Newsletter No. 180
Good afternoon,
There’s a lot happening in energy this week, and to me, the biggest takeaway is that energy security still matters. Shipping through the Strait of Hormuz remains well below normal, higher oil and natural gas prices are showing up in what consumers are paying, and we’re seeing billions of dollars in U.S. oil and gas assets come to market. That tells me there is still a lot of value being placed on good U.S. energy assets and infrastructure.
We also have a new episode of The Jay Young Show with tax strategist Ed Lyon. Jordan and I talk with Ed about proactive tax planning, common mistakes high earners make, and what business owners and investors should be thinking about before year-end. Keep reading this week’s The Upside for the full stories, what they mean for U.S. energy, and this week’s conversation with Ed.
This Week's Headlines
Oil and Gas News
- Hormuz Shipping Remains Low as Temporary Corridor Is Discussed
- Gas Prices Climb Back Toward $4
- UK Energy Bills Head Higher as Natural Gas Prices Rise
What's Happening at King
- Tax Planning Should Start Before Tax Season on The Jay Young Show
- Upcoming Tax Webinar Series Featuring Tax Strategist Ed Lyon
- Oil & Gas Rundown LIVE! If you Missed It
Energy Market Perspective
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Oil & Gas Deal Activity Is Picking Up
Move to Watch
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Enbridge Makes a Big Bet on the Permian
Oil and Gas News
Hormuz Shipping Remains Low as Temporary Corridor Is Discussed
Shipping through the Strait of Hormuz is still running well below normal. Only five commodity ships moved through on Tuesday, compared with a recent average of about 15 a day. That matters because Hormuz is one of the most important routes in the world for moving oil and gas.
Iran and Oman are talking about opening a temporary shipping corridor and clearing mines from the Strait, but Iran is still saying it will remain closed unless the U.S. ends the war. With about 65% of the oil moving through Hormuz headed to China, any real reopening could have a big effect on global supply and prices.
The bottom line is there’s still a lot of uncertainty around Hormuz. Fewer ships are moving through, tensions remain high, and the market is reacting. Brent is above $90 a barrel and WTI is over $80 as traders worry about more disruptions to Middle East oil supply.
Gas Prices Climb Back Toward $4
Gas prices are moving higher again across the U.S. and are now averaging close to $4 a gallon. Prices are up more than 30% since the war with Iran began, mainly because tighter global oil supplies are pushing crude and fuel costs higher.
Some states, including California, Hawaii and Washington, are already near $5 a gallon, while Texas remains among the lowest-cost states. The bigger picture is that higher oil prices don’t just hit drivers at the pump. They also raise jet fuel costs, transportation expenses and, eventually, prices across the broader economy.
UK Energy Bills Head Higher as Natural Gas Prices Rise
Household energy bills in the UK are expected to hit a three-year high this winter as higher natural gas prices push up the cost of electricity and heating. The country’s energy regulator raised its household price cap by 4% for October through December, after bills had already jumped 13% for the summer.
For the average household, that would bring annual energy costs to about $2,350. The main reason is higher global natural gas prices tied to the conflict in the Middle East, showing how overseas supply disruptions can quickly raise energy costs for consumers.
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Happening at King
Energy Market Perspective
Oil & Gas Deal Activity Is Picking Up
There’s a lot more movement in the oil and gas deal market right now. About $20 billion worth of private oil and gas assets are reportedly being marketed across the U.S., including several large positions in the Permian, Eagle Ford and other major basins.
The reason is pretty simple. Higher oil prices have improved the value of these assets and created a better environment for owners who have been waiting for the right time to sell. At the same time, larger operators and private equity firms are looking at where they can add scale, improve their portfolios or pick up quality acreage.
From an energy market perspective, this tells me there is still strong demand for good oil and gas assets. Companies are willing to put real money to work when they see solid production, good acreage and long-term upside. It also shows that even with all the talk about moving away from fossil fuels, the market still places a lot of value on U.S. oil and gas production.
Learn More about how King Operating Corporation is helping develop the energy America needs for the future.
Move to Watch
Enbridge Makes a Big Bet on the Permian
Enbridge is paying $600 million for about 500 miles of crude oil pipelines in the Permian Basin. These pipelines can move around 420,000 barrels of oil a day and already serve more than 20 producers.
Enbridge is putting more money into the infrastructure needed to move Permian oil from the wellhead all the way to the Gulf Coast. To me, that’s another sign that major energy companies still see a lot of long-term value in U.S. oil production.
All the best,
Jay
