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Super-Spiked Videopods (EP75): Obliterating Mainstream Macro Narratives: Natural Gas
WATCH the video on Substack by clicking the play button above or on YouTube (here).
STREAM audio only on Apple Podcasts (here), Spotify (here), or your favorite podcast player app.
DOWNLOAD a pdf of the slide deck by clicking the blue Download button below.
This week we extend our “Obliterating Peak Oil Demand” series to take on other mainstream macro narratives with a focus on natural gas. We have to admit, it did not even cross our mind that the outlook for global gas demand was anything other than continued growth for the foreseeable future. In fact, there are a number of high-profile macro forecasters projecting a permanent peak in global natural gas demand by as soon as 2030 and in some cases the mid-2030s. This, in our view, is pure insanity. We will take the over, and in fact the way over, that global natural gas demand will grow for many, many decades into the future.
Perhaps we were lulled into a false sense of presumed natural gas growth optimism based on what we think is a broad-based acceptance of US natural gas growth due to LNG export expansion and now AI-driven power demand growth. But we are realizing that a positive view of US growth is not necessarily extending to a positive view on global natural gas growth for some of the major macro forecasting agencies.
The final topic we discuss this week is a warning to ignore energy macro forecasters that merely tweak prior "transition" assumptions by pushing them slightly out in time. It was an article in the Financial Times this past week that caught our attention on this front and we would strongly encourage energy executives, investors, and board members to simply ignore and pushback on energy macro outlooks that are not grounded in energy's natural hierarchy of needs, which acknowledges that energy availability and reliability is all everyone everywhere cares about. Macro forecasts that prioritize counting carbon should not be the basis for how to think about capital allocation.
Before we dig in, two reminders. If you are listening to this on Spotify or Apple Podcasts, there is a corresponding video you can find on YouTube (here), Substack (here), or Veriten’s website (here). And second, this will be our final Super-Spiked of the summer. We will return after Labor Day.
Exhibit 1: We do not agree with energy macro forecasting groups that are calling for a peak in global gas demand by 2030 or 2035
Source: Energy Institute, IEA, OPEC, Veriten.
Exhibit 2: We do not agree with the projected sharp slowdown in global gas consumption growth made by some leading energy macro forecasters
Source: Energy Institute, IEA, OPEC, Veriten.
Peak natural gas even more non-sensical than oil
* The idea that global natural gas demand will peak, or even slow, by 2030 is even more far-fetched than the oil debate.
* Global power demand expected to grow at a healthy clip.
* 24x7x365 requirement supports base-load natural gas, coal, nuclear.
* Geothermal, while worth studying, is still unproven at scale; hydro is niche.
* Solar + batteries will grow in areas with high solar radiation. Wind is also location specific.
* Natural gas does need to compete on overall price/cost economics with alternatives.
* Access to capital matters in natural gas, which lacks the mega caps seen in the oil value chain.
Don’t
Published on 4 weeks ago