Sad Story. I hear when the price of oil went negative, Chevron had to lay off a couple of their congressmen

While waiting in line for gas in 1973 I told everyone the age of cheap fuel is over . The market made a fool of me so many times.

Here in North Dakota the news has been full of stories of how the drillers are ready to go, drill more wells and increase production, but they can't get the employees. When the boom crashed, the workers moved on and aren't willing to come back without significant incentives, mainly involving job security which the drilling companies are unwilling to offer given the boom and bust nature of the industry.

Inflation is far more harmful to individuals than a collapsing stock or property market because it directly affects people's cost of living, which they immediately feel. It is not surprising that the current market sentiment is extremely pessimistic. In today's economy, assistance is critical if we are to survive.

As a young pilot training for a career in the airlines, I find this a bit scary. There are no good alternatives to kerosene for large aircraft. Hydrogen may become a possibility, but it’s at least 10 years out. Higher fuel prices probably means less demand for flights and fewer jobs for pilots. Not necessarily a bad thing for the environment, just potentially a bad thing for me.

One thing to note: there's always been "fracking" (short for "fracturing") in the oil industry, long before shale oil was possible. It's just back then they used explosives (often nitroglycerin) instead of water. It would be more correct to use "hydrofracking" when talking about shale oil. I know it's a minor point, but saying that fracking was what made shale oil extraction possible is a bit misleading. Fracking makes all oil extraction possible, it's just hydrofracking that works on shale.

It's hard to predict the future until we see this month’s inflation results. However, historical data consistently show that stocks tend to outperform bonds in the long term. Therefore, I'm staying in the market and focusing on selecting high-quality stocks. The challenge lies in identifying these stocks.

This makes a lot more sense statistically isntead of just saying " oh its the wars fault" Very informative 👏 👍

"Wait, the gas crisis wasn't because of the war?" "Never was."

"Three decades ago" "End of august, 1991" Ah... right. 3 decades ago doesn't mean the 70s anymore

Good video but you missed a few key points. As you mentioned during the shale boom in the early 2010's companies were drilling for market share. The strategy was production growth. They would spend as much money as possible to acquire land leases and drill wells. The problem with that was shale wells have an extremely high decline rates. They may start off at say 1,200 bbls/day but after a few months are only producing at a couple of 100 bbls/day and after a year they produce at 50-100 bbls/day. When the price dropped due to the oversupply of the market caused by this flood of shale oil the companies could not pay back their loans. They did not simply decide to stop drilling, many went bankrupt or were purchased by larger companies. The reason the remaining companies are not picking up rigs and drilling more shale wells now when prices are high are 1) to grow production by drilling high decline rate wells you need to continuously drill more wells each year than the year before, this is a huge capital expense which will not produce an ROI, will flood the market, and cause the price to drop which will exasperate the problem. 2) Banks are not interested in lending money to producers who would do this again, as I said a lot of oil companies went bankrupt and a lot of banks lost a lot of money during the shale boom 3) Banks have a lot of social pressure to not invest in Oil companies so the money is simply not there to invest. Which leads me to the most important point which was missing from your video. You did not speak of conventional oil plays that do not have high decline rates, rather they produce tens of thousands of bbls of oil per day for 10-20 years. These are the plays that will increase supply and decrease oil/gas prices for the world. Since 2015 there has been a huge shortfall in investment in these projects which take 5-10 years to discover, develop and produce along with billions of dollars of investment. Banks were burned in the shale boom and along with the social/political pressure to shun oil & gas money was not allocated to this type of investment. Now that prices are high maybe we will see some more investment. Though at best this would take 5 years to see results as these large conventional plays are found in deep water environments that require many years of planning and engineering work. At worst this investment will not take place due to the fact that politicians across the world are saying they want to abolish fossil fuels. And who would invest billions of dollars knowing they could have their pipelines, leases or permits pulled at any time?

This is one of the most important videos you've made I think. So much disinformation about oil prices going around, and lots of it getting picked up by mainstream media.

5.5 billion is not exactly "stratospheric" for a project of that magnitude. The Alaska Oil Pipeline System cost over 8 billion to build. And requires constant monitoring and maintenance.

I was really looking forward to the insane logistics of bricks

Great video. I've been in and around the industry for just over a decade and I can almost pinpoint the day prices turned up or down. For example, on Thanksgiving Day 2014 (in the US) OPEC held their semiannual meeting where they decided not to cut production which started a long, steady slide in prices.

I love your videos, so informative and produced so eloquently with the graphics and your expansive use of the English language. Love it all.

19:00 you summarise the situation perfectly. Turning profits now via scarcity and encouraging the switching to cheap (by comparison) renewables is the strategy. The funny part is, many of the Oil & Gas companies are now investigating in renewables as well. They are playing both sides.

Every time you say cheap or expensive, I have to mentally check myself and be reminded we're talking in Oil company terms here. These guys could buy and sell my whole island nation on a weekend whim.

As I write, it is mid August 2022, and I'm in Austin, TX for what it is worth. The price of gas is all over the place. On north Lamar, the Valero is selling at $3.23/gallon for regular 87 grade gas, while 1.5 miles away, the 7-11 gas station is selling the same gas for $4.45. Most places are about $3.60, but there is huge variance. And it isn't because of a sudden change in supply or demand, these huge variances have existed for many weeks. Something screwy is going on.

I always wanted to know how gas prices worked in detail (I even worked in a gas station the summer before starting my master's but I had a pretty limited understanding of how the prices worked lol). This video helped me a lot. Love your videos, they are super informative and interesting. Keep it up, guys!!

Not just Azerbaijan, another big Caspian natural gas country is Turkmenistan. Turkmenistan is so rich in natural gas, that for a long period of time, gas, electricity, and water were all free of charge. They also used that wealth from all the natural gas to build tons of marble structures in the capital city Ashgabat (they actually have a Guinness World Record for it). Under late leader Saparmurat Niyazov aka Turkmenbashi, he built a marble monument honoring the country's neutrality with a spinning golden statue of him at the top. It spun so that it would always be facing the Sun, symbolizing that his era was the golden era. Like Azerbaijan, Turkmenistan has pipelines connecting its natural gas to neighboring countries like the Trans-Afghan pipeline connecting Turkmenistan through Afghanistan and Pakistan to India and the Central Asia-China pipeline connecting Turkmenistan to Xinjiang (they also have pipelines to Iran). As part of the pipeline from Baku through Turkey at 6:00, a subsea pipeline has been proposed to connect Azerbaijan to Turkmenistan. Because of the natural gas, Western leaders aren't so keen on criticizing the Turkmen and Azerbaijani leaders when compared to criticizing me. Why? Because we're not rich in the specific resources (oil) they want Back in the 70s when the country was still a Soviet republic, the Soviets were drilling in the northern portion of the country looking for an oil field. When they found a natural gas pocket, the drill suddenly collapsed into a crater. Because of the concern of poisonous gases being released, they decided to set it on fire....that fire is still burning to this day. And the problem of poisonous gases being released is still an issue, thus in addition to saving the environment it's been decided to seal the crater. As cool as the crater nicknamed the Door to Hell is, it's not so cool when you have health issues because of it like the locals

Luckily the Hay prices remained the same so I can freely get around the city with my Mustang Horse

Remember when oil was $200 a barrel and gas still wasn't $5 a gallon . Now we get $5 gas when oil is $100 a barrel. Some serious price gouging.

such an excellent analysis...thanks so much!

When oil crashed to $0 and held at $20, plenty of analysts said, this will be the reason why oil will hit $100. Since nobody will be exploring for more oil, and many people will be shutting their taps for good, when the demand returns, the market won't be ready, hence the price hike today

Refining is really an important part of the price. Here in Brazil we pay too much for gas even though the country is a big oil producer, because we don't have a big refining capacity.

This video is very laudable; An excellent dish of informative gravy.

Awesome video and very informative. Thank u!!!

I think there may be a misrepresentation of the wells with fracking. The companies may have permits for the wells but with the advances in fracking technology you can use one wellhead and bore out in multiple directions both horizontally and vertically making multiple wellheads redundant.

One interesting thing i have head is that some of the big oil companies in Houston have been buying up leases and old depleted wells off the Houston coast, like 20-30 miles offshore. Most likely not to drill again, but to use the already in place pipelines and pump CO2 back in to the ground from the refiners and power plants in that area, Im sure in the coming years there will be a higher CO2 tax that will be in place and incentives companies to do this.

Just discovered you. FANTASTIC. Subscribed. Keep it up.

Thanks for this very informative video!

Oil is used for a lot more than fuel. We have heard about peak oil for 40 years now. There are no other sources for basic petrochemicals that go into every consumer product and agricultural product.

This was a pretty good analysis and history of oil volatility, but I'd be cautious about the final conclusion and more than cautious about prediction drawn from that conclusion. Two factors not mentioned in this video or anywhere I've seen in the comment section are: 1. The oil industry, like everyone else, has been affected by general supply chain issues and inflation, which has driven up the price of tapping new wells. Effectively this makes supply expansion at the moment more costly than it otherwise would be. 2. Oil companies also took on a ton of debt in the last two years, so increasing profits to both pay that down and pay shareholders is a higher priority for them at the moment, rather than expansion. Neither of those factors are small, and they both point to the current situation being a temporary recovery from the pandemic. I'm not saying this video is wrong and we will definitely go back to the old way, but trying to predict the future of the oil market is risky business. Nobody knows what's going to happen, and the incentives guiding today's market can change in unexpected ways tomorrow.

correct me if i'm wrong, but hasnt the shell group officially announced to switch to renewables and not expanding their oil extraction capabilities around 2017 (or 2018/19 not sure atm)

this is another great vid, thanks!

I don't understand claims of "The End of Oil" when there's so many products besides fuels that are wholly or partially made from petroleum.

At the end of the day regardless of whether renewables reach 100% market share, we still need oil and gas. Why? Science. Plastic. Electronics etc. Oil will transition from a source of power to a resource like iron, steel, etc.

Can you do an equivilent video to this on the reasons for the increase in electricity prices too please?

I had a double take when California gas prices were mentioned as "eye poping" at 3,5$ per gallon, when in my country in Europe the price is at 6$ per gallon and that is only so low due to state intervention.

"ignoring the countless externalities" seems like a good summary of most of this

I’m an oilfield worker here in West Texas and I’m not gonna lie, it makes my day hearing Wendover mention WTI and the Permian lol

One of your best videos, 10/10

i like how you very casually keep referring to OPEC as "the cartel". great vid

It's so f'ed up and annoying. Everything is getting from bad to worse at an incredibly fast pace and the government pretends like they don't see it maybe because they have a lot of money. I for one has been hit very hard and at this point, I am more interested in a solution because I don't think an end is near. What is the way forward for the less fortunate ones like me? How do we survive this phase? I am slowly losing my mind.

One alternate interpretation of the same data: over the last 3-5 years, there have been massive increases in commitments on climate change such as the gasoline car sale bans by 2030. This could change how willing they are to invest based upon 20 year outlays....

I love how he says "5 BILLION DOLLARS!" like that's a lot. The Pipeline from Alberta to BC was $37 billion when all said and done.

Nebula is pretty awesome. Only reason I'm not signing up is that I wouldn't really use it right now, but as soon as I have some extra money to throw around, this is probably the subscription service I'm most interested in.

“remember when the oil ma market…” oh yeah of course i know all about that thing

Crazy to think that most Americans think that the president directly changes the price of gas like he has a magic button oe something

A persuasive essay as well "The Walking Communities of 2040" essay. Look at a future without cars. Much fewer them, trucks, airplanes, big boats, fewer them. We all need someone to lean on. When you need a hand.

The only reason CA gas has gone from $2.50 to $6.00+/gal is to make money. There is all the gas you can afford to buy and plenty left over. The double tankers show up at Costco 6x a day hell or high-water under the same production process as years ago. It goes up every summer with the 'summer blend and demand' manure dispensed as if it's a surprise.

I don't think we'll ever reach zero oil production because of how useful it is for plastics, but I have no idea what the industry will be like with plastics as the main driver of production

Being from the Permian Basin maybe I can expand on a few things? One of the biggest pushes in oil companies in the US is to reduce the cost and environmental impact of Fracking, as it would drastically increase their ability to compete with foreign producers. Another is largely out of their control, as drilling wells often leads to the production of a lot of natural gas that they would of course like to sell, but because much of this gas is a very heavy mix of hydrocarbons it's an expensive process to try and sell it without separating it into things like propane and methane. The technology exists to do so on site, but because of the natural gas market there's no real way for them to do it and make anything even close to a profit so most companies flare it instead. That said we have our booms and busts every couple of years, but we're still chugging along without too much issue, and I don't expect oil to go away any time soon. But is fun hearing my home mentioned in a Wendover video! As well as hearing about how we're basically racing and competing with some people on the other side of the planet haha, something I don't hear many people talk about.

9:39 this is cool

Extremely informative. Well down as per usual.

Appreciate the nuanced long explanation, not an over simplified answer like most people are giving right now for gas prices.

Tar Sands are the 800lb. gorilla you forgot to mention.... I live where many of the frack gas/tar sand railcars are stored during slowdowns, and can judge the market/prices that way. Every one of them went west early last winter, long before the Russian war drums started beating.

I warned everyone I knew that this day was coming. Well, now they're all stuck with big gas guzzling SUV's, trucks and luxury vehicles that require premium fuel. I on the other hand still have my trusty 6 year old Accord that gets 34 mpg all day long on regular. ENJOY!!!!

"Gas prices at an all time high" 0:28 shows prices that Norwegians have never paid before in their lives because of how cheap that still is.

Largely very good and accurate, the main thing that wasn’t covered was the real logistical constants preventing large scale ramp up, while oil companies especially in the US weren’t preparing, those that are trying to increase production now (I know by in person discussion I’ve had with their executives for my work) is being limited by rampant inflation (steel pipes necessary for new well lining has increased by 16-20% in March alone, and to get the materials to drill a new well currently has around a 2 year waiting period just from a supply chain failure perspective. This means that those that are ramping up reinvestment are having those increases (20-40% increases sometimes more, only result in single digit production growth). Another factor that’s incredibly important is the DUC (drilled but uncompleted wells) since oil went negative many producers (the majors were the largest offenders in this) used the DUC inventory to avoid reinvestment and increase/maintain production, now the DUC inventory is at the lowest in around a decade meaning the lack of reinvestment has caught up to the industry. The companies that took the profits and distributed value to shareholders instead of increased reinvestment were rewarded by the market with increasing share prices and positive market signals while the inverse also occurred. Overall this isn’t some broad scheme to go down kicking (at least on the US shale side) it’s a web of complex issues with many causes and effects. Saying the war isn’t the reason also isn’t purely true as it has had a outsized impact on the global oil market constraining global supply, disrupting trade and taking key barrels off the market thus overall adding pressure to an already strained market. Oil likely would have reached over $100 without it but if it wasn’t for the war it wouldn’t be over $100 right now due to the tampered demand from renewed Chinese lockdowns.

Great video. The problem right now with people saying it's the end of oil as we know it, is the time it will take to transition. Right now only a little over 20% of US energy production comes from the combination of nuclear and renewable resources. That leaves the remaining 80% to coal, petroleum and natural gas. While it's great that people will want to switch over to electric vehicles, the electricity that is going into them is still being produced within the same systems that are hiking gas prices. We've seen similar trends to the gas hike already with increases in energy prices. So it's still going to affect you even if you have an EV. It isn't just a transition away from gas powered vehicles. We need a transition toward Nuclear and Renewable energy production in our grids as well. Otherwise we are going to continue getting hit by their "party at the end of the world" as Sam put it so well

Great presentation, as usual it did not disappoint. I am someone who works in one of the more extreme logistical choke points in California’s crude supply chain (I work within sight of Valero’s Wilmington refinery, but, spoiler alert: most of their crude doesn’t cross their dock in the Port of LA, but actually moves across our docks in the Port of Long Beach). I found much of what you said to be sensible, and on target. There are other factors that I think are baked into the cake that has brought us $6/gallon gasoline. Chief among them must be the effect that our COVID Dollar-printing spree had upon increasing the value of a commodity in global demand. When you go from something like $21T in outstanding debt to $27-28T in a couple of years, there must be an impact. In the same way that California has been the canary in the coal mine with gasoline regulations and reformulation, the coming years will show how feasible the timelines for renewables and electrification truly are. In a place where keeping the lights and air conditioning 100% on during a heat wave seems to challenge the power grid, many folks are understandably skeptical about the ability of the grid operators to deliver even more electricity around the clock as a motor fuel, and time will tell if the consumers will buy into electrification on a timetable that matches up with regulation. As for refiners, they’ll keep doing what they do..as more and more of those ships bringing oil to California are no longer leaving empty, but instead filled with diesel, gasoline, jet fuel, and other products that pacific rim nations continue to require.

It seems to me that the most impactful fact that leads to a surge in prices is the speculation. It seems that under the Monetary System speculation can make prices rise exponentially. There are just too many artificialities. What until they manage to turn air into a commodity. Now it is clear to me that we are in desperate need of a completely different socio-economic system that must be superior to the preset one and all those of the past. Trying to make the current system sustainable is not going to work in the long term, that is not a real solution to human problems. It's like applying a band-aid to the problems instead of tackling the root causes.

14:41 Where tf are you getting a 1-bedroom apartment in NYC for $2000/mo, the sewer? 😂

Great breakdown and Ive been telling people about this for a couple of months now. Basically, The high peak we saw after the first few weeks this all kicked off was the point they realised they had taken as far as they could, so the slight adjustment back to levels we have see sustained over the last few weeks will very much be the new norm. Because, we all just accept it now with little fuss. I ran the numbers on my 55mpg Ford Galaxy, where we do two tanks a month V's the cost of running an electric vehicle (even at the new high KWH) and its nearly 1/4 the cost per month. Basically, the saving would pay the majority on monthly lease on a brand new EV (lower band). So yeh, they have just accelerated their own demise but have done it on their own terms for maximum short-medium term profit.

Please do a video on how renewables are a feasible replacement and our species can continue its current level of existence using them.

What I don't get is how the prices change quickly when the barrels are bought far in advance on the futures market at pre-agreed prices

One of the best explainers I’ve seen on the current oil markets! Keep up the great work!

My take away from this video is that Oil's price is uniquely affected when supply is lower than demand, the oil cartels have far too much influence, and building American cities in such a way that necessitates everyone drive everywhere for everything makes the average American's quality of life, dependent on the price of gasoline. But I still just fundamentally disagree with the idea that renewables are ready to take over, maybe 20 years from now, but I think it's just a fantasy to think that EVs will displace traditional cars any time soon.

so they were so scared by negative oil prices that they want to keep a stranglehold on supply until they are out of business? this supposes an active "they" to coordinate supply does it not?

The video is really helpful

Lots of information but I may not be convinced by the conclusion. In short the author concluded the current high gas price is because green energy will replace everything very soon, which is hard to believe given the current status quo.

So they realized the ship was sinking, and are limiting the amount of lifeboats to keep prices high and milk as much money as they can from their hostage passengers...got it.

I recently heard some very interesting history about the origins and functions of the Federal Reserve System. Perhaps a video about the FRS, who created it, why, and how it influences national debt, loan interest rates, and fractional loaning, etc, would be interesting for your viewers. I personally would be excited to see what you can come up with. “The creature from Jekyll island”, by G Edward Griffin, was the book that piqued my interest for this.

Renewable energy is not really renewable. It still takes non-renewable resources to make them and the service life of wind and solar is short, they also need a reliable back which usually is based on petroleum.

I nearly went to work for Halliburton in Wyoming in 2008. My partner and I decided that it wasn’t best for our life styles with our newborn. After seeing how everything shifted to North Dakota a couple years later, I’m glad I turned it down and ended up working in a local coal mine instead. The oil and gas industry as a grunt on the ground is very transient and isolated from where you live to where you work. It’s a life that is tough on an individual and tough on anyone that has a family at home.

I love that you always give your videos a proper ending conclusion, rather than trying to transision seamlessly into the sponsorship message. Thanks for another good video!

14:02 I think there might be other, more traditional shale deposit maps. Not sure. Kind regards.

incredible insight

5:25 Nice shot of Slope Mountain on the Alaska Pipeline. I have been to the top of it many times via helicopter.

Correction: oil is ceding the market to electrification, not to renewables. The grid is in disarray around the developed world and we need to sort it out or else we will just be driving electric cars powered by dirty electricity.

Just when I bought an overpriced F-250 and an overpriced travel trailer to go with it. Now I can't afford the gas to move them.

Peak oil has never been reached. Half of oil production goes toward product manufacture. The demise of the internal combustion engine will not halt the requirement for oil and gas. Steel is an alloy of iron and coal and the coal fired power stations being installed every week across China, India Asia and elsewhere are being installed for 40 years service at least, therefore coal will be required for a very long time. The expanding economies of China, India, Asia, coupled with the exponential technological explosion ahead assisted by robotics and A.I. will ensure insatiable demand for fossil fuels as the world gets richer and hungrier for products for the foreseeable future . The ability of the providers of fossil fuels to adjust the taps of supply to keep profitable and keep investing will continue I think. Renewables and nuclear can provide energy but not products.

If the oil companies are posting record profits wouldn’t it entice smaller producers to create new fracking rigs to cash in on it thus eventually balancing out prices?

So. One thing. The cost of production has nothing to do with the market price of any good or service, in any market. That's one of the most basic principles of economics. Supply and demand dictate price. The cost of production only determines whether a supplier decides to engage in that market.

18:32 oil is finite but not so that a few decades means anything.

ver informative video thank you

17:16 I would argue that one legitimate reason that industrial investment is so low, is that "regulatory headwinds" in most developed nations lead financial minds to believe severe restriction of the market, if not an outright ban, is likely in the medium term. After all, if you were a bar owner who had reason to believe Prohibition was 5 years out...would you renovate the place; put in a second bar upstairs, and buy the bar down the street? Probably not! So, the argument that "global warming hawks" are behind the increase in prices is not (entirely) without merit.

19:22 - "The end of oil is near." Those are some big words. And I have serious doubts. It would be good in a lot of ways, but I just don't buy it. I hope you will elaborate on that sentiment in the future, and give reasons why you think that's the case. (Also, keep in mind the entire 3rd world.)

Sure glad I bought a Plug In Hybrid. 50 miles of EV range using no gasoline fits in perfectly with my daily commuting. Haven't had to buy gasoline in months.

In the UK gas prices wholesale is the same as pre 2019 and there is 100 years of cheap gas in the North sea with a pipeline to deliver as much as we need. The government lifted the cap that is there to keep a lid on energy companies greed - they don't need anymore drilling for the stuff in the North Sea. so they don't need anymore investment at least only to pay shareholders.

I do research on energy commodity markets at a university. That time when futures prices went negative was an interesting time, because the model used to determine futures and options prices assumed strictly positive asset prices. When it went negative there was a short time when pricing literally broke lol. We got a paper out of it aha.

Great explanation. I've been trying to explain a handful of these points over the last several weeks, but this video lays it all out very clearly. Thank you!

Great video! Please do a video on the coming demand destruction of oil based fuels from Battery Electric Vehicles which use zero fuel!

Data Time's ads just shocked me to death- Like bro, don't come out and say Wendover when i turns 100% focus on him-

I love this style of video and all the good information. Well researched. Im looking up all your work you got a fan

Video is good, SD is key issue. But leaves other key parts. The 9000 wells is a misnomer. 2,200 of those leases are held up in litigation and cannot proceed in any form until litigation is complete (could be years). Second, lease does not equal enough oil for viable project. Companies often obtain leases for land which is believed to have reserves, lease utilization rate will be never be 100% or close to it. Third, you can hold a lease but if infrastructure is lacking such as a pipeline or roads, those gotta be built, those require additional investment and permits. On the topic of permits, you much have an environmental assessment approved as well as a drilling permit. A large number of those 9,000 leases have requested associated drilling and EA permits. Though the time to process has more than doubled under Biden vs Trump/ Obama

It's the highest I've ever seen it in KC... creeping in 5$ at the pump today. ive lived here since the 90s

An impressive essay. What I find most people neglect to present is how many other things in our world are reliant on Oil & Gas. Fertilizer for the world market is produced with sulfur from the refining process. Tires, inks, plastics etc. all use some part of the distillate from Oil & Gas. It’s easy to say move away from O&G for fuel but there’s a direct market affect on every other item produced.