Mitigating Hydrocarbon Market Volatility
May 7th, 2020
By Synfuels Americas
All Americans are experiencing the disruption wrought by the societal response to the global pandemic, but unique to those in oil and gas are the trying times brought by the actions of OPEC+. Specifically speaking, we are looking at depressed oil prices because of the international crude cartel’s desire to reclaim market share by force- regardless of the price to their economies and societies. This has created energy market volatility. Synfuels Americas CEO Judd Swift is very familiar with Saudi Arabian market strategy and motivations given his diplomatic engagement with Saudi leaders like current Minister of Energy and royal family member Prince Abdulaziz Bin Salman Al Saud. Our experience is what leads us to believe now is an excellent time for the deployment of, and investment in disruptive technologies.
Volatility is the manifestation of uncertainty. Solar and wind producers are reeling not unlike coal and mid-size oil companies all of whom are seeking bailout assistance from the federal government. This uncertainty is resulting in market chaos wherein a proper application of capital and technology can enable new market entrants a competitive foothold. We’ve discussed before the current limitations on renewable power generation, but also the valuable role they play in a diversified portfolio of assets. As the traditional sources of power and fuel production flounder we are applying new technology that can catch the old world flatfooted, as we alter value chains and products.
Most of the mentioned responses to OPEC’s actions would require the United States to engage in non-capitalist, anti-free trade practices- forcing producers into lower production (against antitrust laws), issuing tariffs for foreign product and outright banning foreign oil. Perhaps what is needed, lies in an international compact or treaty form between North America and Europe. Maybe the New World and part of the Old need to engage in trading their oil only amongst themselves. It would lead to a more secure supply under the influence and regulation of free market countries; possibly even leading to cleaner, sustainable production.
We at Synfuels are looking to capitalize on new technology for value adding improvements to the current oil and gas supply chain. We would like to shorten the supply chain where possible, apply new technologies to once and currently unrecoverable reserves to provide value for companies, consumers and governments alike. The oil and gas markets do not need to be expanding to facilitate growing demand. However, it could benefit from a deepening and expansion of capabilities.
We are also enabling coal-centric firms to capitalize on their existing capital stock and infrastructure by providing access to technology for new capabilities. Coal miners can now utilize their own product for their own fuel production or to enter into new markets providing value to consumers. In-situ recovery is a viable option and applied correctly can reduce emissions and increase resource recovery while shortening the value chain by converting coal on-site.
The US is learning quickly that we are not as energy independent as we thought. As oil and gas companies dissolve, so do production, jobs and wealth. With those things go our pursuit of energy independence because we will need to service and fill demand with foreign supply. Alas, we will be back at square one. Therefore, we must expand our production base and capitalize on our existing fuel reserves be it coal, crude oil, natural gas or natural gas liquids. The resources now have varied applications and utility due to the technological advances we pursue every day. We must apply our leadership and utilize our technology and infrastructure in this current environment of uncertainty, in order to secure more stable, cleaner and prosperous sustainable energy for the future.