‘The Saudis surprised everyone’: The Energy Word Founder on retaining unilateral cut

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ADAM SHAPIRO: A little over 15 minutes to the closing bell. Remember when you were a kid, you made a promise, but if you had your hand behind your back and you were doing this, well, you didn’t have to keep it? Someone should remind the world that the Saudis and the Russians sometimes do that when they make promises to cut production regarding oil. Oil trading higher. We’re going to invite into the stream Dan Dicker, The Energy Word founder, and also the author of “Turning Oil Green.”

I wanted to ask you, are we near peak oil? Remember those days? Let’s keep it simple– what is going on with oil?

DAN DICKER: Which peak are we talking about, Adam? Are we talking about peak demand, or peak supply? Because you know, both have been talked about so much. It used to be all about peak supply. And now, it’s all about peak demand. I suppose you’re referring to peak demand at this point, right?

ADAM SHAPIRO: Well, I’m referring to the fact that shouldn’t the price of oil be coming down if the dollar is gaining strength?

DAN DICKER: A little bit I think that there’s something in there. But there’s– I think there’s more going on in the oil market than simply the dollar. And I think the most important factor right now is that the Saudis surprised everyone– not me, but surprised everyone else, let’s say, in retaining that 1 million barrel a day unilateral cut that they put in place in December at the last meeting, you know, five or six days ago. And I think that that has been the driving force to continue to see oil prices stay at these very high levels, despite the fact that you’re right, they’ve been– they’ve been on quite a run for three months now, and are due to take a breath.

SEANA SMITH: Dan, I got to ask you about your most recent blog post. I was reading that, and the first line in it says, “this is the most interesting time in the markets for me as a 35 year oil veteran.” This carries some weight coming from a guy who has been in the business now for some time. What makes you say that? What’s so interesting about right now?

DAN DICKER: Well, Seana, it’s really– it’s kind of a sarcastic comment because for the last four or five years, it’s been very tough to be an oil guy, as you know. I mean, it’s been– and the markets have been all about tech and all about growth, and very little about value and very little about commodities. The commodities have been on the bottom rung just about every year since, I don’t know, 2013 or so in terms of alpha, in terms of gains. And you know, that gets pretty frustrating after a while.

So now, we’re seeing, you know, at last the first kind of move that looks like it’s got some staying power. And for the first time in a very long time in my life, you know, I’d be a little bit frightened if the vast majority of my investments were in Tesla, and Xilinx, and AMD, and you know, what have you.

But I think you’d sleep quite well at night right now if you had, you know, nice 6% dividends plus, you know, the way that the stocks are moving in something like Exxon, or Shell, or BP, or even some, you know– even wider commodity stocks like the Koppers, or Freeport, or something like that. So you know, last to first. And that’s why it’s become so interesting, you know? The bad becomes the good, and nowhere have you seen that enormously like in oil stocks since the start of the year.

ADAM SHAPIRO: Or the old movie, “Good, Bad, and Ugly.” Because when the oil companies were cutting dividends and we saw oil crash, a lot of people were saying, well, that’s the end of that. But let me ask you this– at the end of that blog, you quote one fund manager who said, “if you’re not long energy stocks now, you never will be.” There’s still a long way to go with traditional oil, is there not? I mean, the world still needs gas. The world still needs oil. We’re not going to be solar powered EV car driving folk for another, you know, on a global scale, what, 20, 30 years at least, right?

DAN DICKER: You know, I am moderating on Friday– I am moderating a panel at the MIT Energy Conference, and it is the lone panel out of a dozen or so that features oil company execs. All the rest is green stuff. And you know, that gives you an idea of just how poorly oil stocks are viewed by the public and by the marketplace.

But of course, you’re right, there’s nothing that’s going to make oil and gas not be the preeminent source of energy at least, you know, until 2040. And you’ll never see the sustainable energy, renewable energy– as much as we’d like to– take over the majority of the global energy portfolio until at least then, if not longer.

And it’s surprising to me– I guess, it’s not surprising to me, but it creates an opportunity, let’s say, for investors who realize that a lot of what’s being talked about in the green space, as much as we’d like it to be moving more quickly, is a lot of hype. And oil stocks have been ignored, and at the prices that they were sitting at, at the start of ’21, they made for a tremendous opportunity, which, by the way, I brought to you several times during late 2020 and into the early parts of ’21. And I don’t think it’s over yet. I don’t think it’s over yet by a long shot.

ADAM SHAPIRO: Dan, I’ll bet you those oil executives who are going to be on your panel, in junior high were the guys who were carrying briefcases and had pocket protectors, at least how the world’s treating them now. Dan Dicker, The Energy Word founder.

DAN DICKER: They’re at lot richer than you and me, Adam, that’s for sure.

ADAM SHAPIRO: Yes, that’s what usually happens to those guys who are 13 and 14, and carry briefcases in junior high.