Presentation on theme: "Is Oil Getting over? This is perhaps the most debated question of first decade in 21 st century."— Presentation transcript:
Is Oil Getting over? This is perhaps the most debated question of first decade in 21 st century.
Is Oil getting over? The debate can be continued forever But let us look at this picture in a little different direction
Fact No. 1 This is the website launched by none other than Chevron. For them oil is bread and butter.
Take a closer look at one interesting sentence “The era of easy oil is over” Chevron has tons of data you and me don’t have. They know stuff about oil fields and refinaries that you and me don’t know. And they are making an unequivocal statement “The era of easy oil is over”.
Imagine an oil selling company starting a website for oil conservation and making such a direct statement Can you imagine McDonalds stressing importance of healthy food and asking you to eat less burgers?
Fact No. 2 – No new refinaries 8/bs_nm/energy_chevron_earns_dc 8/bs_nm/energy_chevron_earns_dc “On a conference call, a Chevron executive said the company would continue to expand its existing refineries but did not feel the need to build a new refinery from scratch. The company also said it expected to announce the expansion of a refinery in Korea soon. “
Chevron stock is all time high. Their profit is all time high Motorists are guzzling oil all over the world. India and China are pushing demands higher. So what stops them from adding one more refinary?
“Worldwide expansion of refinary capabilities” ??? Yeah, right!! Keep in mind that keeping all other refinaries at same level, expansion in one refinary in South Korea by 2% does qualify in reports as “expansion of worldwide refinary capabilities”
If more and more people are coming to buy fruit juice in your shop, people are ready to buy even if you double or triple the price, Then why would you not buy more juicers? You can find out your own answers
May be Chevron is out of their mind. Let us look at what good ol’ British Petroleum is doing. Another giant, another fact
Fact No. 2 -BP investing $15 BN in alternative energy British Petroleum has invested whooping $15 BN in alternative energy companies and research BP is second largest corporate investor in alternative energy, only after GE Investment by BP in alternative energy actually exceeds their investment in petroleum exploration
BP - $15 BN – Alternative Energy Why would you invest in somebody elses business more than you invest your own business? Why would you invest in education of your neighbor’s kid more than you invest in education of your own kid? You decide!
Conclusion Is OIL getting over or not is a small question. Much larger question is “Can OIL business remain profitable for long time or not?” You think it will. But for some strange reason, big oil giants think it won’t.
While you are being fooled in buying that bigger-than-battle-tank SUV, Oil companies are quietly switching their businesses
Stone age did not end because the world ran out of stones As Saudi oil minister once famously said “Stone age did not end because the world ran out of stones. Oil age will not end because the world ran out of oil.”
Gold rush was not over because California ran out of gold Visit any gold pan making company and they will tell you that California still has more than 80% of gold in ground Yes, but that gold is finely mixed in sand, very difficult to extract. If you work one hour extracting that gold, and if you work one hour in McDonalds, then you will make more money in McDonalds. But gold rush is definitely over. So gold rush was not over because gold was exhausted Gold rush was over because gold extraction did not remain profitable.
If Oil business is not profitable, no matter whether oil is over or not, you will be kicked to switch to another fuel, Unless you are ready to mine, transport, refine and pump your own oil of course Unless you are ready to mine, transport, refine and pump your own oil of course
Technology will save us I have to give you a point on this one There might be some cracking breakthrugh tomorrow, and we might extract oil from rocks But what if we cannot?
Commercial limitations Technology has some limitations. Nobody invests unless they smell profit Technology has given up on some issues. Nobody invests in fuel injection systems research, because any further improvement will be so miniscule that it is not attractive return on investment
Physical limitation Technology has physical limitations E.g. Companies are digging deeper and deeper for oil and it takes more energy to transport deeper oil to surface. If oil quality goes down and depth increases, then you will spend 1 gallon of oil to extract 1 galon of oil. That point Oil is no more fuel. No technology can change laws of physics.
Still if you are believing in technology, then I have to say, Boy, your faith in technology is strong Stronger than that of BP and Chevron.
In worst case scenario of oil shock, have you thought of what will be resell value of your new shiny SUV? Here are most probable three options. $ Junk $$ Junk $$$ Junk
Chevron is talking about “what to do next” If you are not sure what “next” means, Go drive your SUV off the cliff. Trust me, that will be less painful, considering your future.
Inspite of extra-ordinary demand, extra-ordinary prices and record profits, oil companies are thinking that oil business is not going to be profitable in long term. Why?????????????????? Wake up and do your own research. That’s all I am saying