Super-Spiked Videopods (EP75): Obliterating Mainstream Macro Narratives: Natural Gas

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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 fall for “delayed transition” narratives

* There is now broad-based recognition that the “easy energy transition”” is a bad joke that has adverse societal consequences.

* Our Obliterating Peak Oil Demand series, which we have extended to coal and natural gas, illustrates the absurdity.

* The mindset that everyone deserves to be energy rich is gaining in acceptance.

* What to watch: (1) With upcoming high profile energy outlooks, watch for “delayed transition” language, which is a cop out. (2) If you are a corporate executive, board member, or investor, don’t fall for it in making capital allocation decisions.

Exhibit 3: Don’t fall for “delayed transition” narratives

Source: Financial Times.

⚡️ On A Personal Note: Summer Reading List

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📜 Credits

* Intro & Outro music: Wolf Hoffman: Concerto for 2 Cellos in G Minor, Rv 531: I. Allegro Moderato.

* This episode of Super-Spiked Videopods was edited and produced by Veriten Productions.

⚖️Disclaimer

I certify that these are my personal, strongly held views at the time of this post. My views are my own and not attributable to any affiliation, past or present. This is not an investment newsletter and there is no financial advice explicitly or implicitly provided here. My views can and will change in the future as warranted by updated analyses and developments. Some of my comments are made in jest for entertainment purposes; I sincerely mean no offense to anyone that takes issue.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit arjunmurti.substack.com