Sunday, June 20, 2021

First we bail out Detroit – then we bail out the oil patch

Channeling Leonard Cohen on Father's Day...

... Well, it's Father's Day, and everybody's wounded
First we take Manhattan, then we take Berlin

This week's US rig count is 470; a year ago it was 266 (having plummeted from over 900 at the beginning of 2020). That 470, a far cry from what it was before Covid, is a harbinger of high prices and gas lines like 1973. It's just a matter of time. 

Meanwhile, back in Washington DC...

First we bail out Detroit

Millennials are buying fewer cars and cities around the world are banning cars from their central districts; Covid motivated people to work from home and drive less. Seeing all these looming threats to the automotive market, Biden et al are on a roll to bail out Detroit with a big push for electric cars (not sustainable with fossil-fuel-intensive manufacturing, but still a well-meaning friendly gesture to corporate America and union jobs). 

But what can governments do for the oil patch?

Then we bail out the oil patch

Here comes the IEA's get-off-oil report on the threat of uncontrollable climate change, the Dutch court ruling against Royal Dutch Shell on climate issues, and the ExxonMobile board of directors fight to bring about a response to climate change. 

Imagine that most intelligent oil company leaders know full well their days are numbered with peak oil breathing down their necks. Now all of a sudden they have a cover story: climate change. Under that smoke screen (literally), they can carry on with all kinds of shenanigans. For starters, governments can now begin subsidizing them to get off oil and into renewables.

There may be other ways to scoot down the slippery right-hand slope of the Hubbert curve without killing civilization, but this one just might get enough votes for all of us to squeak by.