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Oil and Gas Investor

Editor’s note: An abridged version of this “No One Asked Me, But …” column appears in the February issue of Oil and Gas Investor magazine.

The recent uprising in Kazakhstan was certainly about more than LPG prices—let’s not fool ourselves—but it serves as a stark warning as to how ingrained the energy sector is in any society. It’s also a stark warning to those of us in the west that any sudden disruption to energy affordability and availability has a profound effect on people’s day-to-day lives.

So it’s no surprise that unaffordable fuel would end up triggering protests that led to an uprising that led to a dangerous response from a government that led to, unfortunately, violence and deaths. Whether or not those protests were spontaneous or planned in advance is a discussion for more informed geopolitical pundits and reporters. But it’s clear, as it has always been, that energy policy decisions have an immediate and severe impact on society. Therefore, they are best made in consultation with those who understand market effects and not solely inside the walls of presidential palaces, parliaments and congressional chambers, and certainly not by activists with weapons and a pent-up angst just waiting to explode.

The Kazakh government’s decision to discontinue subsidizing LPG, the main fuel for cars in the western part of the country, caused an immediate doubling of prices, which left fuel unaffordable in a country already simmering over corruption, economic inequality and a questionable human rights history. Putting prices in the hands of the market drivers is a good move, but when the domestic market has been controlled by subsidies as long as LPG has been in Kazakhstan, the transition is bound to be rough on people.

It is easy to say the authoritarian government of a former USSR republic that maintains a cozy relationship with the Kremlin is a much different situation than the U.S. or the countries of Western Europe. Of course, there’s no doubt about it. But is it such a stretch to believe that when it comes to the politicized nature of the energy transition, the same couldn’t happen in the west?

In the U.S. renewables have long relied on subsidies. Left to their own devices, there is bound to be a rough transition. Say what you will about fossil fuels; the argument for today isn’t whether they are good or bad for the future, but rather they are a mature market at this point and thus more capable to remaining readily available and affordable—at least for the near future.  

Why is that important?

People suddenly plunged into darkness and/or immobility can get quite ornery. Many of us in Texas found ourselves frustratingly plunged into the cold and dark for merely one week in February 2021, and that was a dangerous enough situation for people. People died. Others, like me, where safe but instantly given a preview of life without readily available electricity. Frankly, I never thought I’d find myself scooping water out of a dirty swimming pool to flush a toilet, but I did. Thankfully, good ol’ gasoline kept me warm as I spent my days in my car and then nights under clothing and blankets manufactured with, you guessed it, oil. Now, take that away too and who knows?

I know what you’re thinking. But wasn’t that all because natural gas failed? Well, some would tell you the opposite, and that it was because wind farms froze. I have no idea which is true. I’m not an insider at ERCOT, the Texas Railroad Commission or the Texas Capitol.

The bottom line: playing political games with energy affects people dramatically. It turns them into pawns regardless of whether they are in Houston or Almaty. There’s no doubt we need energy reform around the world. The energy transition is happening and will ultimately make the world a better place. But let’s face it, neither the Kazakh protests or the independence of the Texas power grid have anything to do with solving climate change or improving the lives of people. They are simply about political power and market control. Neither are helpful when it comes to turning the lights on.

Maybe it is time we put the good of people and their well-being at the top of energy policy debate. A week of blackouts is one thing. Violence and death are completely different story. It’s not one I want to be a part, of course. How about you?

Speaking of ERCOT and the Texas power grid failure


While I’m no insider to the progress or lack of progress in correcting the issues that were caused by Winter Storm Uri a year ago, Hart Energy received quite an insider’s look. John Harpole, founder and owner of Mercator Energy and a natural gas expert, takes look at the how the Texas Railroad Commission and the Texas state legislature are trying to figure out how to avoid the disaster of last February. You can read the article, sidebars and interviews here.

Oil and gas divestitures? Not so fast

With apologies to ESPN college football personality Lee Corso, when it comes to the investment community completely divesting of oil and gas, I’ll borrow his catchphrase, “not so fast, my friend.” This was a topic of conversation during the recent World Petroleum Congress (WPC), which came to Houston and enticed the city that long called itself the “Energy Capital of the World” to add the “T” word. But “transition” doesn’t necessarily equate to divestment.

My Hart Energy colleague, Mary Holcomb, reported on this subject from WPC where Val Smith, chief sustainability officer with Citi, noted that when it announced its net-zero commitment last March, the firm was precise with the language it used to oil and gas clients.

“We intend to work relentlessly with our clients to help them transition, and we’ll transition together to net zero or lower carbon,” she said.

In the same panel discussion, Jonathan Cox, global co-head of energy investment banking with J.P. Morgan Securities LLC, said, “We don’t think there’s a path to a successful transition that involves firing our clients.”
So while the energy transition is in full effect, even the largest investment firms understand oil and gas will need to come with it.

Curious quote on oil prices

“We continue to work with producer and consumer countries and these steps have had real effects on prices and ultimately tools continue to remain on the table for us to address prices,”

-- Emily Horne, spokesperson for the Biden administration’s National Security Council, in a news brief published by Reuters.

Work with producer countries?

The immediate follow-up question here would be, by producer countries, do you include the U.S.? At last check, these were the top five oil-producing countries in 2021 by thousands of barrels per day:

1. U.S. (12,108)
2. Russia (10,835)
3. Saudi Arabia (9,580)
4. Iraq (4,620)
5. Canada (4,129)

Curiously, the follow-up quote we got was, “We will continue to monitor prices in the context of global economic growth and engage our OPEC+ partners, as appropriate.”

So the takeaway is that the administration is still working diligently to solve rising oil prices in the U.S. by working with all of the wrong people. It was not long ago when the U.S. achieved net exporter status. Prices hovered in the $40s and $50s. The answers, of course, are much closer to home. Just look at No. 1 and No. 5 on the above list.

As pointed out in the opening of this column, I’m definitely sure we don’t want to rely on a No. 2 on the list for much of anything, given its propensity to take care of its own interests first while possibly getting set to invade Ukraine.

Random, non-energy thought on the month


I’m not usually one for the latest online, social media or mobile crazes, but I must admit that Wordle got me this time. No one asked me, but here’s why I think this one is different for me (in six guesses or less, of course):

BREAK
THINK
AMUSE
(There, I did it in three!)

Another way to put it is that I often need a break and to think about something other than work. As an editor, linguistics kind of amuse me. So Wordle creators, you got me right in the heart with this one.

Oh, and it makes me feel smart.

I’m sure there are better players than me, but the only advice I can offer is this: take care of the vowels and the consonants will work themselves out. You’re welcome.

Value of veterans in the industry


In a previous career life, I had a brief but fulfilling stint working with military veterans transitioning to civilian life. I was able to work with companies who value military veterans as employees, managers and executives. Not surprisingly, many of those companies were in the oil and gas sector.

So I’m extremely proud of Hart Energy and its efforts to support military veterans through its Impactful Veterans in Energy recognition program. I sat down with Nick Tran of Schlumberger, our main sponsor of the program and a longtime Military Friendly designee, for a video interview to discuss the value of veterans to the industry. You can watch the video and see this year’s honorees here.

I’ll leave you with this: military deployment is rough gig, but what these men and women learn while on duty is much more than you might imagine. The ability to think strategically, logically, quickly and with certainty are hallmarks of military veterans’ abilities. Wouldn’t anyone want someone with those skills to be a part of their company?