Vega1357 wrote: jimmyjong wrote: Good Point V but Warren Buffett thinks natural gas will be sticking around for a long time some don't disagree Dominion did not exactly get out of the natural gas industry either with the sale to Warren now did they..
Here is a recent article from Motley Fool on the subject. I edited out some stuff about BLX which the article plugs. I added the highlights:
(from Motley Fool)
Warren Buffett and his company Berkshire Hathaway had the fattest purse in hand when the stock market declared a very early Christmas sale in March and put a sizeable discount tag on almost all the securities. Still, Buffett exercised the financial discipline that is characteristic to people of his stature and financial wisdom. But when Buffett didn’t buy anything for a long time, people started wondering why.
The monotony finally broke when Buffett bought nearly US$10 billion of Dominion Energy, including a big chunk of the gas-processing and storage facility and a whole pipeline. The rest went towards the debt that Buffett took off from Dominion’s hands.
The bet on natural gas
The move was also met with skepticism, because Buffett bet on natural gas when the U.S. is slowly transitioning to green energy, especially towards solar and wind power. In the past five years, renewable energy has grown from making up 13% of the total energy providers of the country, to 20%. An analyst who covers Berkshire Hathaway stated that “future doesn’t come as fast as some people think.”
If that’s the reasoning behind buying Dominion and expanding his energy empire, it means that Buffett believes natural gas is going to stay relevant for many years to come — and not just relevant, but profitable, because Buffett bought into the company at a time when natural gas prices are at a record low levels.
Some experts believe that the energy deal is very sweet for Buffett, but not so much for Dominion. The wizard of Omaha leveraged the market crash smartly and bought considerable assets at bargain prices.
Your bet on renewable energy
If you side with Buffett’s critics on his Dominion Energy move, then instead of betting on natural gas, you might prefer to bet on the clean energy future. …
Warren Buffett’s energy deal, especially at a time when the sector is suffering due to low demand, fits neatly with his strategy of buying good businesses at the right value until they remain good businesses. And if he has made such a substantial purchase now, that means he believes natural gas might remain a good business for many years to come.
Still, it might be prudent to stick with renewable energy, which might have an even greener future, and for a significantly longer time.