Good morning; here's what the Oilman has for you today:

• Warning: Stranded Assets

• EIA Sees Fresh Record in U.S. Oil Output

• Tweet of the Day

Warning: Stranded Assets

Mass writedowns are looming over the oil and gas industry.

Investors are being slow in pricing them in, according to an asset manager’s warning.

According to Impax Asset Management’s CEO, there is a “significant risk” of stranded assets in the industry, and Biden’s Inflation Reduction Act is making that risk even greater.

But the risk only exists in a make-believe Net Zero World

What people and organizations like Ian Simms and the London School of Economics Department of climate change (there’s no ulterior motives in that department, right?) assume is a net zero future.

Renewables’ reliance on hydrocarbon-powered manufacturing is something they leave out of the equation.

Now, truth be told, $370 billion is quite a financial hand to give to renewables.

But is it enough to wipe out the competitiveness of oil and gas?

Only if everyone in the world decides to drop oil and gas holdings. And their everyday amenities like reliable power, transportation, clothing, etc.

Which ain’t gonna happen, folks.

Renewable energy investments only caught up with oil and gas last year

For the first time ever, investments in wind, solar, and the rest topped $1 trillion last year.

And that put them on par with—wait for it—oil and gas investments.

To make oil and gas losers, you’d need to move a lot of that $1 trillion into renewables.

Right now. When oil and gas stocks are reaping the benefits of soaring prices.

The Oilman is not too sure there’s a chance that’s going to happen.

Also, oil and gas companies have done their homework.

The public companies are playing the renewables game and dumping some cash into carbon capture and low-carbon diversification.

The only stranded assets will be those that investors piled into because of hype and overreaction to scare tactics from the ESG mafia.

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EIA Sees Fresh Records in U.S. Oil Output

Crude oil production in the U.S. could rise to 12.54 million barrels daily this year.

That’s according to the latest Short-Term Energy Report by the EIA, and amounts to a new, post-pandemic record high.

That’s only half the good news…

Because the EIA also seems to believe that thanks to this record production, the oil market would swing into a surplus this year.

Yep, a surplus.

Just as OPEC cut its production by more than a million bpd…?

Don’t laugh; the EIA can explain.

• First, OPEC has been underproducing anyway, so the cuts are mostly formal, not real. That’s true.

• Second, Russia’s output has declined less than expected, judging by oil export flows. Maybe true. I mean, there’s such a thing as storage.

There, that’s simple enough.

But the industry disagrees

In fact, the industry disagrees completely with the EIA’s predictions.

CERAWeek wasn’t so long ago to not remember all those executives saying that OPEC was back in the driver’s seat and how this meant higher prices.

It was also just last month that Pioneer’s Scott Sheffield said the U.S. would never return to the 2019 record.

“We just don’t have that potential to grow U.S. production ever again,” he said.

So, did the EIA miss the news?

Did it miss industry warnings about higher costs and investor pressure to keep that cash flowing back into their pockets?

Maybe it did. It’s not like the EIA can be a short seller, right?

Around the Global Patch

🇨🇦 Canadian heavy crude nears an all-time high.
🇨🇳 Chinese Summer = all-time high demand.
🇮🇹 Italy give go-ahead on Russian refinery sale.

Tweet of the Day

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