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

• Transmission Line Shortage Threatens Transition Ambitions

• Investors Stick with Oil Gas Stocks despite Killjoy Bankers

• Upcoming Oil and Gas Events

• Tweet of the Day

Transmission Line Shortage Threatens Transition Ambitions

For years, experts have been warning that the energy transition will involve massive investment in new transmission.

Transition advocates have finally acknowledged it.

The price tag for fixing the problem $600 billion. Annually. By 2030.

That’s totally going to happen

The United States has the largest transmission network in the world.

It’s some 120,000 miles in total, but it would need to expand to accommodate wind and solar.

And it would have to expand a lot and quickly.

Which is not going to happen because it is physically impossible.

Those 120,000 miles of lines were built over a century or so.

Most of that was built a century ago.

Now, it has to double if the Biden plan for a 100% “clean” grid is to happen.

In a decade.

Shortages everywhere you look

Doubling the U.S. transmission line network will require:

A lot of steel and copper, the latter already in a shortage

A lot of specially trained workers, of whom there is a shortage

A lot of local community support, of which there is none

Even small network expansion projects are running into fierce opposition from communities.

But sure, let’s double the network’s size in 10 years and hook up gigawatts of wind and solar.

And then do it all over the world in countries nowhere near the wealth and resources of the U.S.

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Investors Stick with Oil Gas Stocks despite Killjoy Bankers

Investors are buying oil and gas stocks, with holdings at the highest since March.

The healthy energy stock appetite persists despite warnings from Wall Street that the industry’s cycle may have run its course.

Why investors are not listening to bankers

That’s an easy one.

Bankers, swayed by climate NGOs talked up ESG investing.

Investors bought it and bought into ESG funds.

And, surprise, they got lower returns than they expected.

Oil and gas, on the other hand, offer fat dividends, and they offer them long-term.

Plus, the buybacks that got to be so trendy last year with all those windfall profits.

Who wouldn’t want a piece of that?

So, energy stock holdings at investment funds have gone from a 1% underweight allocation to 8% overweight, per Bank of America.

I bet some bankers are still wondering why.

It’s a cyclical industry, but the cycles are changing

Some are saying the latest cycle has peaked.

Translation: profits are about to start going down.

The thing is that these days, cycles are not exactly clear-cut.

In fact, some analysts are saying they are going to get softer and longer in the future.

There won’t be so much difference between peak and trough.

With underinvestment in new supply and price volatility, it’s easy to see where these forecasts are coming from.

Softer and longer cycles sound like a pretty stable future for the industry.

Investors like stability.

Upcoming Oil & Gas Events

• November 1: Oil and Gas Electrification Symposium, Longmont, CO

• November 2: LOGA State Industry Series, Benedict’s Plantation, Mandeville, LA

• November 6: Louisiana Energy Golf Open, Oakbourne Country Club, Lafayette, LA

• November 6-8: IPAA Annual Meeting, JW Marriott San Antonio Hill Country Resort and Spa, San Antonio, TX

• November 7: LOGA State of the Industry Series, Petroleum Club of Houston, Houston, TX

Around the Global Patch

🇻🇪 Venezuela's potential 25% oil production surge post U.S. sanction relief.
🇨🇳 China and India's fossil fuel challenge.
🇷🇺 Russia expands gas supplies to China.

Tweet of the Day

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