Newsletter No. 84
Good afternoon,
It is Thursday, September 26, 2024 and here is another edition of The Upside where I bring you the latest updates on the oil and gas industry, including what’s happening here at King.
This Week’s Headlines
- Insurers State Farm and Berkshire Hathaway Boost Fossil Fuel Investments
- BlackRock Predicts AI-Driven Surge in Asian Energy Demand by 50%
- EV Market Struggles as Consumers Say No to High Prices
- Diamondback Energy and Kinetik Expand Ownership in Major Texas Oil Pipeline
- Dr. Thomas Black on Medicine, Military, and Private Equity on The Jay Young Show
- The Rice Report: The Economic Storm: A Chilling Warning of Impending Crisis
Global Oil & Gas News
Insurers State Farm and Berkshire Hathaway Boost Fossil Fuel Investments
While many insurers are reducing fossil fuel investments, State Farm and Berkshire Hathaway’s insurance firms have increased their stakes in oil and gas companies over the past decade. A Wall Street Journal analysis revealed that from 2014 to 2023, State Farm grew fossil fuel investments from 2.6% to 3.6% of its $142.7 billion portfolio, focusing on companies like ExxonMobil and Chevron. Berkshire Hathaway’s insurers raised their fossil fuel holdings to over 20% of their $183 billion portfolio, driven by Warren Buffett’s significant investments in Occidental. As a result, the overall exposure of U.S. property-and-casualty insurers to fossil fuels rose to 4.4% in 2023.
BlackRock Predicts AI-Driven Surge in Asian Energy Demand by 50%
BlackRock anticipates a 50% increase in energy demand across the Asia Pacific region over the next decade, driven by the rise of AI and data centers. According to Brad Kim, BlackRock’s managing director for global infrastructure funds in the region, data center demand will double within five years. Tech giants like Microsoft are already securing long-term renewable energy contracts in Asia, such as a recent solar power deal in Singapore. BlackRock sees massive investment opportunities in energy and digital infrastructure as AI development accelerates, with plans to mobilize $100 billion in capital through a new partnership with Global Infrastructure Partners, Microsoft, and MGX.
EV Market Struggles as Consumers Say No to High Prices
The electric vehicle (EV) market is in decline as consumers reject high prices, with unsold EV inventory up 350% this year and only 34% of U.S. shoppers planning to buy an EV in the next two years, down from 48% last year. Major automakers like Ford are halting new electric models because there is low demand, and some EV brands are losing up to $600 a day in value. This drop in EV interest may lead to sustained demand for fossil fuels, as more people choose gas-powered vehicles. Investors might shift focus back to oil and gas projects, and lawmakers may reconsider strict emissions regulations, ultimately prolonging reliance on fossil fuels. You can see the up-to-the-minute commodities numbers here.
Move to Watch
Diamondback Energy and Kinetik Expand Ownership in Major Texas Oil Pipeline
Diamondback Energy and Kinetik have each bought a bigger stake in Epic Crude, the company that runs a large oil pipeline stretching 1,126 km from Orla, Texas, to the Port of Corpus Christi. This pipeline can handle up to 1 million barrels of oil per day. With their new 27.5% shares, both companies are boosting their control over oil transportation. Diamondback increased its oil shipments through the pipeline, and Kinetik set up a new deal to move more oil. Epic Midstream still manages the pipeline and owns 45%.
HAPPENING AT KING
Dr. Thomas Black on Medicine, Military, and Private Equity on The Jay Young Show
The Jay Young Show co-host Jordan Soto and I talk with Dr. Thomas Black, a veteran physician and investment expert. Dr. Black shares his journey from the military and medicine to managing over $1 billion in private equity transactions. He discusses his mission to empower healthcare professionals through financial education and insights from his book The Tax Cure. If you missed our live episode with him, you can catch the replay on YouTube, Rumble, or directly on our website.
Challenges in Replenishing the Strategic Petroleum Reserve
My latest blog examines the U.S. Department of Energy’s efforts to replenish the Strategic Petroleum Reserve (SPR) while there are financial constraints. After significant drawdowns, the SPR is at its lowest level in decades, and current funding allows for only a small portion of its capacity to be restored. Despite favorable oil prices, budget limitations pose challenges, highlighting the balance between maintaining energy security, managing finances, and transitioning toward alternative energy sources. You can read it here.
macro-economic look
The Rice Report: The Economic Storm: A Chilling Warning of Impending Crisis
In a recent special episode of The Rice Report, Eric Rice delivers a stark warning about the looming economic crisis, breaking down key factors driving the turmoil. You can watch this and more episodes of The Rice Report on YouTube and Rumble.
Also, please let us know how we are doing at King Operating Corporation. Leave a review here.
Recommended Reads
Gov. Newsom signs California legislation on oil and gas operations
BSEE: 29% of GoM oil production shut-in as Helene intensifies in the Gulf of Mexico
Thank you for your continued support, and if you have any questions for myself or any member of the King team, please don’t hesitate to reach out.
All the best,
Jay
