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Suncor Energy Inc T.SU

Alternate Symbol(s):  SU

Suncor Energy Inc. is a Canada-based integrated energy company. The Company's segments include Oil Sands, Exploration and Production (E&P), and Refining and Marketing. Its operations include oil sands development, production and upgrading; offshore oil production; petroleum refining in Canada and the United States; and the Company’s Petro-Canada retail and wholesale distribution networks (including Canada’s Electric Highway, a coast-to-coast network of fast-charging electric vehicle (EV) stations). The Company is developing petroleum resources while advancing the transition to a lower-emissions future through investments in lower-emissions intensity power, renewable feedstock fuels and projects targeting emissions intensity. The Company also conducts energy trading activities focused primarily on the marketing and trading of crude oil, natural gas, byproducts, refined products and power. It also wholly owns the Fort Hills Project, which is located in Alberta's Athabasca region.


TSX:SU - Post by User

Comment by Experiencedon Oct 14, 2022 11:36am
193 Views
Post# 35024832

RE:Inflation war

RE:Inflation warGood points.  It may very well turn out that way.

What history tells though is that things may work out quite differently than you suggest.

A couple of months ago I posted about how the current situation we find ourselves in looks a lot like what happened in the 1970s as opposed to 2008 or even 1982.  Interestingly, in the video of Cathie Wood posted by Obscure, Cathie also drew parallels to the situation in the 1970s.  While I disagree with Cathie on her conclusions as to the proper course of action the US Fed should take, both of us agree that the cornerstone of the problem was inflation expectations.

So why am I talking about this now?

While some commodity prices are declining for now, in the US wage inflation is running between 5.5 and 6% and could possibly rise as people try to catch up on lost standard of living since their wages over the past year haven't kept up with inflation.  From history, unless this wage inflation which is driven by inflation expectations goes down, it will be very difficult for inflation to go below somewhere around 6%.  Traditionally, the Central bank discount rates are about a 100 basis points above the inflation rate.  This would put the discount rate for the US Fed at somewhere in the 6s which is about 300 basis points above where it is now.

The other reason that it might also be difficult for inflation to be tamed without further intervention by the US Fed is that the Biden Administration is pumping trillions of dollars into the US economy over the next few years.  Such expenditures funded by deficit Government financing by their very nature are inflationary (just ask anyone who has passed Econ100 about how that works).

So for now, unless I see something dramatic happen, I will stick with my current scenario and the associated investment strategy.
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