I'm in the O&G business and about as far right as you can get politically....but this run up in oil prices has very little to do with the current occupant in the WH and more to do with the crash in 2014 of oil prices.
From the early 2000's to 2014, O&G was easy and drew tremendous investment from Wall Street to main street. After 2014, that investment dried up, not just here in the USA, but all over the world. For example, Saudi Arabia has less rigs operational than any time in recent memory.
Why did it dry up? The easy money was gone, and the people that invested money wanted to actually see a return. Shale plays are a little like Ponzi schemes as they need continual investment as the production drops off dramatically after the first year.
You are seeing the result of less investment because of those reasons, and here where it gets political, there is tremendous pressure on investors to be green, and having a bunch of Oil and Gas on their balance sheet isn't politically correct, so you see less bigger investors putting money into the market. Instead they can buy the S&P and FAANG (Facebook, Apple, Amazon, Netflix, Google) and make big bucks without the backlash from the greens.
Here is where capitalism comes in to save the day, we need to see higher and higher prices to lure that money back into the industry. And with high demand and low supply, the price is coming up. I'm seeing more and more investment in CAPX than I have seen in years. It's going to take some time for the market to equalize, and I am guessing $100 oil is where it will hit before it's over. OPEC (Saudi's mainly) learned a lesson also, they are not going to just turn on the spigots, they are going to let this run. After 2014, they really pumped a lot more than they should have, trying to put the Shale play out of business. They almost succeeded...but American ingenuity won out. Everybody cut margins (and pay), the smart guys figured out cheaper ways of doing things and the inefficient went out of business. You are now left with a completely different industry than you had in 2014.
And another aspect of this is also political, as is everything in life. Mexico is so corrupt their oil production has dropped off a cliff and the American Oil companies are now in there trying to salvage the whole industry. Venezuala, well we know what socialism has done to their economy, but their oil production is basically nil....and what there is is all going to China to pay for their bailout. Libya, yeah, a mess. Iran, still sneaking out oil but most won't touch it except China. Iraq, well it actually doing pretty good. Nigeria? A mess. Chad? Dropping to nothing. Canada? What a mess, the federal government is basically trying to put their whole industry out of business. My sales there dropped to zero in the last two years.
The current occupant has made it very difficult to get drilling permits on federal land, and that has a effect on prices, but we are talking maybe a dollar or two a barrel. While he came out and took credit for a 10 cent decrease, that is long gone in this latest runup.
And while crashing oil prices create havoc on the industry, we have fared very well during those times. Because we concentrate on customer service in an industry that doesn't have any. When purchasing managers are losing their jobs left and right, we are there to support them and they remember that.
Avgas will hit $5 a gallon soon....and may hit $6 before it's over (speaking the cheapest pricing seen on Foreflight). That's my prediction and I may be wrong. But it's my way of staying on topic.
