Oil prices during the pandemic dropped because governments around the world asked people not to drive and commuting helps drive up oil demand. People are beginning to commute which drives up demand and with all the other normal activities becoming normal, energy demand is up. However, governments around the world want to lessen their demand of oil and gas by concentrating on renewables.
In an article by Stanley Reed of the New York Times News Service, OPEC decided not flood the market with oil and gas, but only do a modest increase of 400,000 barrels a day or 0.5% increase.
Richard Bronze, head of geopolitics at Energy Aspects, a research firm, said, it is going to take oil prices sustaining above $80 a barrel for a period of time or pushing sharply higher.
Oil prices climbed on the news to $78 a barrel, the highest since late 2014. Oil prices have doubled in the past year (in addition many oil stocks have doubled).
OPEC will meet monthly to decide whether to increase the limit, the next meeting is scheduled for November 4.
Linking to dividend paying stocks, some of the best paying dividend stocks for the past 50 years has been the oil companies. It is hard not to have some in a dividend portfolio even if you want renewables to play a significant role in the generation of electricity. With every industry revolution there is a transition to the new one but when you examine how people heat their homes and drive vehicles, the transition will be in years not months. When the average person buys an electric car, we will be on the back end of the oil transition.
There are more questions than answers, till the next time – to raising questions.