Note from Keith Kohl - Thanksgiving Day
Posted: Thu Nov 28, 2024 12:20 pm
We all have our reasons to be thankful today.
Thankful for friends, for family, or for the feast you’re consuming this Thanksgiving. For some, you might be thankful you didn’t have to fly to your destination, or maybe to not sit in bumper-to-bumper traffic that adds hours to your drive.
Unfortunately for most, the latter reasons aren’t the case, because today is expected to be another record day for travelers.
The TSA is expecting to screen more than three million people at their checkpoints; AAA is expecting that nearly 72 million of us will take to the road this year — a new record that will break the pre-COVID levels in 2019.
These holidays are the peak of the travel season for us all, and it’s never been busier. The amount of travelers on buses, cruises, and trains is up nearly double-digits over 2023, and almost 20% over 2019 levels.
Don’t worry, if we can take solace in nothing else, at least prices at the pump won’t be as painful as last year, with the average gallon of gas across the nation hitting $3.04 — roughly 7% lower from where it was a year ago.
Believe me, this particularly good bit of news isn’t due to our luck, or even to the politicians that take credit for lower energy prices.
Look around and try to tell me an industry so key to nearly every facet of our daily lives that is more vilified than the U.S. oil and gas industry. But hey, it’s easy to demonize them, isn’t it? After all, they’re the first villain you think of as you go to fill up your tank for your holiday travels.
Yet, when you truly understand how we’ve gotten to the point that we have with our energy security today, you’ll know how easily things could’ve gone wrong… or just how quickly things were heading downhill not too long ago.
As for the solution to that problem, we can thank good, old-fashioned American innovation.
The younger members of our investment community here may not realize the position we were in not too long ago.
If we’re being truthful, I’d bet that most people have forgotten the point we were at in 2008. That year, our domestic oil production — for the entire country — averaged just 5 million barrels per day.
That’s it.
To put a little perspective on that, just keep in mind that more than 6 million barrels per day is pumped out the Permian Basin alone today.
And try not to forget that not only had U.S. oil production been declining for almost 40 years at that point, but we were also hopelessly shackled to the whims of OPEC barrels back then.
Then as we both know all too well, our drillers finally started tapping into oil and gas resources from tight shale formations that were previously unattainable.
Everything changed after that as U.S. oil production soared to unbelievable heights. We’re now pumping out more than 13 million barrels everyday.
And quite frankly, we’ve all become a little spoiled from that unprecedented success.
Now we’re in a different sort of predicament. The days of wild growth in the shale patch are gone, and they’re not coming back. But that doesn’t mean all of that growth has dried up… it just means that drillers today are playing a different game.
There’s a sentiment that I wish everyone would understand when it comes to every oil company with a rig in the field today — more with less.
It’s a mantra they’re all whispering quietly to each other. Less money, less rigs, and more output.
Gone are the days of the debt-fueled drilling frenzies that took place a decade ago. Today, it's all about efficiency.
That’s the battle-cry heard in West Texas now, and it’s what will separate the winners from the losers in your portfolio.
The only trick now is finding out who’s leading the charge.
Until next time,
Keith Kohl
--------------------
I have been a subscriber to Keith's "Energy Investor" newsletter for more than ten years.
The only thing that will make Trump's "Drill Baby Drill" promise come true is higher oil & gas prices.
Thankful for friends, for family, or for the feast you’re consuming this Thanksgiving. For some, you might be thankful you didn’t have to fly to your destination, or maybe to not sit in bumper-to-bumper traffic that adds hours to your drive.
Unfortunately for most, the latter reasons aren’t the case, because today is expected to be another record day for travelers.
The TSA is expecting to screen more than three million people at their checkpoints; AAA is expecting that nearly 72 million of us will take to the road this year — a new record that will break the pre-COVID levels in 2019.
These holidays are the peak of the travel season for us all, and it’s never been busier. The amount of travelers on buses, cruises, and trains is up nearly double-digits over 2023, and almost 20% over 2019 levels.
Don’t worry, if we can take solace in nothing else, at least prices at the pump won’t be as painful as last year, with the average gallon of gas across the nation hitting $3.04 — roughly 7% lower from where it was a year ago.
Believe me, this particularly good bit of news isn’t due to our luck, or even to the politicians that take credit for lower energy prices.
Look around and try to tell me an industry so key to nearly every facet of our daily lives that is more vilified than the U.S. oil and gas industry. But hey, it’s easy to demonize them, isn’t it? After all, they’re the first villain you think of as you go to fill up your tank for your holiday travels.
Yet, when you truly understand how we’ve gotten to the point that we have with our energy security today, you’ll know how easily things could’ve gone wrong… or just how quickly things were heading downhill not too long ago.
As for the solution to that problem, we can thank good, old-fashioned American innovation.
The younger members of our investment community here may not realize the position we were in not too long ago.
If we’re being truthful, I’d bet that most people have forgotten the point we were at in 2008. That year, our domestic oil production — for the entire country — averaged just 5 million barrels per day.
That’s it.
To put a little perspective on that, just keep in mind that more than 6 million barrels per day is pumped out the Permian Basin alone today.
And try not to forget that not only had U.S. oil production been declining for almost 40 years at that point, but we were also hopelessly shackled to the whims of OPEC barrels back then.
Then as we both know all too well, our drillers finally started tapping into oil and gas resources from tight shale formations that were previously unattainable.
Everything changed after that as U.S. oil production soared to unbelievable heights. We’re now pumping out more than 13 million barrels everyday.
And quite frankly, we’ve all become a little spoiled from that unprecedented success.
Now we’re in a different sort of predicament. The days of wild growth in the shale patch are gone, and they’re not coming back. But that doesn’t mean all of that growth has dried up… it just means that drillers today are playing a different game.
There’s a sentiment that I wish everyone would understand when it comes to every oil company with a rig in the field today — more with less.
It’s a mantra they’re all whispering quietly to each other. Less money, less rigs, and more output.
Gone are the days of the debt-fueled drilling frenzies that took place a decade ago. Today, it's all about efficiency.
That’s the battle-cry heard in West Texas now, and it’s what will separate the winners from the losers in your portfolio.
The only trick now is finding out who’s leading the charge.
Until next time,
Keith Kohl
--------------------
I have been a subscriber to Keith's "Energy Investor" newsletter for more than ten years.
The only thing that will make Trump's "Drill Baby Drill" promise come true is higher oil & gas prices.