As I start collecting information on energy markets it seems more and more that we are going to run into an energy shortage starting in 2025.
- The shale plays no longer make sense as interest rates are too high to be profitable. This means we will continue seeing the consolidation that we are seeing with the likes of Hess and Pioneer Natural Resources.
- Shale wells get most of their oil in the first 2 years so the wells that were launched in 2022 are where we are getting the energy. The number of wells hasn’t gone up so there will likely see a shortage in 2025 as there are no replacement wells.
- Middle East is in a precarious situation with the Red Sea where Russian oil likely can’t make it out to India and China.
In all likelihood this means we are in a long term decline in oil and the real outcome we should hope for is energy efficiency being the name of the game. This means any opportunity to cut energy usage will be the primary driver, as that will be the limiting factor.