We reached the Memorial Holiday weekend and things energy related are going exactly as predicted.

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As I passed the Chandler America local Phillips OnCue yesterday, (Friday 5/27), I noticed gasoline (100% gas/no ethanol) was priced at $4.59/gallon. Before I finished writing this report, the price reached $4.69/gallon, a price central Oklahoma has never seen, and which parallels the national average for unleaded gas.

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While driving home that day, I remembered a statement I heard from earlier in the week: “We are going through an Incredible Transition.” I arrived home in time to see the close of the stock market on CNBC which reported July’s futures for natural gas were trading just under $9.00/MCF, the highest price in the last 14 years!

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That is an amazing price going into the middle of summer, when prices historically have fallen, and supplies are pumped into storage at low prices for winter use. Storage gas is now down 22.7% from just a year ago, while the country in certain areas appears to be bracing for rolling brownouts and blackouts. Likewise, oil was trading at a high price of nearly $115.00/BO (July’s futures), which comes as no surprise, considering the circumstances of the last three plus years. Several recent releases of oil from the strategic reserve and a push to produce 15% ethanol gas has not seemed to make a difference on gasoline and diesel fuel prices.

 

That is one of the most puzzling aspects to me. We wholly support farmers, but higher ethanol gas goes against the Green New Deal zero carbon agenda, as ethanol gas produces more carbon emissions than 100% gas.

As of 4/22/22, the average daily domestic production and active drilling rig count was 11.7 million BOPD (barrels of oil per day) and 695 active drilling rigs, half of which are in Texas. Unless a drilling boom is forthcoming, a return to energy independence will not come quickly. Calls to Saudi Arabia, Venezuela, and even Iran to produce more oil have been placed. However, investors for American domestic producers are still receiving the signal that American production is off the table.

 

Rising inflation now is a big deal and probably the number one concern of most Americans today. This too could be “The New Normal” (PART II) unfortunately. We as explorers, drillers, and producers, can only do our best to meet the nation’s rising energy needs, as demand for oil and gas continues to increase.

 

The above referenced “Incredible Transition” will likely be quite painful to the wallet in the meantime. As an example, before this letter was even completed and published, I went to town on Tuesday morning (5/31) and saw gas had risen to $4.79/gallon. On my next drive just three hours later, the gasoline price had gone up to $4.89/gallon. I thought wow, surely $5.00/gallon gasoline cannot be the New Normal. But time will tell, so let’s get to work!

 

Before this report was proofread and corrections were made and published, gas has gone to $4.99, $5.09 and now today $5.19/gallon.  My goodness, time that is telling us the direction of things to come is really going fast.