The folk that argue against the glut could be right but the SP performances of O&G minors would seem to support the premise that it is an actuality at least the companies I observe here in Oz.
For it not to be true several things would have to occur -
1. The USA would have to increase its energy consumption and importation to the point of them once again becoming the worlds major energy importer along with all that entails in terms of national debt etc.
2. China would need to increase its energy consumption and importation to take up the slack caused by the energy various forms of unconventional production and import reduction by the USA.
3. The consumption by the rest of the world would have to increase without any concurrent production increases or energy efficiency changes occurring!
Finally and probably the most important from my point of view, is the SP of most energy explorers and producers rather than remain flat or head south, would head north to support this premise no glut with a ramp up of income and production....
While any of these are possible IMO they are not likely because we all now understand that we can't afford to waste finite resources like our personal wealth and usable energy. With all discoveries occurring these days all around the world and the switch to less conventional hydrocarbon production methods. It is doubtful IMO that there will be an energy shortage any time soon and along with that there will be cycles that appear like gluts. The average earnings of O&G companies will also be lower but perhaps still worthwhile? We shall see .....
Cheers Firefly.
KAR Price at posting:
$5.10 Sentiment: Hold Disclosure: Held
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