Energy Chart-a-Palooza

Charts, charts, charts

Energy Chart-a-Palooza
Photo by Lukas Blazek / Unsplash
Energy cross-currents are plentiful

U.S. Inflation Reduction Act and global efforts to move away from fossil fuels on one hand; skyrocketing energy prices and tight oil and natural gas markets on the other hand

Central banks across the world are raising rates, looking to induce a global slowdown or recession in order reduce demand and allow supply to catch-up, ultimately lowering inflation - can they thread a needle?

In the midst of an energy environment as confusing as we can remember, we off some charts to highlight topical themes

A Picture Tells 1,000 Words

Diesel cracks are going nuts again, driving much of the petroleum complex.  

We note wholesale diesel prices were 28% above oil prices, on average, the 34-weeks before the Russian invasion into Ukraine and 56% above oil prices the 34-weeks since.

It would appear constrained product supply from Russia has stressed global diesel supplies.

Shown a different way, diesel cracks are approaching a four standard deviation move versus 15-20 year averages.

Low U.S. oil & product stocks appear bullish for pricing, but demand questions have come to the forefront and have become the primary market focus.

Energy policy will surely be debated through the mid-term elections and beyond, but U.S. oil production through May 2022 has increased by the second highest amount on record.  The argument that policy is materially limiting production appears stretched.

Federal onshore oil & gas production is up 7.6% in May, when comparing the first five months versus last year, nearly twice the rate of the U.S. increase overall.

Another month of data rolled forward, inching Texas closer to over taking Alabama when looking at just renewable generation compared with total power generation, soon leaving only four states to overtake.

Not particularly known to be a solar state, Texas is on a pace to have its solar power generation exceed total power generation in 10-15 other U.S. states over the next 18-24 months, on our estimates.

We are putting the finishing touched on our inaugural long-form report.  Look for it soon.

Coming Soon