RE:RE:ICE vehicles are pricing themselves out of the marketA better question might be "Why am I still here?"
I like the intelligence and knowledge that is respectfully posted here. I keep coming back for it.
I used to own about 60,000 shares of SU. I was a big fan but a couple of things kept eating away at me.
1) Why were the institutional investors continuing to dump SU when the FCF was so good?
2) Why was SU doubling down on its core business when it has become so clear that gasoline sales are going to become a trickle in Canada and the USA within 5 years.
I don't think the oil industry is going to go extinct but I do think that gasoline sales are rapidly approaching extinction.
Diesel fuel is going to remain around much longer because of the lack of capacity to build Class 8 EV alternatives to diesel. That is unfortunate as diesel is much more harmful to humans than gasoline.
Natural gas also has a long runway. Most of our houses and businesses run on nat gas and that isn't likely to change soon. The build out of solar/battery storage is still a long way off, unlike the rapid transition to EV's
Asphalt and cement currently provide significant markets for heavy oil. I'm not up to speed on the transition away from the use of hydrocarbons for asphalt and cement, but I know they are awful polluters so it is only a manner of time before political pressure forces the transition. I believe the technology is already in place.
I keep posting because I want somebody (there are a lot of good brains here) to convince me that I'm wrong about the future of oil. I get that things don't happen over night, but there must be a reason why SU continues to lag behind its peers in the oil and gas industry. As Experienced has said many times, why invest in a company that is swimming upstream when there appear to be so many better choices.
I acknowlege that SU's cash flows are great for now, but I don't see it continuing. The above average yield offered by SU shares is great for the short run, but not if it comes at the cost of depreciating share prices.
I get that higher oil prices will generate even more cash flow, but what happens to the SU share price as the demand for gasoline drops? And it will. Every auto maker (except than Ferrari) has publicly discussed their plans to transition fully to EV's. The one's transition the fastest will survive. The laggards will end up flusing when they realize that Guvco won't be there to bail out anything to do with gasoline powered vehicles.