.

That's a Harvard University study's estimate of the per-gallon price of the president's global-warming agenda. And Obama made clear this week that this agenda is a part of his plan for addressing the Gulf mess.

So what does global-warming legislation have to do with the oil spill?

Good question, because such measures wouldn't do a thing to clean up the oil or fix the problems that led to the leak.

The answer can be found in Obama Chief of Staff Rahm Emanuel's now-famous words, "You never want a serious crisis to go to waste -- and what I mean by that is it's an opportunity to do things that you think you could not do before."

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