What was the best performing asset class of 2021?
It wasn’t crypto, US equities, or precious metals…
It was oil with WTI up 55% and Brent Crude up 50%.
And now — all of a sudden after seeing oil futures briefly hit -$37 in April of 2020 — Wall Street’s prediction of $100 oil has gone from “far fetched” to “might happen.”
It’s a price we haven’t seen since the summer of 2014, right before OPEC went to war with US shale producers…
But if we do see the black gold hit triple digits, here’s what that could mean for Sky Quarry (who is currently raising capital via Regulation A+).
The Net Zero Paradox Continues to Create Unintended Problems
As the world continues to race ahead towards the “Net Zero by 2050” goal, people are starting to realize the uncomfortable paradox of going green…
In order to build the necessary infrastructure to decarbonize, we still need A LOT of natural resources (like oil) to do it.
Even though it’s politically popular to say “oil companies BAD!” and score some quick wins via executive order (or other regulation)…
Like it or not, we need oil and we need a lot of it.
To be clear, we don’t carry political gripes when covering the markets. But we can’t ignore how policy impacts them…
Right now, the case for $100 oil rests on higher demand… diminishing stockpiles among industrialized nations… and doubt that the Organization of the Petroleum Exporting Countries (OPEC) can increase production as it has promised the market.
“The Biden team put its trust in OPEC and Russia instead of the U.S. energy producer. Its policies have led to less oil and gas production in the United States.
Instead of going to U.S. producers to try to alleviate what is a shortage of oil and gas, the administration decided to beg OPEC for more oil instead. That backfired.
Long-time U.S. ally Saudi Arabia, the de facto leader of the OPEC cartel, was in no mood to help the U.S. and bail us out like it has other administrations when they have asked for more oil.
To avoid a major U.S. energy crisis and to save the economy, the Biden administration needs to start looking to U.S. energy producers as part of the solution, not part of the problem”
To be fair, $100 oil isn’t exactly in OPEC’s best interest…
With constrained supply and raising prices, it could spark the resurgence of US Shale operations (and really, any other high cost oil producer).
But even if OPEC and Russia could step in (and Saudi Arabia doesn’t seem interested in making up for its allies’ unmet quotas).
“Even Russia, the group’s second-largest exporter after Saudi Arabia, appears to have hit a wall at about 9.9 million barrels a day, about 600,000 less than it pumped in April 2020 before the big cuts and well short of Russia’s 10.2 million barrel a day allocation for next month Saudi Arabia has the same quota.
For Russia to increase substantially from here will require improved tax policies and the development of new fields, analysts say.”
As air traffic recovers and still-restricted economies reopen around the world, supplies could be stretched thin.
If only we had a politically popular way of producing domestic oil without having to raid protected lands…
Cause unnecessary damage to the environment with fracking…
All while leveraging the current oil transportation infrastructure.
The (Even Better) Case for “Net Zero” Oil
If this is your first time hearing about Sky Quarry, here’s the gist of what they’re up to…
Today in America, there’s an estimated 700 million tons of semi-toxic waste that sits in our landfills. If left alone, it could poison our groundwater and fertile soil (if it hasn’t already).
They’re called waste asphalt shingles (WAS), and they cover ~80% of residential roofs in America. Each year, ~13 million tons of WAS are sent to landfills.
But thanks to new technology, these hydrocarbon time bombs can potentially be converted into safe, strong, and affordable building materials that could possibly be used to rebuild our crumbling infrastructure…
And help us in our fight against climate change.
Thanks to Sky Quarry’s patented ECOSolv technology, they can convert every ton of WAS into the equivalent of ~1.5 barrels of oil!
Under the companies original assumptions of WTI Crude trading in the $70 – $80 range, this means the 13 million tons of annual shingle waste is the equivalent of 19.5 million barrels of oil – worth between $1.35 billion and $1.56 billion per year!
At the time of publishing, March 2022 contracts for WTI Oil are trading at ~$88.
Obviously, if oil prices go lower, those numbers would be adjusted down. If we took a bearish position on oil prices over the next 1-3 years, at $50-$60/barrel, revenue estimates would put the 13m tons of WAS at $975m to $1.17b.
But what happens to those potential revenue numbers if oil climbs – and remains – at $100 (or more)?
We could be looking at a hidden source of energy – ~ $2 billion worth of oil – that is literally being thrown away in our landfills every year…
And thanks to Sky Quarry’s technology, we could potentially produce this oil at a “Net Zero” cost – both financially and environmentally.
Considering an Investment in Sky Quarry?
To be clear, Sky Quarry is an early-stage company. Their ECOSolv technology – although patented – is still unproven at this time.
However, they are dedicated to solving the environmental problems caused by waste asphalt shingles (WAS) – which currently cover ~80% of all residential roofs in America.
For investors looking to invest in companies addressing climate change, recycling waste asphalt shingles presents an opportunity to not only remove hydrocarbons from the environment and impact climate change…
But to do it in a way that can support a sustainable recycling market and potentially generate returns for investors.
Jake Hoffberg – Publisher