What The World’s Leading Energy Insiders Fear Most

On Wednesday, you saw what the annual Windsor gathering of energy executives, ministers, and ambassadors agreed on were the most important “shifts” in the energy sector today.

But one topic got more attention during my briefing than any other.

And I wasn’t the only one talking about it, either. You see, there’s a crisis brewing…

It’s already started, right here in America’s oil fields. Soon, it’s going to spread to the rest of the world. And the fallout is not going to be pretty…

In fact, we might be looking at something similar to the Credit Crunch of 2008. That’s what has so many global energy insiders worried.

But don’t worry, because this time, you’ll be prepared.

In fact, you’ll even be able to play it for some gains…

The Days of Easy Energy Credit are Over

There were a number of interesting discussions during our three days at Windsor Castle. One involved the currently accelerating energy debt crisis. In fact, it was one of the main points in my briefings and was reflected in the presentations of others.

The bottom line is simply this.

Regardless of where the crude oil price moves from here, there is little likelihood that any rise in the level will be large (or happen soon) enough to save most companies mired in a vicious cycle of ever more debt.

Now, much of this we have discussed on several previous occasions.

For some time, most American oil & gas producers have operated cash-poor. When prices were $80 a barrel or more, it made sense to reserve revenues for dividends, stock buybacks, and so on. Actual forward working capital was instead covered by lines of credit, obtainable at easy rates from eager banks.

Not these days.

The problem is now beyond acute. I discussed this matter at the annual Windsor Energy Consultations last weekend, and today I want to share some slides from my presentation with you to drive the point home.

Sometimes pictures provide a stark indication of that is going on.

Oil Prices Recovery is Too Little, Too Late for Many Companies

You see, even with oil recovering of late – WTI, the Benchmark crude rate set in New York is up 47.69% over the last month – prices are still way too low for companies to make enough revenue to make ends meet. Instead, producers increasingly rely on debt. As credit increases and net cash flows (that is, operating cash minus interest payments and capital expenditures) decline, a significant and expanding gap has emerged.