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Has IEA Resorted to Political Gimmickry?

Public Policy

On May 18, the International Energy Agency (IEA) unveiled a report that it claims is the “world’s first comprehensive study” of how to achieve a net-zero emissions energy system by 2050. In a press release the IEA contends its report outlines a plan for reaching that goal while “ensuring stable and affordable energy supplies, providing universal energy access, and enabling robust economic growth.” Moreover, it calls for an immediate end to fossil fuel supply project investments and predicts no sales of passenger cars powered by internal combustion engines by 2035.

One of Rigzone’s regular market-watchers seems unimpressed with IEA’s grand proposal, and another sees it yielding a potentially rosy scenario for oil and gas producers. Read on for these and other insights in this review of the past week’s oil and gas market hits and misses.

Rigzone: What were some market expectations that actually occurred during the past week – and which expectations did not?

Tom McNulty, Houston-based Principal and Energy Practice leader with Valuescope, Inc.: News that there might be a deal in the works with Iran, such that sanctions might be adjusted or lifted, caused oil prices to drop right away. This means an additional 1.5 million barrels per day (bpd) of oil coming on to the market, officially, but I am skeptical because think Iran has been selling volumes close to that to China all along. The condition of Iran’s oil complex is also in question, after years of poor management and investment. Iranian oil should not be viewed as having a substantive price impact for the time being.

Gerrad Heep, Partner-in-Charge, Energy – Audit, Grant Thornton LLP: With a full quarter of relatively stable pricing, there was an expectation that oil and gas property impairments might finally subside for First Quarter 2021. In a random sample of ten public, independent producers (five followed full cost accounting and five followed successful efforts accounting), every company had an impairment in the fourth quarter of 2020. Only two of the ten had an additional impairment in the first quarter of 2021, and the size of those impairments was relatively small.

Rigzone: What were some market surprises?

Mark Le Dain, vice president of strategy with the oil and gas data firm Validere: A lot of talk about the IEA net zero report which basically outlined a scenario where they suggested no new oil and gas developments. One of the interesting responses to this is some funds are describing this type of environment – not practically achievable of course, but the continued pressure – as perhaps the ideal scenario for energy returns over the next decade. Restricted development supports a robust oil price in a world where demand is still growing and higher cost of capital and barriers to entry allows the existing incumbents to capture that profit for shareholders. The industry often returns its cost of capital over longer periods of time, supporting this, and it makes sense that any further barriers to the creation of supply supports additional returns.

Heep: It was surprising that crude oil prices did not react more to recent events. The U.S. Centers for Disease Control announced revised guidance on wearing masks, conflict erupted between Israel and Hamas, and the Colonial Pipeline shutdown crippled the supply of gas to the East Coast. Yet West Texas Intermediate stayed in the $63 to $66 a barrel range. Perhaps it is another sign that crude oil prices have stabilized.

McNulty: The biggest market surprise this week came from the IEA, with its net zero emissions report, stating that oil demand will collapse down to 72 million bpd by 2030. That is less than 10 years from now! And the report goes on to say that demand will fall to 24 million bpd by 2050. As if that is not enough, the IEA states that many of the new liquefied natural gas supply projects being built today are “also not needed”. Why is the IEA making these predictions? Because an electrified transportation fleet worldwide will not need any gasoline. But where will all the power come from, to charge this fleet, if nuclear and natural gas are gone? This report might mark the moment when the IEA has “jumped the shark,” and shifted from an analytical framework to a political one.


4 Comments on "Has IEA Resorted to Political Gimmickry?"

  1. Theedrich on Wed, 26th May 2021 3:08 am 

    The Biden admin is installing freaks and psychotics as henchmen.  They are the best Leftists.  The new Soviet also prefers types with gorilla-style noses (“historic firsts”) to execute its anti-evolutionary strategy.  Needless to say, it is thoroughly materialistic, although it uses religion or pseudo-spirituality as a front for its murderous program.

    The aim is to turn America into a narcoticized Marxist dictatorship of the billionaires, by the billionaires, for the billionaires.  Lies, sloth and perversion in every field is the strategy.  The practice of medicine is controlled by politically favored frauds hiding behind “science,” the clay-footed idol of the masses.  New psychoses such as “gender dysphoria” are proclaimed as derangements to be solved by surgically carving up those hypnotized as having been afflicted by genetic mistakes, thereby enriching the medicine men and women.  Sociopathic district attorneys everywhere are releasing vicious criminals onto the streets to victimize the public.  “Critical race theory” is being programmed into White 5-year-olds.  Never mind the millions of ThirdWorld trash being imported under the guise of “humaneness” by Biden.  The military is being used as an agency for socialist change.  Et cetera.

    Of course, this decay has been coming for a long, long time.  Since at least 1860, America has been run by presidents determined to destroy White-run Western civilization in order to clear the way for an indiscriminately mongelized conglomerate of subhumans.  Bribery by the superrich and foreign countries (such as Biden’s purchaser, China) is a major tool in the armory of the megalomaniacs.  And the slavish submission to the career criminals at the top is evidence of intimidation by propaganda at every level and sphere, including religious institutions.

    The Biden administration realizes it has only about two years to make its destruction permanent, so it is working with maximum speed to eviscerate every human cultural institution, including the family, in order to impose its dictatorship on the proles.

    And the herd welcomes it through its choices in elections.

  2. Cloggie on Wed, 26th May 2021 3:12 am 

    We have a new special relationship developing, namely between Spain and the US, in renewable energy matters:

    “Spain to Build 500 MW Hydrogen Plant”

    Iberdrola is already very big on US renewable energy markets. Now US energy company Cummins is entering Spanish markets to build a huge green hydrogen factory near Madrid to the tune of 500 MW, to be expanded soon towards 1 GW.

  3. Biden's hairplug on Wed, 26th May 2021 3:42 am 

    “And the herd welcomes it through its choices in elections.”

    Too pessimistic. The white herd voted for Trump in 2016 and it was indeed a “white lash”. Trump would have won again in 2020, but was stopped by Dominion. Now white America is collecting courage to attempt an escape. The waiting is for an incident, that could be foreign or domestic.

  4. makati1 on Wed, 26th May 2021 5:47 pm 

    What an “interesting” view of the world you have Biden’s/Cloggie! Have you ever talked to a shrink? Maybe you should?

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