Shale is considerably more difficult and more expensive to extract than crude. Compared to Saudi Arbabi, extracting shale can be over 3 times to cost to their conventional crude. Truly difficult economic circumstances and energy shortages will have to occur before the government gives incentive to companies to extract the shale. Obvious result will be huge price increases for oil and coal will follow, dividends will be fat.
Although the dividends in this sector have been weak and inconsistent over the last decade I think that will change substantially when we take into account the broader view on the topic. I see the next decade as a pure opposite of the one before it for the fossil fuel sector, shortages will become crippling and fossil fuel companies will become saviors rather than the despised villains as we have come to know them.
Here I will quote the Shah of Iran during the 1973 oil crisis,
"Oil is almost a noble product, we are careless to use it for heating or electricity when this can so easily be done by coal. Why finish this noble product in 30 years when thousands of billions of tons of coal remain in the ground"
He was right to an extent, we do have much more coal for our needs than available oil and gas (globally, we use more oil and gas than coal). Although he did not account for new fields, there are undoubtedly more reserves to be tapped but it remains certain that we will run out within a few generations a the current rate. Something has to give, lower consumption is certain and no consumption is guaranteed when supply dries up. The ESG crowd is successfully shutting down new production without so much addressing ever increasing demand.
From 12,000 ft view, we can see that coal, oil and natural gas are a bi product of millions of years of decayed, heated and compacted dead plant and animal matter. Our world is exactly like a sealed glass terrarium, the resources and life we have is purely recycled. It is no coincidence that our population boom coincided with the oil consumption boom over the last 100 years. Oil and gas supercharges the food industry and allows mass production of essentials for our life, ironically the oil we use once was life and that is the reason that it makes this possible. One example is Nitrogen which is an essential component in NPK fertilizer used for food production, it is made from natural gas, there are many more such examples.
Essentially, what environmentalists are encouraging through global warming rhetoric is reduction in human life, since not using coal, oil and gas leads exactly to that. It does not matter what we do, since the Earth replenishes itself over time the life and CO2 we are expelling now will feed greenery and decompose to form more fossil fuels over another few million years of heat and compaction.
There is no possible way that fossil fuels can become obsolete, or disappear from the market or loose their pricing. It is a constantly diminishing resource that cannot be recycled like gold, steel, copper ect.. It will increase in value over time as reserves are depleted and populations increase, it is fundamentally essential for a basic standard of living that most people are reliant on.
@hagetaka did you enjoy the Sermon?
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