As our energy-environment discussion marches on amid the pandemic, one of our biggest concerns must be that temporary fallen demand and extreme lower prices discourage investments in new oil and natural gas supply. Worse, there is also a loudening mantra that COVID-19 somehow signals the “the end” of oil and gas so new investments are not warranted.
The reality, however, is that there is no evidence that the fall in oil and gas demand is nothing more than a short-term blip. Yes, this year is likely to prove an exceptional one, but oil and gas usage has been on a decidedly upward trend for many decades. Any prediction of an absolute reduction in oil and gas demand (not just a decline in growth) even over the mid- and long-term is still speculation and assumption.
While America’s oil and gas companies would surely be well advised to not overinvest or overproduce right now, buoyantly very high domestic oil needs amid our surging gas demand necessitate more domestic investment. In addition, our energy advisor the International Energy Agency has encouraged us on our journey to becoming the world’s largest exporter of these essential fuels.
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Policymakers and the oil and gas industry itself must see beyond the clouds today to the time when energy markets collect themselves. Too many of “our experts” regularly forget our most basic energy premise: irreplaceability means that oil demand has no choice but to rebound from the pandemic.
We continue to see just how quickly April predictions of doom and gloom were proven so utterly wrong: “Rebound in oil is just a ‘breather’ and crude prices will likely turn negative again, analysts say.” Not exactly: unsurprisingly so, oil prices were up nearly 90% in May - for their “best month on record.”
Source: Forbes- Read the rest here
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