The resilience speaks volumes about the power of those microeconomic factors and the need to spend more on production. Wall Street, however, is unlikely to green light a spending spree unless prices remain higher for longer. Having shouldered heavy losses in the previous 10 years, shareholders want dividends and share buybacks, not new projects. Hardcore ESG investors are completely against backing new fossil fuel projects and big mines.
For now, the macro bears are in charge. But as soon as the economy hits its bottom, perhaps as soon as late in the second quarter, and shows some sign of a new life, the micro bulls will see their revenge. The commodity boom will only end when capital expenditure in new projects picks up significantly. But that won’t happen in 2023.
From the year behind us:
Many Winters Are Coming. Start Saving Energy Now: For months, European leaders underestimated the size of the energy crisis they face. It was clear in early summer the continent faced a difficult time. And it did.
Listening to Electricity Traders Is Really Scary: The inside story of how the people who trade electricity in the UK see the energy crisis — their worries, hopes and fears.
Sorry, But for You, Oil Trades at $250 a Barrel: While everyone was looking at Brent and WTI prices, the real action was in the diesel and jet-fuel markets, where prices went, to put it simply, crazy.
London Paid a Record Price to Dodge a Blackout: The lights stayed on in Europe, but the cost at times was eye-watering. Unknown to many but a few in the industry, catastrophe was at times avoided by a very thin margin.
Look at All the Money Cargill Made Last Year: Although the political focus was on Big Oil, the commodity traders were among the biggest winners of the 2022 crisis in markets from natural gas to wheat.
Toilet Paper Crisis Shows Inflation Is Still a Mess: The highest inflation in 40 years seen through the lens of a everyday product: toilet paper. Demand is inelastic, supply was curtailed. Prices jumped.