Peak Oil News and Message Boards

If shale doesn't get a 2nd boost after this bust, it will probably be Warren Buffett's biggest blunder. He seems to think there's more in the ground than doomers do and is buying low so he can sell high.

http://www.cnbc.com/2016/02/04/warren-b ... llion.html

This article explains how deliberate overproduction (not geological depletion) is knocking off shale, but Buffett's investment indicates he thinks this has a 2nd act.

http://www.cnbc.com/2016/02/04/early-si ... picks=true

Thanks ennui2.

Warren Buffett buying an oilco by building a big position in Phillips 66….Hmmm….very interesting.

But why Phillips 66? I have to admit I've been buying a little Schlumberger (SLB) and National Oil Well Varco (NOV) on days when the market makes big down moves in oil price and the stocks swoop down as well, but I've never even looked at Phillips 66.


If you had billions and billions of dollars and you could invest in any oil stock in the world, why would you pick Phillips66 to invest in?

Ah…here is why Buffet is buying Phillips66

phillips-66-best-play-on-domestic-shale

The company is mainly a REFINER these days. It buys shale oil, refines it, and resells it.

With shale oil prices so low, Phillips66 is buying the oil cheap and making big bucks selling gasoline etc.

Well of course OIL isn't done. We are at peak oil or close to it so we are exactly half done. Buffet will make as much money off us going down the curve as they did climbing up the slope. Notice the PSX is a refining and marketing company and has sold off it's oil fields to Conoco Philips. So this isn't a bet on oil as much as it is a bet service and demand.

There won't be much demand for service if shale dries up. The two go hand in hand.

ennui2 wrote:There won't be much demand for service if shale dries up. The two go hand in hand.

Thats true. And shale oil production in the Bakken and elsewhere is definitely starting to drop.

But in this oil glut Phillips 66 can buy cheap oil from multiple sources, not just from US shale oil.

I think Mr. Buffett is making a pretty safe bet with this purchase of 1 billion dollars of Phillips66 stock.