Summary
➡ Blackrock, the world’s largest asset manager, has shut down its ESG funds due to underperformance and backlash, leading to a renewed interest in oil and gas investments. Meanwhile, the U.S. and other countries are printing money at a rapid pace, causing inflation to rise. This situation is encouraging investment in scarce and energy-intensive assets like oil. Prairie Operating Company, a debt-free oil producer, is a promising investment option due to its efficient operations and potential for high returns.
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Transcript
But I’m going to show you how I’m using this information to profit. I’m going to show you how you can allocate to this rising trend and show you how you can increase returns by 60% to 80% with this little known tip. So let’s go. All right, welcome to the channel if you’re new. My name is Mark Moss. I make these videos to change the way you think about money, because almost everything you’ve learned is wrong.
And trying to understand and make sense of all the millions of inputs going on the markers today can be very difficult. But we’re gonna break this down to the most basic component. All right, but let’s just start with the first question that you probably have, which is, can oil prices really go up to $200 per barrel? I mean, that sounds crazy, right? Well, I don’t have a crystal ball, and there’s no certainties in life.
So let’s just look at some of the data and assess what the probabilities of this are. Okay, so before we get into the three brutal truths, the catalysts that are driving oil prices higher, I want to look at a couple of charts. Okay, so here’s a chart of the oil prices for the last 70 years. Now, the chart shows oil prices adjusted for inflation. Now, just as a side note, this is adjusted for the government’s CPI, official inflation rate, which, of course, is way understated.
It’s way worse than that. But let’s just go ahead and go with this number. So, as you can see, the previous high in oil was $200, set in 2008 when you adjust it for inflation. And the previous high was $150. All the way back in 1980, you see how the price hit 150, and then it dropped all the way down to 20, and then it went all the way up to 180, and then it actually went down to negative 35.
In 2020, it was a bigger drop. So, technical analysis would tell us that it should revert to the mean, but actually past the mean, and it should shoot over the $200 mark. Now, another way to look at this is by comparing the oil chart to the S and P 500 price. And what we can see here is that oil has historically been trading above the S and P 500 range, except for around the last decade.
But it looks like it’s starting to catch back up. If oil just caught back up to the SP 500, it puts it around $160 to $200 per barrel. Now, another way, look at this. Since 2020, real inflation, as measured by the increase in the money supply, has gone up by over 30%. But the price of oil hasn’t moved up with the price of inflation yet. If you go back and look at the price trend pre pandemic, you can see we’re barely above the trend line, except for that spike in early 2022 when the Russia Ukraine war broke out.
And then prices spiked temporarily, and then they rolled over pretty quickly. And so you can see that oil hasn’t kept up with inflation at all. Now, as a side note, it’s worth mentioning that after the price of oil spiked so high, Biden drained the US oil reserves, flooding the market with oil. Why? Supply and demand. By oversupplying the supply, it pushed the prices down. The problem, well, the problem is that the US has no oil savings anymore.
So any problems that happen, we’re out of luck. It also means that Biden can’t manipulate the price of oil down again. And it also means that the US is going to need to refill these reserves in the near future at any price, which is only going to add to the supply demand imbalance again, pushing the prices back up. Okay, but these are all technical reasons. What I mean by that is like technical analysis.
Reading the charts. And if you watch my channel for any amount of time, you know, I’m not a really big believer in charts or technical analysis, at least for the long term. I do like to use them to help establish price levels, price trends, things like that, which is, of course, what we just looked at. But what I think matters more are fundamental reasons, fundamental drivers, and they’re typically the drivers of supply and demand.
All right? Now I see three massive catalysts that are converging right now. So let’s break each one of these down, and then I want to show you how this little known tip, how you can increase profits by 60% to 80% by investing in this oil and gas sector. Okay? But first, the catalyst. Let’s look at the first one. Now, you know economics, it’s not that hard, really. All prices are the equilibrium of supply and demand.
Now, of course, there’s millions of reasons why the supply and millions of reasons why the demand can change. So let’s look at a couple of those. So let’s first look at the supply. For the last five to ten years, investing in oil and gas has kind of fallen out of favor for a few reasons, but primarily because of the rise of ESG, which has been pushed by Klaus Schwab, the World Economic Forum, you know, Blackrock, the Bank of England, and other NGO’s like that.
Now, the goal of ESG has been to stop using fossil fuels and move the entire world over to what they call renewables. I like to think of them as unreliables. These are things such as wind and solar. I call them unreliables because they don’t work all the time. If it’s not sunny or if it’s not windy, well, no energy. And they’re certainly not renewable because wind and solar both have a lifespan of about 20 years, and they have to be replaced.
All right, but the goal of Blackrock, you know, the bank of England, all of these players and so forth, has been to starve fossil fuel companies of capital. Basically take away the money that it takes to drill, take away drilling access, and then make the regulation so burdensome on these companies that it basically puts them out of business. Well, when you do that, what do you think happens? Well, all you have to do is fast forward a few years, and you can see that no investment in the space means less supply, less supply.
But what about the demand? Well, it turns out the trillions of dollars invested into wind and solar could never, would never be able to replace what we need oil for. Right? So the demand hasn’t gone away. It has. It hasn’t even stayed fixed. Instead, the demand has actually gone up. So this is supply and demand imbalance number one. Now, especially as we’re seeing and fighting wars across the globe right now, how do you think all the carriers, the jets, the tanks, all the weapons get to Russia and get to the Ukraine battlefields? Or how about over to the Middle east? The Red Sea.
Yeah, lots of oil. And now the US, NATO, Russia, China and everyone else, they’re ramping up their wartime economies to build even more weapons and move even more troops around. And guess what that does. Yeah. It uses more oil. So this pushes the demand for oil and gas up even higher. And you know what else does this? Well, it also cuts off the supply. Since October of 2023, an ongoing campaign of drone and missile attacks on commercial ships by Yemen’s Houthis have been aimed at pressuring Israel to end its bombardment of the Gaza Strip and enter a ceasefire.
There have been no oil supply losses so far, but the shipping disruption is indirectly tightening the market by keeping 35 million barrels at sea, owing to the longer journey shippers have to take to avoid the Red Sea. Now, there’s also the insurance war premiums, and they’ve gone up by five times from two thousand dollars to ten thousand dollars as a result of this eruption. So when their costs go up, what do you think happens? That’s right, it goes up.
Now, that was before the strikes of the US and Britain. That happened a few weeks ago, which then saw insurance premiums go up to $30,000 from one shipping source. Now, we also see that Iran right now is threatening to attack Israel, and that also means even more supply disruption. And again, supply and demand. Now, the second big catalyst, one I’m happy to see, one I knew would finally come, is the death of ESG.
I always said that eventually reality would smack him in the face, meaning that eventually we’re all going to wake up to the fact that we, you know, still need energy, we still need oil and gas. And this is exactly what’s been happening. Blackrock, which is the largest asset manager in the world, they’re the largest pusher of the ESG investing narrative. They basically dropped them all. They’ve shut down their ESG funds for, you know, underperformance.
They faced enormous backlash with about half of the states in the US pulling their pensions funds, causing Blackrock to lose billions of dollars. And they’ve seen many of these same states pass laws, outlying ESG regulations, and Blackrock themselves has given up. Even Larry Fink said that he doesn’t even want to use the word ESG anymore. So what does this mean? Well, it means that investing in oil and gas, they’re back in fashion now with many of my meetings and my contacts and friends that are on Wall street and institutions, they say that ESG isn’t even being mentioned anymore.
So the push away from oil and gas has reversed and now it’s game on. And then finally, we also have inflation. Inflation is raging hard. It’s not slowing down. Yes, the CPI, it’s stuck, it’s sticky. But what I’m watching is the US and other countries, they’re printing money like crazy. The US is adding $1 trillion of debt almost every quarter right now. That’s the last several quarters have been like that.
And every quarter, the US treasury, the government has to revise how much they have to borrow as a matter of fact, last quarter’s borrowing estimates were revised up by over 40%. That’s how far they are. Now, this means that they’re spending money so fast, they can’t even keep up with how much they need to borrow. And this isn’t slowing down. In fact, Biden is pushing for a 2025 budget of 7.
3 trillion. Now, what does that even mean? Well, that’s 60% more money than we spent in 2020. It’s 15% more than what was projected for the year. Okay, so now you understand the catalysts that are all forming to create this massive inflation. And, you know, my inflation playbook is buy scarce and buy energy intensive assets. Of course, oil is an energy intensive asset. Now, I want to show you how to play this other than just, you know, buying calls.
And then I want to show you how to increase your oil investments by 60% to 80% with one little tip. Okay? Now first, how to play it. Okay, so, first of all, you can buy oil. You can buy oil directly. You can, you know, buy it directly with calls. You can buy through ETF’s, such as BnO, USO, UCO. There’s so many others. All right. USO is up 22% year to date.
UCO is up 34% year to date because, again, in high inflation, buy scarce assets, energy assets. You can also buy the big producers, Exxon, Shell, etcetera. But if you want a much larger upside and you want cash flow, then you want to buy the oil producers. Now, real quick, before I go to show you how you can increase investment returns by 60% to 80% by buying oil producers, I want to give you a quick update on a sponsor in the oil and gas sector, because there’s big news that could potentially affect this company in a really big way.
Now, Prairie operating company, whose Nasdaq ticker is P R O P, which is short for prairie operating, is making big deals in one of the best oil regions in the US. And as we’ve just discussed, oil has been way undersupplied and the demand and the prices are accelerating really fast. So you put undersupplied oil and increasing demand, and then you know what happens? The price goes up, which is why I’m investing big time right now into energy assets and plays like this.
So you have governments printing money and pushing inflation. You have the ESG narrative dying. You have wars breaking out, restricting supply, and increasing the demand at the same time, all while oil is still sitting around its historic price and is actually pretty low and adjusted for inflation. And today’s sponsor, Prairie operating company, is drilling for oil on some of the best areas for oil in the United States.
And what I really like about Prairie operating company is that they’re doing all of this debt free. Now, why is this a big deal? I talk about debt all the time, but for them, it’s a big deal because oil producers use a huge amount of capital that has to be financed. And right now, with the fed fighting inflation, rates are at an all time high. So the cost of capital is extremely expensive for companies having to pay the debt service.
It’s also very dangerous. All right, so I don’t want to invest into companies that are dangerous. And it’s dangerous because, one, it adds a lot of risk because they have to continue to service the debt. So if anything happens to the company or the price of oil were to drop, they’d be in big trouble. And also, the highest debt service eats into their profits big time. But Prairie operating company, they’re able to break even on oil, even at $30, which is unheard of.
Most us producers are in the $50 to $60 range, which is about double the price or half the profits. Now, Prairie has fully engineered and proven reserves. They have deep inventory of drill ready, permitted puds and have a plan to recycle profits and back into drilling so they can get this company gushing cash. In fact, their projections are 75% IRR or even higher. Now, you know that I love buying cash flow.
A rental real estate project might have a cash flow of, like, 0. 05, but Prairie operating is projecting a 2. 3 projected cash flows from their operations. And this isn’t some small private company that’s illiquid. Prairie operating is a Nasdaq listed company whose ticker is prop. And what I really like in this company is returning the profits to shareholders. You see, this is typically done in a private equity deal.
And then the lion’s share of profits go to the founders and the owners of the private equity company. But Prairie is doing this through a publicly traded company, so the profits flow right back to the shareholders along with the dividends. Okay, so that’s all I’m gonna say. But you should check out their presentation. I’m gonna link to it in the show notes down below. It’s worth taking a look at.
Okay, now, finally, how do you increase your returns by 60% to 80%? Okay, so what most people don’t know is that the government is your partner. Now, the government have certain goals to achieve, and if you do what they want you to do they give you incentives? Now, some people call these tax loopholes, but they’re not loopholes, okay? The government puts it in place to incentivize you to work with them.
And guess what? The government wants to continue to have the US drill oil and continue to lead the world in energy. So if you help them, if you invest into oil and gas, then they give you incentives in the form of tax breaks. Okay? So here’s the overview of how this works. But disclaimer, I’m not a tax professional, and you should definitely seek the advice of your own tax professional.
But I do own part of an oil field. I’ve been investing into oil and gas for almost two decades. So this is how I do it. Okay? So oil and gas companies, of course, drill for energy and they generate real cash flow in the process. And of course, like I said, I love cash flow and investments. And in the course of drilling, the oil companies incur expenses. We break these down into two categories, tangible and intangible.
Now, tangible are real things, right? Like actual equipment. And this is usually about 20% to 40% of an oil company’s expenses. And of course, those can be written off. Then we have intangibles. All right, these are like other types of expenses, typically about 60% to 80% of an oil company’s expenses. And these are also tax deductible. And as an investor in an oil and gas company, we get a write off, both types of expenses.
So, for example, if I invest $100,000 into an oil company, I can usually write off about $60 to $80,000 of my income against the investment. So this adds to it compounds the returns that I get on the investment. And even if the investment doesn’t make me a lot of money, I still get the tax write offs. So it’s a guaranteed way to get returns that way. All right, so to summarize this, we have high inflation, leading to even more money printing and higher inflation.
We want to fight inflation by buying scarce assets and energy assets. Oil has a huge supply demand imbalance because of underinvestment from ESG guidelines that are now over, and the investments are coming back. We have wars that are causing the demand for oil to shoot through the roof. And then whether you buy it directly through an ETF or through a cash flow and producing company, that gives you huge tax incentives like prairie operating.
That’s up to you, but I’m a buyer here, but let me know what you think. All right, give me a thumbs up if you like the video. If you don’t, you can give me a thumbs down, that’s okay. But at least tell me why in the description down below. Subscribe if you’re not already subscribed. And that’s what I got to your success. .
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