RE:RE:Just Stop Oil NuttersIn my opinion, the main weakness in the ICE demise theory is with the lofty projections of rapid and continued EV adoption, where unfair and unsustainable temporary subsidies are put in place now to force widespread acceptance and get people out of their ICE vehicles.
First off, I mentioned before that I believe that a transportation transition to electric worldwide will not exceed the incremental new total oil demand we will require globally.
Secondly, what happens to EV sales when these massive subsidies become too expensive for governments and society to continue to support? What about road tax, now paid by ICE vehicles?
The Trudeau government has done everything possible to keep Canadian electricity very costly in the west, and yet it is almost free in the east. I recall my recent monthly bill in Edmonton that was around $0.40/kwh. Seems like 20x more than the super night rate as you get in the east. For any hope to call this a national move to transition, this massive discrepancy has got to change as most EV adoption projections assume cheap power is available everywhere and equally throughout the country.
The EV/ICE cost comparisons you make seem like a very clear choice at this time for many in the east, and taking advantage of this free subsidized money they now dangle is a no brainer. Get it while you can I would say, because at some time a certain market saturation point will be acheived and the whole half-free EV party comes to a screeching halt.
We are now witnessing the rapid unscheduled dissassembly of ESG investing, where they also had the same lofty projections, because wind and solar without hefty subsidies, and being burdened with increasing costs, they are losing money and being forced to play ball in a level playing field. Reality matters.
The points about competing technologies and more you make above are indeed a present headwind to oil, and keeps oil prices restrained. However if the same fate awaits this hyped EV transition as it did with ESG investing, the end result will pressure oil to run up as it returns as the dominant energy source used, especially on a global basis where many countries can not continue to afford to hand out heavily subsidized EVs . I think the headwind factors now make oil a great buying opportunity at these levels, where the others are a gamble. The fact is that today, even under so called weak demand, an EV transition in full swing, many economies stagnating, oil consumption is still growing now at 103 mm bpd and is forecast to continue growing year after year.
There are arguments on both sides of EV transition. Here is a new study that exposes the real price of fueling an EV, with all the subsidies that are out there now, which you know will eventually go away at some point.
Fueling EVs cost roughly $17 per gallon: Study https://www.texaspolicy.com/wp-content/uploads/2023/10/2023-10-TrueCostofEVs-BennettIsaac.pdf Before this reverts and rapid adoption becomes history, along the way there are great buying opportunities like today, where oil is up 3.5%, and oil stocks have barely moved.
On a side note, it was wise to hold off on your SU purchase until it breaks that resistance line on NYSE with some follow through momentum. Algos are in control at the moment. I have booked some SU profits around here, and my plan is to rebuy if it rises past resistance, but also rebuy if it pulls back in anticipation of the next breakout attempt. Time to sit on my hands.
Experienced wrote: Guess I have a diiferent perspective - where is the best place to put my money to get the highest risk adjusted total return
From this perspective it is not a question of whether the world will need oil in say 50 years. Odds are that oil will still be needed. The question is whether the growth in demand and the associated price of oil will match that of other industries where I can place my investment dollars.
When I look at it this way and see competing technologies such as EVs; use of recycled plastics to make clothes; trend in people working from home; Governments around the world ganging up on oil, my conclusion is that I can do better putting my money elsewhere.
I am by no means alone in looking at things this way.....a simple glance at the valuation metrics of oil companies like SU says it all.