All right, my oil and gas predictions for 2025. I’ve been doing this since 2014. So, let’s see what I got right and what I got wrong last year before we get to my predictions for 2025.
If you want to check out all my past predictions and see what I got right and also what I got wrong, here are the links for the past 11 years I’ve been doing this. Some of it is really funny 😂
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024
What I Got Right and Wrong Last Year
First prediction for last year, see you in court. I absolutely got that one right. Energy transfer is suing Greenpeace for 300 million in connection with that whole Dakota access pipeline mess. ExxonMobil is suing activist shareholders. Shell is also suing, so a hundred percent got that right that for the first time, the oil and gas industry is suing those that illegally interfere with their business.
Number two from last year, natural gas infrastructure will boom. Absolutely got that one right too. Presently there’s about 8,700 miles of natural gas pipeline under construction in the US, which is much more than was reported the year before last. And we have 11,000 miles of projects planned. So natural gas infrastructure will boom. I got that one right.
ExxonMobil goes private. I got that one wrong. I still think the drivers are there for ExxonMobil to look at going private, but it just didn’t happen, and I just completely missed that one.
Number four prediction from last year, interest rates will go up after the election. Got that one wrong too, interest rates went down.
Peak electric cars will happen 2024. Yep, I got that one right. If you look at all the EV manufacturers, they’re curtailing manufacturing, they’re actually canceling contracts, they’re giving steep discounts just to get the EVs off the shelves. Nothing wrong with EVs, in all right circumstances, they’re actually really great.
The problem is EVs are basically still for wealthy people. To have an EV and make it practical in your life, you need to be able to recharge it at night. So, when you get up, it basically has a full tank. The only way you can make sure it’s recharged every night is to charge it in your garage. And the only way you can start a charger in your garage is if you own the house. So, you can’t do this if you rent a house or rent a condo or rent an apartment and public charges just aren’t reliable.
So, I think you had the first-round adopters, the early adopters drove sales really quickly. All the state and federal subsidies for EVs spurred that. Now it’s got to the point where the market is saturated with people that wanted EVs and really not that many people are going to buy them after that. So peak electric car sales, absolutely I got that one right.
Then beginning of multi-year oil field service equipment boom, yes, I absolutely got that one right for last year.
The industry’s becoming a molecule industry, 100 % got that right. You see a lot of focus on what you can make with hydrocarbons. and getting the value out of that manufacturer of hydrocarbons to make different things.
The Death of ESG
Number eight for last year, ESG is dead, 100 % got that right. So many investors that started ESG funds, not only do the funds not make money, but they also lost money, and most of them have dumped the funds, and most of the investors have walked away from ESG.
Number nine, shale growth. Yep, I got that one right last year. The shale fields have grown. It’s a quick, easy oil. It’s not long-term oil, but it’s a quick, easy oil, and we figured out how to do it at a profit.
And then my 10th prediction for last year that I absolutely got right is rebirth of oil field pride movement. Besides the drill baby drill bumper stickers, which people are now not scared to stick on their vehicles like they used to be five years ago, there’s other things going on.
So, you may have heard of the group, Just Stop Oil, which is a bunch of young people in the UK that are protesting the oil and gas industry because they think we’re destroying the planet. They’re doing things like blocking traffic, throwing soup on famous paintings, painting Stonehenge orange, even trying to paint a Taylor Swift private airplane. And so, so many people are so aggravated with this that there’s now a counter group to just stop oil called Just Stop Pissing People Off. And it’s a bunch of young people that go and protest the Just Stop Oil people. So, rebirth of the oil field pride movement absolutely got that right.
So, if you look at what I did last year, I got 80 % of my predictions right. Now that’s not as good as I did the year before where I got 90% right, but it is better than my 11-year average of 74%.
Pricing for 2025
So, before I get into my oil and gas predictions for 2025, let’s talk a little bit about pricing. I think Brent will average $71 a barrel for 2025. WTI will average $69 a barrel and natural gas will go for $3.35 per million British thermal units.
Why is my price lower than everybody else except for gas where I’m higher? A couple of things. So, no matter what’s going on geopolitically, tariffs, politics, whatever, the market always wins when it comes to the prices of hydrocarbons, of natural gas and crude oil. So, what’s going on in the markets right now is the big driver for growth and demand for hydrocarbons is China and China’s economy. China’s economy hasn’t grown as much as a lot of people projected it would. And our current administration is talking about putting tariffs on China. If they do that, it’s going to slow down their economy even more, which means the demand is not going to be there.
However, I think our current administration is going to remove a lot of the roadblocks for production in the U.S. And remember, in the U.S., there’s not one person that says go up in production or go down on production, unlike Russia, China, and the Middle East, where they can control that and control prices. In the U.S., it’s not BP and Chevron and Shell that produces most of the hydrocarbons. It’s thousands and thousands of independent producers. A lot of these are small companies. Somebody’s grandfather stood up a long time ago. It’s a 10-man shop.
You have all these thousands of producers that must decide for themselves if they want to increase production or go down? Well, if our current administration is going to remove the roadblocks, things like permitting, drilling on federal lands, that sort of thing, a lot of these independent producers are going to go, this is time to produce. I think a lot of our independent producers are going to go up in production.
At the same time, I think what’s going on with Russia and the Ukraine is going to come to some type of settlement where both sides probably claim victory. But regardless of what that settlement looks like, that Russian oil that’s sanctioned will be allowed to come on the market, at least some of it, right? And I think the same things could happen in the Middle East. Specifically, I think the Houthis Rebel problems could disappear, which means supertankers now can go through the Red Sea, which is also going to increase supply.
Will Pricing Tank?
What happens when you have an increase in supply of hydrocarbons, but a decrease in demand? Prices tank. I think that’s what’s going to happen. So that’s where my prices are. A lot of experts out there are saying the prices are going go up for WTI and Brent, and prices are going go down for natural gas. I think the opposite. And the reason I think natural gas is going go up is I think we’re going to finally remove some of the roadblocks to get more LNG produced and transport out to other parts of the world, which then will cause a little bit of an under supply, which will cause natural gas prices to go up.
Oil and Gas Predictions for 2025
Let’s get to my oil and gas predictions for 2025. Number one, IRA fallout. What does that mean? The IRA is a law. So, our new administration that’s come in can’t change it, but they can do things like remove funding, remove the ability to enforce parts of it. And I think that’s exactly what’s going to happen. Now this is going to have a trickle-down effect. Most people will say, okay, if that happens, it’s going to hurt the renewable industry, which it will. That’s already starting to happen.
The people on the renewable side are really worried right now about future grant funding to keep their business alive. But it’s also going to affect a lot of the oil and gas companies that took advantage of that IRA funding as well. And so, when you look at it, I think there’s going to be this huge fallout. We don’t know where it’s going to end up, but I think it’s going to cause a lot of economic woes in the energy industry as a whole. So, my number one oil and gas predictions for 2025 is IRA fallout.
My number two oil and gas predictions for 2025, I think the big tech companies are going to become big natural gas companies. And you go, what? Hear me out. You’ve all heard how there’s a need for more electrical generation for data centers to run AI, which we can’t provide electricity right now. We have to have new sources of electricity. You may have even heard how Microsoft has partnered with Three Mile Island, the old nuclear plant that was shut down to relight that nuclear plant.
What’s happening is the big three, so Amazon, Microsoft and Google need cheap, reliable electricity to run new data centers to run AI, which is a profitable business for them. But the electricity, like I said, has to be cheap and reliable or the financial model just doesn’t work. So why don’t they all just start building small modular reactors? Because it takes 10 years at a minimum between the time you get a permit and when that small modular reactor actually gets lit. But they need electricity today. What’s the choice?
Nat Gas to the Rescue
There’s only one, natural gas. It’s cleaner for the environment, very quick to stand up, very reliable, very cheap. I think you can see the big data center providers, the Amazons and the Googles and Microsoft become big natural gas buyers and users. Now listen as I go through this. If you think that through, it makes sense, right? They’ll build natural gas generation capacity, but then they must connect that generation capacity to their data centers, which means they can build infrastructure. Well, their infrastructure will be new and modern and super-efficient and reliable because their core businesses could need that reliability and efficiency.
The other thing though is when you do this type of work, you build an oversupply. You’re not going to generate just enough electricity to run your seven data centers. You could build enough electrical generation to run 20 data centers for future growth, which means there’s going be a surplus of electricity on this brand-new infrastructure.
I think Amazon and Google and Microsoft at some point in 2025 are going to start selling electricity to us, the private citizens in the U S. And I’m telling you right now, sitting here in Houston, Texas, where I must deal with the grid that’s managed by ERCOT, I would much rather plop down my credit card and have Amazon provide my electricity because I know it’s going to be reliable and cheaper. This is my number two oil and gas predictions for 2025.
Number Three Oil and Gas Prediction for 2025 – Blunts to BTU’s
My number three oil and gas predictions for 2025 is Blunts to BTUs and all of you just went, what did you say, Mark? You heard me Blunts to BTUs. We talked about the need for more electrical generation to run data centers, right? We all know that.
Do you know what the second biggest growing need is for electricity in the US? Marijuana cultivation. In some strange sort of HSE way, the marijuana cultivation industry has also become friends with the oil and gas industry. They’re going to need the same cheap reliable electricity that the big data center providers need, and they’re going to do the same thing. So, marijuana cultivation is going to be investing in natural gas infrastructure and electrical generation. Blunts the BTUs, there’s my third prediction for oil and gas industry for 2025.
Fourth oil and gas predictions for 2025, Shell and BP on the road to Houston, Texas. Look at what’s going on with Shell and BP. Shell’s already moved their corporate headquarters once because of unfair laws and taxation. Both companies right now are having to still deal with the windfall taxes in Europe and a bunch of negative government intervention that I think they just could go, you know what, screw it. And they’re going to move to Houston, Texas. Now remember, when I’m doing my predictions, that doesn’t mean that’s when it’s going to be the peak. It also doesn’t mean when it’s going to be the most. It means that’s when it’s going to start.
So when I tell you that Shell and BP will move to Houston, it will start in 2025. It won’t be completed, but that’s when it’ll start. That’s why my predictions are true oil and gas predictions for 2025.
Then my next oil and gas predictions for 2025, our new administration is going to tank the price of crude, but only for a minute. I talked earlier about how I think our current administration is going to place tariffs on China. Also talked about how I think that they’re going to remove a lot of the barriers to production in the US.
The other thing that’s going on is, like I said, I think that the Russian oil will hit the market, and I think it’ll be cheaper to start moving crude and the natural gas through the Red Sea. All that’s going to come together at the exact same time, which means that the prices of hydrocarbons, especially crude oil, are going to tank for a little while because of our current administration.
The Public Will ❤️ It
Now, to feed that cycle, the public is going to love it. The price at the pump wil be less, the price for food could be less, the price to heat and cool your homes could be less, the price for everything will be less. And the public is going to love that, which is going to improve the rating of our new administration, which they are going to love. So, they could try to keep that cycle going.
Now it’s not good for the oil and gas industry. And like I said, and like I’ve always said, the market always wins. So, when I say your new administration is going to tank the price of crude, it will, but only be for a while, for about three months, about one quarter, and then the market will correct itself.
My next oil and gas predictions for 2025. Deep water growth. Deep water is expensive. Even ultra deep water, I think is going to grow, which is even more expensive than deep water. However, deep water and ultra deep water are conventional reservoirs, which have a much longer decline curve than shale plays. And so, when I look at the world’s demand for energy going up, it only can really be met by hydrocarbons. That hydrocarbon production means it needs to go up. And if you’re going to invest money in increasing hydrocarbon production, think the best bet globally right now is deep water. So, I think deep water growth is my sixth prediction for 2025.
Number seven oil and gas predictions for 2025, more refining capacity in the world, but unfortunately not in the US. it’s really a damn shame. If you’re going to build a refinery, it’s a large capex investment. I mean, anywhere from 40 to a hundred billion dollars, it’s going to be 10 to 15 years between the time you first break ground before some of the units go online and maybe 20 years for the entire refineries up and operating.
Risk – Oil and Gas Predictions for 2025
And so, it’s a huge risk to build a refinery somewhere if you must worry about politics or public opinion coming back and hurting your business or maybe not letting your refinery operate at all. So if you’re building a refinery, you’re looking around the world, where’s the least amount of geopolitical risk to build my refinery? And unfortunately, it’s not in the U.S. Exxon’s next refinery is being built in China. There’s a bunch being built in the Middle East.
We as the American public must take responsibility for the fact that financially it doesn’t make sense to build a refinery in U.S. today in 2025 because of the risk. Let’s hope that changes in the future. Remember, not only do we produce the cleanest hydrocarbon molecules in the world, but our refined products are also the cleanest in the world because we hold everything to such high standards.
If you’re building a refinery in China, right, or in the Middle East or in Russia, I promise you, you’re not being held to the same standards. And so those refined products have a more negative impact on the environment, more chance of people getting hurt. And that’s just not right. Those refineries need to be built here, but it’s just too much risk. Let’s hope that changes in the future.
Number eight oil and gas predictions for 2025 CCUS side hustle, carbon capture and storage, right? It’s a legitimate business, has proven itself and even though it’s still funded by subsidies, we now have line of sight to when it’s actually going to be profitable. But the thing I think is going happen in 2025 is you’re going have other businesses that are going to depend on CCUS grow. And that’s just going to help our industry.
Things like food processing, water treatment, welding, cleaning, fire extinguishers, laboratory, fertilizer manufacturers, metal fabricators, greenhouses, the cultivation of plants in greenhouses really, and of course enhanced oil recovery. If you don’t know this, if you have a reservoir that’s not doing too well, you can inject CO2 into it, and that basically adds energy to the oil, which makes it easier to get out. That’s the reason ExxonMobil bought Denbury, because of their CO2 expertise and infrastructure.
I think you can see all these CCUS side hustle businesses grow in 2025, which is just going to speed up the path to profitability for CCUS, which is just going to help the oil and gas industry. It’s going to be another revenue stream. And then quite frankly, if you are worried about carbon dioxide and you have an industry that’s pulling out the air or pulling out of power plant fumes or cement manufacturing, the negative public perception must go away because you’re doing something about it. So, I think my number eight oil and gas predictions for 2025 is the CCUS side hustle going on.
Return of US Manufacturing – Oil and Gas Predictions for 2025
Then number nine oil and gas predictions for 2025, and I love this, the return of oil and gas manufacturing to the US. A lot of the parts and pieces that are used, think of little things, think of chains, think of tongs, think of one-inch ball valves, mud pumps, pressure regulators, light bulbs, electrical wiring, conduit, all that sort of stuff. Most of that now is being built overseas, especially in China.
However, we have the manufacturing expertise here to do it, and we have the manufacturing facilities. It’s just that they’ve been running at a very low output, 5 % or 10 % of what they could kick out, because there’s not enough business for them. But the biggest thing is we have the skilled labor force and the market demand right here in our backyard. Well, when our current administration puts tariffs on China, it’s going to increase the cost of those goods and make it more profitable to manufacture them here in the U.S. than it will be to buy them from China.
A couple of things around that. Number one, the quality is going go up, which everybody’s going to love. Number two, kind of think through this. For a few years in history, not that long ago, Toyota was the number one American-made manufactured automobile. Why? because when we place tariffs on Japanese automobiles to make it fair for our American manufacturers, Toyota’s strategy was just to build a manufacturing plant here in the U.S., so it was an American manufactured vehicle, and it was a great strategy.
I think you can see the same thing happened with all the parts and pieces in the U.S. You will have some other countries come here and stand-up manufacturing facilities, but it will still be manufactured in the U.S. by Americans to our quality standards because it will be cheaper, because the other huge cost of manufacturing is electricity. And I expect our electricity prices to go down because our new administration is coming in.
And this whole return of oil and gas manufacturing to the US I don’t think it’s going to go away no matter what happens in the future. I think we’ve kind of went full circle and a lot of stuff we’ve manufactured here starting in 2025 and forever, which is great jobs, prosperity, quality level, that sort of stuff.
Final Oil and Gas Predictions for 2025
Then my final oil and gas predictions for 2025 is Another Day, Another Doomsday. Yeah, Right. The public is tired of the climate catastrophe people screaming that the oil and gas industry is destroying the planet. Number one, it hasn’t happened. The world’s gotten better in the last 300 years. Human life expectancy has gone up. Infant mortality has gone down. Death from climate has gone down dramatically. The world’s a much better place.
And if you look at the polls that have been happening for 10 years, the worry about the climate is less and less important to people. In fact, it peaked around 2021 where more people here and in Europe were worried about the climate and man’s impact to that.
Now, not that many people care about it anymore, which is a good thing. So, my 10th prediction for the oil and gas industry is Another Day, Another Doomsday. Yeah, Right.
So hopefully this was helpful to you. I’ve been doing this for 11 years. If you want to have some fun and some laughs, go back, the links will be for all the last 11 years’ worth of predictions I’ve done. You can see the stuff I got right; see the stuff I got wrong. But this is, I love doing this.
A little bit of warning now that we’ve grown so much that we have to have legal people involved in the stuff we do. Please make no investment decisions based on anything I just rattled off here. This is my personal belief of the oil and gas predictions for 2025. Hope this was useful to you. We will see you next time.