Science has taught us that human beings need three things to survive: food, water, and oxygen. As the 20th century moved to the 21st, the modern world and modern economics have worked overtime to include one line of products to that list: the line of products created by fossil fuels, or to be more specific, oil. 

From early American Settlers utilizing oil as an illuminant for medicine and as grease for their wagons and tools, to the kerosene lamps invention in 1854, oil has displayed its amazing variety and worked its way into nearly every aspect of our society. Crude oil has fueled the advancement of the human experience in more ways than most in the civil society can fathom. 

To list all of the products that could be produced from one barrel of oil would take more time than I have to write. However, it stands clear, for anyone willing to look, that from the beginning of our petroleum demand days, in the 1950s, when we consumed approximately 5- 10 million barrels of oil per day, to 2019, when the demand for oil reached 100 million barrels of oil per day, fossil fuels have powered the world economy and woven its way into the fabric of our nation. The vast number of products created by fossil fuels, and the demand for those products, create a truth that most are not unaware of. That truth is the fact that we are all, each and every one of us, in the oil and gas business. It is simple, we are all consumers. 

Looking at the list of products that can be produced from one barrel of oil, I would be willing to bet that there is not one person living in the modern world that does not use multiple products from that list daily. When you look at the list, hopefully you will realize the incredible link between your life and the oil industry. 

Can you think of one product, who’s rising price would have more impact on your pocketbook than oil?  With the knowledge of the important role that oil, and more specifically the price of that oil, plays in our lives, we believe, knowing the industry and being prepared for the storm we see coming just over the horizon might be the most important move anyone can make.

Civic concerns for living conditions are as old as human history. Citizens questioning air quality and water pollution date as far back as Roman Times. The spread of epidemics across Europe in the late 14th and mid-16th centuries was historically associated with pollution. Over 2,000 years ago, China, India, and Peru were already practicing soil conservation. Human concern for the environment is engrained in human nature and can be dated back throughout most of our collective experience. These environmental concerns, however, did not give rise to major public activism until the 1960s. 

The early environmentalists focused most of their activism on the protection of the European countryside and the American wilderness, by designating specific areas to be protect, as well as a focus on the health consequences of the Industrial Revolution. 

By using the environmental movement and their self-created moral high ground, world governments figured out a way to circumvent their population and borders enabling them to enact “Environmental Policies”, having never been voted on by their citizens. These decisions are made by fiat with the only explanation being that their actions are necessary to save the world from some unmeasurable problem that might, or might not, manifest for decades to come. They have anointed themselves to be the ones to save the world from the predatory “capitalist”. 

By the late 1980s, the environmentalism and global governance, that had inserted itself into our day to day lives, had circled the globe and environmentalist had become a global political force. Organizations like Greenpeace, Friends of the World, and the World Wildlife Fund had offices worldwide and had established international headquarters which allowed them to organize their multiple ongoing operations and strategize their global political efforts. 

The strategies utilized to try and reach their GHG emission goals were:

1. Carbon Dioxide regulations for new and existing power plants
2. Fuel efficiency and GHG regulations for light and heavy-duty vehicles
3. Energy efficient regulations on commercial and residential buildings and appliances
4. EPA approved alternatives to hydrochlorofluorocarbon
5. Methane gas regulations for landfills and the oil and gas sector
6. Executive orders to reduce GHG emissions from the Federal Government

These strategies were more extreme than any environmental practices to date and we’re highly contested across the United States. The expansion of governmental control exploded and, in some eyes, The Climate Action Plan led directly to the 2015 Paris Climate Accords (PCA). 

The world governments had finally figured out a way to completely circumvent individual countries populations by getting the leaders of those countries to sign on to a climate accord where the only accountability was provided by those world governments themselves. The environmental and governmental den of thieves had designed a system of control based on unprovable climate assumptions with no one to hold them accountable other than themselves. 

In June of 2017, newly elected President Donald Trump announced his intentions to pull the United States out of the Paris Climate Accord and the outcry from the environmental movement was historic. It took three years for that decision to take effect and on Nov. 4, 2020 the United States became the first country to withdraw from the Paris Climate Accord. In response to this withdraw, the We Are Still In It Coalition was formed.

This coalition was comprised of over 2,300 businesses, including companies like Amazon, Microsoft, Apple, Google, Coca-Cola, PepsiCo, McDonalds, and many more. It also consisted of 412 colleges and universities, 294 American cities, 947 faith groups, and 87 cultural institutions. Like the majority of benefits listed when enacting environmental actions, this group listed four ways to achieve a net zero carbon emissions by 2050, yet the technology to do what they want to do has not been invented yet and the only benefits seem to be social standings. Here are the four ways the We Are Still In It Coalition expect to reach Net Zero emissions by 2050. 

1. Set science-based targets and make the necessary investments to reach the goals
2. Collaborating across industry and supply chains
3. Adopt and deploy new technology to accelerate sustainable energy
4. Being a leader on climate policy

Less than 4 months after the United States' exit from the PCA, the newly inaugurated President Joe Biden, in January 2021, signed an Executive Order indicating his intentions for America to rejoin the Paris Climate Accord. Upon this expected decision, the Heritage Foundation analyzed the PCA and the decision for the United States to rejoin. Here are the Heritage Foundations three main takeaways from their analysis of what the Paris Climate Accord will do to America. 

1. The PCA will reduce America’s income, drive up energy costs, and eliminate hundreds of thousands of American jobs, while realizing only trivial benefits environmentally.

2. Restricting Americans’ use of conventional energy sources will significantly harm the United States Economy and disproportionately inflict harm on the poorest Americans the most.

3. Despite the United States return to the PCA, policy makers should make every possible effort to prevent implementation of its harmful, ineffective regulations.

For decades, all roads for the environmental movement led to today and the introduction of the “Green New Deal” (GND). While the GND is being presented as the new way, in truth, it is just an extension of the road the environmentalists have led us down for years. The goal of the GND is to bring America into the new renewable energy world by reaching zero carbon emissions by 2050 at a cost presented to be only $1.7 trillion. Economists have pulled the proposal apart and some have anticipated that $1.7 trillion price tag to be as much as $3 trillion off and the true cost would come in closer to $5 trillion. 

In an effort to convince American citizens and businesses of the virtues of the NGD, the Environmental Protection Agency listed Stakeholder benefits of “Green” energy. Those benefits include examples like meeting organizational environmental objectives, increased brand credibility through recognized environmental initiatives, demonstrating civic environmental leadership, generating positive publicity by being “Green”, improving employee retention and recruitment because of your positive environmental stances, and differentiating your products and services with your “Green” environmental credentials. 

I truly believe that deep down, everyone has a little environmentalist in them. I believe that all of us want to live in a beautiful non-polluted world. I believe that all of us would love to have clean burning, cheap energy, that has a limitless supply, however, wanting and hoping does not mean it will happen. Whether it is the Climate Action Plan, the Paris Climate Accords, or the Green New Deal the process of removing oil and gas from the lives of humans is an extremely daunting task at the least and impossible at the worst. 

Just look at the math behind making this transformation and you tell me if it is feasible. 

In 2018, the United States alone consumed 3.9 billion mega-watt hour (MW/h) of electricity. For reference, 1 Megawatt (MW) of power produces enough electricity to cover the consumption of electricity for 400-900 American homes for one year. To produce this amount of energy onshore, utilizing the most advanced wind turbines on the market would require over 14 million 1.8 MW wind turbines. These turbines would cover 75% of the lower 48 states and require 15 billion tons of steel, concrete, and other raw materials. These wind turbines have already proven to be a threat to wildlife, 14 million of them covering 75% of the continental United States would have a devastating effect on eagles, hawks, bats, and many other avian species. 

If you decided that onshore was not feasible and you elected to build offshore, the impact would be even more dramatic. While you would not need as many wind turbines, you would need to install a couple million of the truly monstrous 10 MW wind turbines. These colossal turbines would sit on foundations in 20-100 feet of water or on platforms, if placed in deeper water. The number of turbines needed to produce this amount of energy would require them to run up and down both the Atlantic and Pacific coasts. Other than typical corrosive salt water mechanical failures, if one Category 4 hurricane ran up the Atlantic coast, taking out a large swath of these wind turbines, large sections of America would be without power for what could be months, until repairs or replacements were made.

To replace 3.9 billion MW/h of electricity with solar energy would be an even more Herculean effort. Using Nellis Air Force Base Sunbeam Tracking solar panels would require enough solar panels to build a solar farm the size of New Jersey. Not only would the farm need to cover and utilize solar panels on an area the size of New Jersey, but to generate the equivalent amount of energy, the sun would need to shine with "summer in Arizona" intensity 24 hours a day, 7 days a week, for the entire year. This does not consider the cost of the toxic chemicals used in creating the panels and the runoff and pollution potential from leaks of these toxic chemicals during maintenance or removal. 

Now let’s look at the environmentalist inspiration, battery power. Using backup batteries to supply the United States' energy needs, for just 7 straight windless days would require more than 1 billion half-ton Tesla style batteries. None of the above examples take into account the cost associated with developing a completely new power infrastructure and the conversion needed for end users to make this transition. 

In 2017, the World Bank modeled what the increase in material extraction would be to build enough solar panels or wind turbines to produce an output of 7 terawatts of electricity by 2050. 7 terawatts is enough energy to power half of the world’s economies. Their conclusion showed that in order to generate 7 terawatts of electricity by 2050 would require an expansion of mining, development, and extraction like the world has never seen. I will sum up their research in one sentence. In order to save the world from global warming, we must destroy it by pillaging it first. 

Once you get past the magnitude of what would need to be done to make a renewable transition possible, along with the impractical physical materials needed, the question needs to be asked, is the technology even available to do this economically? 

For decades, green energy pioneers focused their efforts in a few main areas of research. Solar, wind, hydro, and nuclear have been the major categories the clean energy proponents have researched. While they have made some wonderful advances in their collective research, the best they have to offer has been listed in the estimates from the paragraphs above. While solar, wind, and hydro remain a favorite of the green movement, nuclear, on the other hand, hit a snag in popularity with Three-mile Island and Chernobyl and has yet to re-enter the ring as a contender. 

The hope of the entire green movement to replace fossil fuels is based on technologies that have been extensively researched for decades, and are currently at the height of their technological advancements. In looking at all of the potential options, we believe the act of replacing fossil fuels will require a printing press or air conditioner type invention and those do not happen very often. To paraphrase, “We want it to happen, we hope for it to happen, and because we want and hope for it so badly, it is going to happen, but it hasn’t happened yet.” 

The path to green energy is being pursued by governments across the globe, but the technology to reach those goals has been lagging. After decades of research on saving the environment, nuclear power, solar power, ethanol, and wind power are still the main alternatives. In other words, demand for fossil fuels dwarfs that of the alternatives and the technology being utilized to reach zero carbon emissions is based on technologies that have been studied for years, if not decades, or those technologies have not been invented yet.

To understand where we believe oil is going, we must first look back to where the industry has been. Utilizing the knowledge from our past and tying it together with current market conditions and Societal and Governmental actions, gives us an indicator of where the industry is trending and can make predicting where we expect prices to go a little simpler.  Establishing the value of any product relies on various factors. Oil is no different. There are several factors that have an impact on what the price of oil will be. Factors like supply, demand, and geopolitics are a few of the major ones. 

In the 1950s, oil had already been in our lives for several decades when its utilization exploded. From the days of Ike until the last half of the Obama presidency in 2014, oil demand continued to grow. However, during the same time, oil companies had been relatively successful in keeping up with that demand by producing their existing reserves of oil and making the necessary investments in upstream oil and gas operations. This annual pledge of capital enabled the companies producing their existing oil reserves to develop and explore for additional reserves to replace the oil lost through production. 

In 2014, Industry-wide Capex for upstream oil and gas operations were at record levels exceeding $880 billion. 

In 2014, they were trying to cover the approximate 5 million barrel per day production deficit to demand (88.8 million BOPD produced/ 94 million BOPD demand) and were investing capital at historic rates, approximately $880 Billion annually. By 2018, the gap remained approximately 5 million barrels per day; however, daily demand had grown to 99.3 million barrels per day and daily production had only risen to 94.9 million BOPD. In spite of the exponential explosion of daily demand, the Industry Capex from 2014 to 2018 dropped from $880 Billion to a little over $500 Billion, a drop in excess of 43%. 

Think back to that point in time. Remember the pre-pandemic world with thriving economies and aggressive business expansion. Through those years, the surface of the oil and gas industry remained calm, however, when you looked beneath the surface, you would clearly see an industry not making the necessary investments to replace the reserves of oil they had already produced. 

In combing through the data, we are left with one conclusion, the world is facing a significant energy crisis in the coming future. The oil and gas industry, as a whole, is in possession of shrinking reserves and is not making the necessary capital expenditures to develop additional oil reserves. That was the economic world we saw developing before the pandemic reached our shores. When you include the industry capex from 2019, 2020, and the projections for 2021, the true dire state of the industry comes into focus. 

When Covid was introduced to the world, the authorities believed the best way to combat the virus was to shut the world down and effectively shut down the world’s economy. Predictably, with the economy shut down and businesses shuttered, demand for oil plunged. This led to the largest drop in oil price history on April 4, 2020. 

In response to these unprecedented events, industry investment in upstream oil and gas operations took another significant reduction. In 2019, industry capex remained relatively flat to 2018 at a little over $500 Billion in 2020, total capex was reduced to approximately $400 Billion, followed with projections for 2021 sitting even lower at approximately $300 Billion. 

From 2014 to 2021, Upstream Investment in oil has dropped in excess of 65% industry wide. 

• 2014- $ 880 Billion
• 2015- $ 600 Billion
• 2016- $ 510 Billion
• 2017- $ 510 Billion
• 2018- $ 546 Billion
• 2019- $ 546 Billion
• 2020- $ 400 Billion
• 2021- $ 300 Billion

Follow the thinking. To cover the significant increase in daily production levels needed, the oil and gas industry decreased their upstream investments from $880 Billion in 2014 to $546 Billion in 2018? Then followed that by investing $400 Billion in 2020 and, when the projections are finalized, an anticipated $300 Billion in 2021. 

Does this make sense if you are wanting to replace what has grown to be an over 11 million barrels of oil per day deficit? 

So here we are, oil demand is expected to return to pre-pandemic levels, demanding more daily production than ever before, yet investment in development and exploration has decreased from $880 Billion to an anticipated $300 Billion? Do you see why we believe this is becoming something that does not bode well for price stability? 

Let’s follow this scenario out to 2030. The International Energy Forum (Energy Ministers from 70 different countries) are projecting that if demand returns nominally to pre-pandemic levels, the current daily production deficits of 11 million barrels of oil per day would increase to 27 million barrels of oil per day by 2022. If demand flatlines and does not increase by one barrel over the next 8 years, current production decline projections will leave us at a 51 million barrels of oil per day deficit. If demand does increase by below historical averages, that 51 million could grow to exceed a 68 million barrels of oil per day deficit. 

Let me ask you this. If you produce 100 million barrels of oil per day, yet demand exceeds 168 million barrels of oil per day, what would you expect your price per barrel to do? 

This is not private information hidden behind passwords and confidentiality. It is in the open for anyone willing to look. Looking at the math, this is statistically where the oil industry sits. 

In my opinion, the Age of the “Modern World” began on Aug. 27, 1859. That was the day Edwin Drake drilled a hole less than 70 feet down and changed the world by placing America’s first commercial oil well into production and announcing America’s entrance into the Hydrocarbon World. 

For the next 50 years, some of the largest companies in human history were founded and grown by producing American oil. Utilizing antiquated technologies, these companies would leap from field discovery to field discovery picking the low hanging fruit before jumping to the next lily pad. The fact that these fields were never fully developed didn’t stop these companies from moving on when they found something new, but did provide millions of barrels of oil left behind when they departed.  

By the time the 1930’s began to roll around, these producers began to grow nervous about their future paths. At that time, they had been producing from known productive oil and gas areas in the United States for decades and were beginning to believe that they had already discovered all, or most, of the large fields. Remember, this is in the early 1900s. Their view of the total amount of oil in place was limited at best and led to them believie that they had found all they could find. These companies were given a lifeline when oil was discovered in Kuwait and Saudi Arabia in 1938. That lifeline was bolstered in 1948, when the Ghawar Field, the largest conventional oil field on the planet, was discovered in Saudi Arabia. The decision to migrate drilling operations overseas was set in stone when oil was then discovered in Algeria and Nigeria in 1956.

Today, there are roughly 75 companies worldwide that would be considered “Major Oil Companies”, defined as having a market cap of $10 Billion. Of those 75 companies, only 4 of them generate their revenue by producing strictly American Oil. Of those, only one of them was created in the past 40 years. Our energy is no longer produced by the Majors. Now, American energy is produced by roughly 9,000 Independent American Oil Producers, who average 12 employees or less. 

Those factors already existed when the American Oil Industry was dealt another critical blow in 2020. That was when Corona was rampant, prices crashed, and resulted in the elimination of a large swath of the American Independent Producers who were unable to withstand the effects of Corona on the oil industry.

The American Oil Industry has evolved from the days of the “Seven Sisters” controlling our “oil world” in the 50’s, to roughly 9,000 independent oil producing companies who drill more than 90% of our wells domestically and produce 83% of our oil and 90% of our Natural Gas. When I say that we are playing on a level playing field, that is what I am talking about. Our competition is not the Major oil and gas companies of the world, our competition is companies just like ours; the only difference is that they have no idea what we are about to do. 

For generations, the bottom line has been the determining factor in most business decisions. “What will make us the most money?” has been the determining question to be answered. In recent years, a new question has entered the equation and has grown to hold tremendous weight. “Is it good for America?” has been the new questions on investors lips.  

Sadly, for the most part, when that question is answered with a “Yes” the next sentence will be, “but it will cost a lot of money to do it.” Regardless of the cost, this question has made making business decisions much more difficult.  

As we have said before, if a country does not control its food, medicine, or energy, someone else does and you are in trouble, just ask Germany. While there is nothing that we can do about the first two, the third, however, is what we have spent cumulatively over 300 years as a family getting ready for.  We see an opportunity for men and women just like us, traditional Americans, who love our country and want nothing but the best for everyone, to join together and attempt to consolidate more American Oil Reserves than any company in the past seventy years.

In our eyes, someone is going to do it, and if someone is going to do it, it might as well be a group of people who want the best for our country and all of the people who call it home. It is time to see an American Oil Company back at the top of the Energy Mountain.

That is why the 6th Factor is the most important. Regardless of what the first 5 Factors tell us, without a group of people with an uncontrollable desire to make it to the top of the mountain, the first 5 Factors would be irrelevant. By joining hands, together we can climb this mountain, protect American Oil, and build something not seen in America in a very long time, A New Power in American Oil.  

Together, we have an opportunity to make Burrite that new Oil Power.