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Each year, our friends at BP release a new energy outlook for the coming years. This energy outlook, which was released on January 25, 2017, is very well respected. At the very least, it gives us insight into how one of the largest oil companies in the world is thinking, and therefore, what they are planning for in the near and long term.
This year, the Energy Outlook largely corresponds to the predictions by the EIA in its updated outlook that we wrote about in the last edition of The Five Star Standard. And while I wish I could tell you that I was planning for 2035 when little Ty takes over Five Star (or little Tiffany depending on God’s plan), I am not that astute of a businessman – but it is something I keep in the back of my mind (as an aside – we will know if my lovely fiancé Gabi reads this as I will get a pretty quick text telling me we are not naming our children, should we be lucky enough to have them Little Ty and Tiffany – LOL).
From the report and conference call, there were a few nuggets that I thought you all would find interesting:
Finally, and importantly for us, BP sees a long-term fight between low-cost producers and others as the world remains awash in oil supply (or at least recoverable reserves). They believe that low-cost producers (namely certain Mid-East members of OPEC, U.S. shale producers and Russia) will continue, through 2050, to leverage their low production costs of production against higher cost producers that rely on offshore such as Brazil, the North Sea and Asia. The predictions of a long-term price war add credence to our belief that we will continue to see shorter boom/bust cycles that remain a bit enigmatic.