The stock market’s reaction is hardly surprising. However, it’s not going to be easy in the long term. Various security risks will ultimately arise. While its easier to control Venezuela than, say, Libya due to geography, it’s hard to imagine that majors will spend billions of $$ in the near term to boost production of heavy crude at current prices. Venezuela’s oil industry was clearly in a state of multi-year degradation, which means that anyone coming into the country would need to bring capital, equipment and, most importantly, workers – and guarantee their safety.
BJPark on
This is a delusional reaction. Do people have any idea how perfectly things need to go over the next 10 years for this to actually, directly benefit any oil company?
Sometimes I really think we believe we have total control over outcomes. How else to explain this delusional optimism? When has anything *ever* gone according to plan? And that too regime-change, lol! Yeah, those always work out excellently as expected and hoped.
Basically, there are only a few, narrow ways in which this ends well, with millions of factors needing to fall neatly into place. But there are nearly infinite ways this can go badly – both in the target country, as well as the US.
Hubris. Such hubris.
I would be shocked if oil companies themselves actually invested any money into Venezuela because of this.
Mr_1990s on
I don’t think anybody is surprised that oil related stocks spiked today. But, I don’t understand why the AP wrote this article without noting that all of the stocks they mentioned also spiked on Friday before the US’ action against Venezuela.
It seems very likely that there were investors who knew this was happening and that’s a very big problem.
DramaticSimple4315 on
It could take dozens of billlion dollars and years to rebuild the oil industry in Venezuela before it even begins to represent a positive annual cashflow for the US companies. And the more it floods the market, the lower the price, the stepper the financial cliff would be.
Plus, let’s think how quickly the oil industry has been outflanked by wind/solar in terms of competitiveness. That in spite of 5 years of climato-negationist policy from the US administration in the past 8 years. 10 years from now oil might well be completely irrelevant facing ever more effective renewables.
So, this is a moronic move. All individuals, funds and robots flocking to these companies long term are essentially betting on humanity to fail since should this venezuelian prove beneficial long term, it would mean that the global fight against carbon is completely sidelined.
4 Comments
The stock market’s reaction is hardly surprising. However, it’s not going to be easy in the long term. Various security risks will ultimately arise. While its easier to control Venezuela than, say, Libya due to geography, it’s hard to imagine that majors will spend billions of $$ in the near term to boost production of heavy crude at current prices. Venezuela’s oil industry was clearly in a state of multi-year degradation, which means that anyone coming into the country would need to bring capital, equipment and, most importantly, workers – and guarantee their safety.
This is a delusional reaction. Do people have any idea how perfectly things need to go over the next 10 years for this to actually, directly benefit any oil company?
Sometimes I really think we believe we have total control over outcomes. How else to explain this delusional optimism? When has anything *ever* gone according to plan? And that too regime-change, lol! Yeah, those always work out excellently as expected and hoped.
Basically, there are only a few, narrow ways in which this ends well, with millions of factors needing to fall neatly into place. But there are nearly infinite ways this can go badly – both in the target country, as well as the US.
Hubris. Such hubris.
I would be shocked if oil companies themselves actually invested any money into Venezuela because of this.
I don’t think anybody is surprised that oil related stocks spiked today. But, I don’t understand why the AP wrote this article without noting that all of the stocks they mentioned also spiked on Friday before the US’ action against Venezuela.
It seems very likely that there were investors who knew this was happening and that’s a very big problem.
It could take dozens of billlion dollars and years to rebuild the oil industry in Venezuela before it even begins to represent a positive annual cashflow for the US companies. And the more it floods the market, the lower the price, the stepper the financial cliff would be.
Plus, let’s think how quickly the oil industry has been outflanked by wind/solar in terms of competitiveness. That in spite of 5 years of climato-negationist policy from the US administration in the past 8 years. 10 years from now oil might well be completely irrelevant facing ever more effective renewables.
So, this is a moronic move. All individuals, funds and robots flocking to these companies long term are essentially betting on humanity to fail since should this venezuelian prove beneficial long term, it would mean that the global fight against carbon is completely sidelined.