Energy’s annual pulse check in a unique year
Next week, the leading lights of global energy will rendezvous in Houston. And so will our DrivePath team.
The prominence of the annual CERAWeek conference has reached new heights over the past decade, alongside the emergence of the United States as the world’s largest oil and gas producer. Meanwhile, LNG continues to grow in global significance, and power demand is expected to increase worldwide at a pace few expected.
Among other things, the meeting provides energy leaders a chance to take stock of where the industry has been and, more importantly, where it’s going.
And this year offers a few unique issues for them to consider:
Technology and Oil: After years of pitting Big Tech vs Big Oil, energy observers now see the widely anticipated AI-driven energy demand driving a convergence of the two sectors. The impact on both technology and power producer shares when DeepSeek made its world debut offered a stark contrast to dramatic declarations in past years of data being the new oil. It turns out that going big on data – like everything else – requires a substantial amount of power, much of it fueled by natural gas. Markets now seem to recognize this.
Renewables reset: BP made headlines over the past few weeks with the oil major’s strategic refocus on its core business. The conversations at CERAWeek over the past several years have marked a clear shift toward having more renewables in the energy mix, so it will be interesting to see how the tone shifts following the high-profile course corrections by BP and others.
U.S. protectionism: With Donald Trump’s return to the White House, the United States finds itself in unfamiliar territory as Trump moves to raise trade barriers – including for energy. These tariffs may be bargaining chips for the famously deal-oriented president, or the start of a new normal. Either way, they will have serious implications for international trade, the global economy, and therefore the outlook for energy prices.
Natural gas bulls awaken: The past year has seen natural gas prices rise off the floor as a result of lower winter temperatures, power demand and steadily growing global demand for LNG. With oil prices softening, but stuck in a fairly narrow band for months, this is an odd reversal of fortune for natgas after years of rock-bottom prices before a spike that followed Russia’s invasion of Ukraine and then a drop back down to the previous low range. The Energy Information Administration expects Henry Hub spot prices to trend higher this year and next, assuming no big changes in LNG projects, weather, or …
Geopolitics: The outcome of talks to end the war in Ukraine will clearly have a potentially big impact on global energy prices, depending on what happens with the sanctions currently constraining Russian energy exports. Growing U.S. LNG export volumes have found a ready market in the absence of piped Russian gas to Europe, and the global market has had to find workarounds for sanctions against Russian crude oil. Layer on top of all this the implications from the U.S.-China rivalry and the prospect of renewed and/or expanded sanctions on Iran and Venezuela. With so many international energy players at CERAWeek, chatter in the hallways around the Hilton Americas could be spicier than usual this year.
U.S. politics: The annual visit of the U.S. Energy Secretary has become a closely watched part of CERAWeek, particularly with the sharp change in tone from one year to the next by the recently departed Energy Secretary, Jennifer Granholm. The opening plenary with Dan Yergin next Monday is likely to be a more familiar conversation for the audience, since the new Energy Secretary, Chris Wright, stepped down as Liberty Energy CEO before taking the job. On the other hand, considering Interior’s role in energy production on Federal lands, perhaps Secretary Doug Burgum’s session over lunch on Wednesday will be the place to be. And if you can’t make that, Yergin will talk to EPA Administrator Lee Zeldin over lunch on Thursday.
Our DrivePath team will be on the ground in Houston for CERAWeek. If you would like to connect, please reach out via LinkedIn or via email at gpennoyer@drivepathadvisors.com.
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