Open the Taps — No, Apes, not the beer taps. We are full up at Cisco’s in Seaport and don’t need any help in that arena. We’re talking oil.
OPEC+ is considering pumping more oil as well as excluding Russia from current production targets. On the news, oil prices slid; good for you, bad for producers.
Some narp from Goldman was on CNBC Tuesday saying that technically he could see oil at 300 bucks a barrel.
While this probably won’t happen, it shows that opinions are out there that things will get worse before they get better.
But what if they don’t? What if OPEC really opens the taps and helps fight off any additional oil price increases for the foreseeable future?
Well, the summer travel reopening trade will boom. Airlines, hotels, Airbnb, and booking holdings, travel’s usual suspects, will probably see an even higher than already anticipated boost in earnings.
I’d also expect to see steady profits for the big energy companies. It’s hard to ignore their profitability at $115/barrel for oil.
You also might see decreased short-term investment into energy infrastructure. When the need isn’t necessarily totally apparent, out of sight sometimes means out of mind.
When gas prices aren’t constantly moving higher, converting your car to LNG or buying a Tesla isn’t as obvious of a decision for the average consumer; at the same time, stabilized prices mean a decrease in the value of future cash flows from traditional, non-GND, non-ESG energy ventures - things like oil rigs, leases, and pipelines.
You also might see depoliticization of energy prices as the midterm elections get closer. If gas prices are no longer kicking consumers in the nuts and the wallet at the same time ($8 a gallon in California is a big f*cking boot), it’s hard to make such a public appeal to the voters’ sensibilities.
These are merely hypothetical high-level insights, not financial advice. Let’s find out what happens.
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