Morgan Stanley siger i en analyse af olieprisen, produktionen og nye teknologier, at olieprisen groft sagt har toppet for altid. Mens den toppede på 145 dollar i 2008 og nu ligger på 40 dollar, så tror Morgan Stanley ikke, at den kommer over 50 dollar. Det skyldes en kombination af shale oil, ny teknologi, øget satsning på gas og energi-effektiviseringer samt grønne investeringer. Morgan Stanley tror, at grønne investeringer og ESG vil blive den vigtigste finanspolitiske stimulans i USA og Europa i de kommende ti år.
The New Definition of “Peak Oil”?
Do tech-driven energy efficiencies—coupled with a shift in environmental attitudes—mean oil demand will fail to recover to pre-COVID levels?
Back in 2008, which at this point feels like it might as well be the 1800s, the investing world was obsessed by the idea of “peak oil”.
The thesis was that oil was becoming increasingly hard and expensive to find, while growth in the emerging markets was creating ever-increasing demand.
Between this mismatch and the view that higher prices would be needed to justify more production of this harder-to-find oil, prices soared. On July 4th, 2008, U.S. oil prices hit an all time high of $145/barrel.
Today, the same barrel of oil is worth about $40. And instead of a peak in oil supply, commodity markets are now contemplating a peak in demand. How we got here is a story of technology and environmental advocacy, and one that has material cross-asset implications.
The technological shift was in shale oil. New processes allowed producers, largely in the U.S., to dramatically increase output and do so much more cheaply than things like deep-water drilling.
U.S. oil production, which had declined steadily from 1985 to 2008, has more than doubled in the years since.
But a shift in environmental attitudes has mattered as well. New technologies have improved energy efficiency, while green investment is becoming a major policy theme.
At least 30% of Europe’s new 750bn EUR recovery fund will be spent on projects that aim to help the environment. Vice President Joe Biden’s economic plans call for even larger investments in clean energy and infrastructure. While the latter is obviously dependent on a U.S. election that is now less than one month away, we’re talking about very real numbers.
One of the largest oil producers recently released long-term projections for oil over the next 20+ years. Those projections saw oil demand failing to ever really rise above pre-COVID levels in their base case. And in the scenario where there’s even greater environmental policy action than we see today, oil demand could fall materially.
All of this, in our view, has significant market implications.
Coupled with the near-term challenges our analysts see for the oil market, we think prices will really struggle to move above $50/barrel, as levels above this will encourage producers to hedge much more aggressively at these prices. As such, oil prices should lag other “reflationary” assets in this cycle that we like a lot more.
Within the energy sector, it’s a reason that we favor producers of natural gas over oil, with the former having much more favorable supply and demand dynamics. More broadly, we think the shifting landscape could drive major divergences between stocks and currencies impacted by oil.
Finally, we see this story as further evidence that ESG investing is a theme with real dollars and euros behind it.
Depending on the U.S. election result, environmentally focused investment might end up being the single biggest theme in fiscal stimulus across the U.S. and Europe, over the next decade.
