“The Stone Age didn’t end for lack of stone, and the Oil Age will end long before the world runs out of oil” - Ahmed Zaki Yamani, Minister for Oil for Saudi Arabia
One might consider that everything in AI land is built on projections. That includes data centres. Ive got a niggly feeling that speculation ie buying and selling of financial products in lieu of the growth of IA is driving this. It's better to spot the ACTUAL financing and construction of data centres. Ive noticed a lot of delays recently. Some say AI is a bubble, not quite dutch tulip status but still, i increasingly get the feeling it might be so.
On 2nd thoughts it might actually be more physical constraints that hamper the data centre rollout than finance. Ie, energy allocation, molecules etc. I also see more objections by the general public from all sides of the political spectrum. Unless data centres can supply their own energy and don't simply take that energy from the grid i see hickups continueing. Ironically the same as w renewables and their physical constraints.
My question would be: can the digital control grid needed for CBDCs/ Stablecoins and digilal IDs actually function without those data centres?
Commodity cycles usually end from incentive destruction before resource depletion.
Years of underinvestment eventually tighten spare capacity, raise geopolitical sensitivity, and increase volatility transmission across the entire inflation complex.
Energy markets are still heavily shaped by prior capex decisions.
Good question! There’s a couple of things there. My focus in this post is focused on oil rigs vs gas rigs, so I’d need to look at the gas specific data. From an AI infra buildout, we could see a change in how gas-specific rigs react, but we quickly run up against infrastructure limitations, specially around natural gas pipelines. A clear example of this is west Texas, where you often seen negative natural gas prices because of a lack of takeaway capacity.
On the LNG front, the U.S. is limited in exporting additional bcf because most of the capacity is already contracted out, something around 80%, so there’s not a lot of flex to export more unless we get greater investment in liquefaction plants
That infrastructure bottleneck point is exactly what I keep coming back to because it may become one of the most important factors in evaluating energy and infrastructure stocks going forward... Really appreciate the thoughtful response.
Specifically American energy and infrastructure stocks, those that have large exposure to these landlocked production sites.
Canada is currently new outs on their west coast towards Asia. I expect local Alberta gas prices to connect with the world prices more and more often in coming years, reducing the episodes where Canadian gas is locally oversupplied.
Why would oil producers make strong commitments to drilling if the long end of the curve doesn’t show a strong impact from the war? The industry has been burned before, obviously if the fallout does come it will be that much worse
One might consider that everything in AI land is built on projections. That includes data centres. Ive got a niggly feeling that speculation ie buying and selling of financial products in lieu of the growth of IA is driving this. It's better to spot the ACTUAL financing and construction of data centres. Ive noticed a lot of delays recently. Some say AI is a bubble, not quite dutch tulip status but still, i increasingly get the feeling it might be so.
On 2nd thoughts it might actually be more physical constraints that hamper the data centre rollout than finance. Ie, energy allocation, molecules etc. I also see more objections by the general public from all sides of the political spectrum. Unless data centres can supply their own energy and don't simply take that energy from the grid i see hickups continueing. Ironically the same as w renewables and their physical constraints.
My question would be: can the digital control grid needed for CBDCs/ Stablecoins and digilal IDs actually function without those data centres?
Commodity cycles usually end from incentive destruction before resource depletion.
Years of underinvestment eventually tighten spare capacity, raise geopolitical sensitivity, and increase volatility transmission across the entire inflation complex.
Energy markets are still heavily shaped by prior capex decisions.
If capital discipline, automation, infrastructure bottlenecks, and shareholder-return priorities are now structurally limiting rig growth…
what happens when AI-driven electricity demand and LNG demand continue accelerating at the same time?
Good question! There’s a couple of things there. My focus in this post is focused on oil rigs vs gas rigs, so I’d need to look at the gas specific data. From an AI infra buildout, we could see a change in how gas-specific rigs react, but we quickly run up against infrastructure limitations, specially around natural gas pipelines. A clear example of this is west Texas, where you often seen negative natural gas prices because of a lack of takeaway capacity.
On the LNG front, the U.S. is limited in exporting additional bcf because most of the capacity is already contracted out, something around 80%, so there’s not a lot of flex to export more unless we get greater investment in liquefaction plants
That infrastructure bottleneck point is exactly what I keep coming back to because it may become one of the most important factors in evaluating energy and infrastructure stocks going forward... Really appreciate the thoughtful response.
Specifically American energy and infrastructure stocks, those that have large exposure to these landlocked production sites.
Canada is currently new outs on their west coast towards Asia. I expect local Alberta gas prices to connect with the world prices more and more often in coming years, reducing the episodes where Canadian gas is locally oversupplied.
Why would oil producers make strong commitments to drilling if the long end of the curve doesn’t show a strong impact from the war? The industry has been burned before, obviously if the fallout does come it will be that much worse