We still need OIL until 2060

It’s not cheap to drill for wells. This Goldman Sachs chart notes that rising inflation, rising wages, and rising materials costs are pushing up the cost of production.

Most wells have a payoff period that can last decades.  Yet, various agencies have called for these wells to be “sunsetted” before they reach their payoff period. What’s the point of the investment, then… other than to provide short-term political cover? Instead of expansion, they’re focused on shareholder returns. They’re buying back stock. They’re hiking dividends. And they’re paying off debt.  Naturally, this has created an unprecedented lack of investment in the energy markets. Last year, Goldman Sachs shined a spotlight on this problem in an alarming report.    “In upstream oil and gas, the industry at the peak was spending $900 billion per annum, which troughed at $300 billion in 2020, so a two-thirds reduction in apex. … We have exhausted all of the spare capacity in the system, and can no longer able to cope with supply disruptions like the one we are currently witnessing because of the Russia-Ukraine conflict,” the bank wrote in 2022. Less production today means less output in the future. And it becomes a simple balance of supply and demand before an energy crisis hits.  Now, I hear someone in the back say, “Well, don’t worry about it, Garrett. Because by 2030, we’ll have a massive charging infrastructure, and we’ll run off electric vehicles.”  To that, I just say: “That’s adorable.” Last week, I sat in on a presentation by geopolitical analyst Peter Zeihan, who was conducting a talk on globalization. He noted something that should alarm anyone hoping for a green solution...  To achieve the global green initiative, the world will require the following increases in metals by 2030, according to Zeihan:  We’ll need 3 times the amount of copper that we produce today.  We’ll also need 4x the Chromium.  We’ll need 10x the Lithium. We’ll need 10x the Nickel.  And we’ll need 18x the Graphite.  Is that possible? Not even close.  There are three reasons. And it all involves basic math. We’ve never been able to double the industrial capacity of any metal (that’s 2x) in a decade at any point. Yet, we’re suddenly going to do this at even larger scales for those five critical elements?