1/ A few thoughts on the politicization of #energy markets spurred by these remarks from @SenWarren. There's nothing worse than intellectual dishonesty from intellectuals. Either @SenWarren is purposefully misleading or doesn't understand how energy markets work. #OOTT, #EFT
2/ Let's set the record straight. #Oil and #gas prices prices are up because of a supply/demand imbalance and a lack of investment in new production finally catching up to demand. Can briefly see more below, or look at data from @IEA or our own @EIAgov.

3/ $XOM and $CVX together produced just over 4m bdp of oil in Q3 '21, which is less than 5% of global production (~96m bpd in Sept). They don't exactly have pricing power. Shouldn't the Senator leading the antitrust charge understand what's monopolistic power and what's not?
4/ Prices at the pump would be related to their refining businesses - each of which accounts for ~20% of net income. Profits aren't "doubling" because of price gauging in this ultra-competitive market. Has the Senator looked at the price of oil year-over-year? WTI chart below:
5/ Commodity companies are price takers, not price makers. They have a high proportion of fixed costs relative to variable ones. When such firms are selling into end-markets where the product price doubles YoY, profits are going to go up. A lot. Nothing nefarious.
6/ Democrats are panicking because inflation is sapping their popularity. Higher costs for energy, food, goods and shelter are mostly a regressive tax. Doesn't matter if the economy is doing better to most people if they personally are doing worse.
7/ Enormous stimulus/spending packages (regardless of whether you agree with their merits) coupled with restrictive oil/gas policies are creating an energy market nightmare. Despite trying to deflect blame on OPEC and now US businesses, this is a Made in America problem.
8/ The Biden admin and its surrogates can try talking down prices by suggesting an SPR release, oil export embargo or a market manipulation conspiracy by producers, but none of this is wise, accurate or long-term impactful. See more from @UrbanKaoboy:

9/ What would better balance oil and gas markets longer-term is a more constructive and supportive domestic energy policy. There's a reasonable middle ground between "drill baby drill" and "the green new deal." Some more thoughts on that below:

10/ What worries me as a citizen is that #ESG-inspired energy policies will lead to bad economic outcomes, which will ultimately undermine environmental priorities and create a populist backlash that threatens our sociopolitical stability. A LOT MORE here:
linkedin.com/pulse/esg-road…
11/ You have to appreciate the irony at least of one of the proponents of the Green New Deal concerned about the prices people pay at the pump. Isn't that the whole point? To make oil/gas so cost prohibitive that it further and faster accelerates the transition?
12/ The fact politicians like @SenWarren now are concerned about US oil production/prices shows that political and economic reality matter a lot more than this rapid energy transition fantasy. I too care about the environment, but people have to be able to afford living.
13/ It's pretty fitting @SenWarren would ultimately blame the private sector for these problems, rather than public sector policy errors. I guess the private sector is only good for its tax revenue to build all the roads we drive on and nothing more...
14/ I'm a little more peeved than usual about this because my familiarity with @SenWarren from my time at Harvard Law. I think the Sen is smart and knows better. This looks dishonest and regardless of where the dishonesty comes from - the Right or Left - it's all the same: Bad.

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More from @StuLoren

1 Nov
1/ This is a thread about the deteriorating state of affairs in #Illinois and, specifically, #Chicago. But it’s probably applicable to other cities and states that in recent years have experienced rising #crime and slowing #economic growth.
2/ I'm writing this because there comes a time when everyone reaches some personal boiling point on some issue and I've hit it. I'm not going to stand back, silently while my family's safety and economic outlook is increasingly at risk.
3/ My thoughts aren’t 100% formulated yet, but I want to start building out my thinking on some urgent issues and hopefully create an intelligent discussion space. As time goes on, I will likely have more to say and bring more data and actionable ideas to the table.
Read 84 tweets
19 Oct
1/ This is a thread on concerns I have with #ESG investing and the role of #markets in a functional, #capitalist #democracy. Warning: it’s long and nothing in here is necessarily original on its own, but I wanted to tie together some thoughts.
2/ At the outset, I want to make clear that the following is my analysis, not my firm’s. If ESG factors matter to you, by all means invest accordingly. I also care about environmental, social and governance issues. My guess is almost everyone does to varying degrees.
3/ Additionally, over the last 5+ years I have invested in firms benefitting from cost declines in renewable power, advised clients to do so and at one point was trying to raise an energy transition fund.
Read 112 tweets
6 Oct
1/ U.S. #energy policy is in serious need of a rethink. Energy policy is not just climate policy, it's #economic policy and it's #foreignpolicy. Our European allies' dependence on #Russian gas supplies is geopolitical malfeasance.

bloomberg.com/news/articles/…
2/ For decades, the U.S. was reliant on energy supplies from the Middle East, which dictated our foreign policy decisions in the region. The #shale revolution provided a brief, decade-long reprieve from the mercy of #OPEC.
3/ But rather than use our energy abundance as a geopolitical and national/economic security tool, we are ceding power back to those whose national interests are not aligned with those of the U.S.
Read 20 tweets
5 Oct
1/ This is a thread on my rationale underlying the #investment opportunity in #defense firms. A compelling #value opportunity in an otherwise mostly expensive market. Touches on the realities of human nature and the growing risk of global conflict.
2/ The history of man is largely a history of conflict. As advanced in technology and morals as we'd like to think we are, I tend to side with the Hobbesian view that the the natural state of the world is one of anarchy, or: "the condition of Warre."

gutenberg.org/files/3207/320…
3/ Governments serve many key functions and can take many forms - I'm partial to liberal (lowercase L) democracies - but historically all share a common purpose and source of legitimacy: to keep their citizenry safe. There can be no prosperity without security.
Read 25 tweets

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