We focus on the longterm implications to the energy sector of the sharp rise in geopolitical turmoil, especially following the terrorist attack in Israel last weekend, coupled with continued stock market turmoil among past energy transition darlings like Orsted and Next Era Energy Partners among many others.

We make the following observations:
(1) The unmet energy needs of the other 7 billion people on Earth is massive and points to significant longterm growth potential in all forms of energy, both new technologies and traditional sources like crude oil, natural gas, coal, and nuclear.
(2) Yet, almost no one is calling for oil and gas companies to grow CAPEX and the major decline in New Energies equities and rising cost of capital in that space points to slower New Energies CAPEX as well, at least versus prior forecasts.
(3) Rising Middle East tensions and the ongoing war between Russia and Ukraine come at a time of generally low OPEC spare capacity, even after considering the recent supply cuts from Saudi Arabia.
(4) The number of oil projects in particular being pursued continues to shrink and the cost curve is steepening.
(5) While we continue to characterize the commodity macro as "Super Vol" rather than "super cycle" due to economic uncertainty in three of the largest energy consuming regionsChina, Europe, and the USAthe addition of new geopolitical risks in the Middle East coupled with turmoil in the New Energies space suggest it is just a matter of time before we hit a major pinch point for energy commodity prices.
(6) The traditional energy sector continues to be generally underappreciated by most investors, policy makers, politicians, and academics. And we would at some point expect to find value among some New Energies equities whenever the dust settles, though that day may still be some ways into the future.

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DISCLAIMER
My views are my own and not attributable to any current or past affiliation.

CREDITS
Intro & Outro music: Wolf Hoffman on Apple Music: Concerto for 2 Cellos in G Minor, Rv 531: I. Allegro Moderato.

This episode of SuperSpiked Videopods was edited and produced by Veriten Productions.