Thursday, December 22, 2016
Interest Rates and Energy
The easiest oil and gas has been tapped.
The recent declines in energy prices were the result of overproduction that was the result of new technology combined with ultra-low interest rates. Easy money.
The breakeven price of oil and gas is higher than 20 yrs ago.
Now interest rates are rising. There may be a reflexivity in the relationship of interest rates and oil/gas production. The cost of money may inhibit drilling and the rising cost of energy may cause interest rates to rise.
Energy production is much more money intensive than in the past.
Natural gas prices on the rise.