Do Androids Dream of Electric Sheep...Or Just Lie About It?

Due to my obsession with energy markets I get the occasional question from investors. This week I was asked about the AI results on Google for queries about what price of oil Exxon needed to be profitable. I think it’s becoming clear to most rational people that the whole AI boom is a bubble that is based on a scam much like most of the Great American Bubbles. And the AI scammers have enlisted the oil industry scammers to help out by saying we need lots more gas power to fuel the AI we need to save us. Before I get to the Google AI results on oil prices, I want to talk about a very small man with big songs, Bob Dylan. 

This week I learned that Bob Dylan weighs “6 or 7” pounds. And if that “or” is confusing to you, AI wants you to know that “it’s important to remember that weight fluctuations can occur naturally.”  It really does think of everything doesn’t it?!

Now that we have established the power of AI to accurately answer tough questions, let’s get back to that query I got from an investor this week after they asked AI for some help on oil industry break-evens and they wanted to know if it was true.  What price of oil does Exxon need to make money?  Any guesses?

Good news for Exxon and its investors!!  According to  AI, which Bill Gates has told us will replace “doctors and teachers” in the next ten years, Exxon can be profitable at oil prices lower than $35 in the Permian. Can you see why the oil industry loves AI? AI is like the marketing department of the American Petroleum Institute on steroids. However, as people who can read and do simple math are aware, Exxon can not make money at oil prices lower than $35. I’ve laid out that case pretty clearly over the past 5 years. These were easy bogus claims for the industry to make when oil prices were $80 as no one could question it. Now that oil prices are below $60 it becomes a tougher lie to sell. And even the Wall Street Journal isn’t buying it anymore and quote very industry-friendly data group Rystad who,"estimates the price that many U.S. oil players need to break even—including dividend payments to shareholders and debt-service expenses—is above $62 a barrel.”  The real number is certainly higher than that.  This week on Mike Shellman’s Oilystuff site, he wrote that, "I'd like to add it [US oil industry] is not going to pay its current debt off, plug and abandon all its wells and decommission all of its massive infrastructure above ground below $90."  The industry never likes to talk about the cost to decommission (which they have no intention of paying) but when you add that in to get the true cost of U.S. oil, the number is significantly higher.

America is such a land of scams at this point that we are being lied to that natural gas is clean power and that we need a lot of it to power datacenters that are critical to our future (if you are a doctor or teacher reading this, Bill Gates thinks AI will take your jobs so your future isn’t really what he cares about, I guess).  The scam of natural gas as clean energy desperately needs us all to believe in the scam of AI. Which leads me to another crazy thing I read this week. In 2019 when I wrote the article, “The Inevitable Death of Natural Gas as a ‘Bridge Fuel’” I was not expecting what technology the industry would anoint as the new bridge fuel. Why would we need another bridge?  Where might this new bridge take us?  

“We should be thinking about renewables and battery storage as a critical bridge to when other technology is ready to scale, like new gas-fired plants,”  John Ketchum, CEO of energy producer NextEra

If you missed it, the last piece I wrote was called "methane insanity" and that was before I read Ketchum's bizarre take.

Climate denial was all about lying to the public and attacking known facts. The economics of the shale industry have been all about lying to the public and attacking known facts. This is what the oil industry does. Now they have partners in the U.S. government and the A.I. con artists to further blur the lines between truth and fiction. Meanwhile....