Suncor Energy Inc T.SU

A Perspective on Oil

[Experienced]

Right now oil prices are high and producers like SU are making record profits, paying down debt and rewarding shareholders with dividends.

This situation may well hold baring the recession I am predicting and will likely last for a few more years.

But what does the future hold after that?

In the transportation sector we see a rapid growth in the use of EVs thus reducing demand for oil and oil products and greater demand for electricity.  The reality is that oil will not play a role in the production of this future increase in electricity demand.... it doesn't right now and will be even less so in the future.

This reality is why, in part, the SP of companies like SU doesn't match its financial metrics. The other reason is the one that I talked about extensively a while back.  That  SU needs to show the market that it has a plan to morph into a company whose future doesn't rely on oil production or at least it has developed other significant businesses to generate shareholder wealth.  IMO we have seen very little in terms of announcements in this regard.

Conversely, companies producing natural gas will have a future in this changing world since natural gas will continue play a significant role in future electricity production and perhaps an even greater role when it becomes more evident that renewables like wind and solar have limitations in the reliability of the grid.

With this as background I would encourage people to think more about buying gas producers on market weaknesses than oil producers and also look at electricity producers the same way.

If you are skilled in options trading like Migraine then you could make a lot of money playing the swings that will happen during this transition. Otherwise, IMO you will look over shoulder and wish you had put your money elsewhere.  Not to say SU is a bad investment but there are better avenues to make money as the world changes.

[Chefboy69]

you are way off base and i have learned..the long drawn out posts are ALWAYS shorts or put buyers.. https://www.suncor.com/en-ca/what-we-do/low-carbon-power https://www.suncor.com/en-ca/who-we-are/technology-and-innovation/renewable-technologies

[Experienced]

Good luck with your investments in penny stocks.....I wish you all the best

[Oldnagger]

There are many considerations to address ,before you arrive at your conclusions as to the displacement of liquid petroleum products longer term. And I stress longer term . Petroleum will always compete globally with all other forms of energy production. Right now petroleum products are priced at a significant premium to most other fuels. So you could argue that the premium will diminish over time

[Experienced]

Thanks for your thoughtful post. Great as usual. In my earlier post, I was talking about the medium and longer run. At the beginning I said that we would likely continue to see higher oil prices for a few more years and that SU is not a bad investment but investors should start think about investing elsewhere. I have been investing for a long time, and I have learned a few things over the years.

[Oldnagger]

As far as EV s go the following video is thought provoking and does a much better job of expressing my thoughts on the subject ,than I can !! https://youtu.be/S1E8SQde5rk

[Experienced]

Good reference.... As I think you know from reading my posts over the past year that I wouldn't disagree with this perspective and in fact would add other factors such as the ecological damage associated with wind and solar farms. Having said all that, the point is the following - 1......right now oil is used to produce about 1% of the electricity in the US and as time goes on that low

[Oldnagger]

We can all use more pragmaticism. Unfortunately it is not the stuff that dreams are made of. Even in my old age , I am still chasing rainbows !! best of luck, we are all different !!

[Experienced]

Well if you are Irish that shouldn't be a problem....all you need is good Sherpa leprechaun...lol

[Oldnagger]

I am not sure about who needs a leprechaun. I am saying that petroleum will be as much in demand many years from now as it is today. I realize that there is an ocean of people who wish it were not so. But there is also a growing ocean of people who very much need energy in all its forms and will pay no matter what to get it. That other ocean includes just about everyone outside of North America

[Oldnagger]

I should mention that one of the serious obstacles to the greater use of crude has been a worldwide constraint on refining capacity. That however is more curable than most of the other forms of energy provision. It is also possible to directly combust many types of crude if need be. My conclusion remains, the world will need crude for a very long time indeed (until someone invents fairy dust )

[mrbb]

the greener the energy, the more lie, deception and confusion buried underneath the claim. The mass sheeple are too busy with finding food on the table and roof over their head, and can be easily misled. Looking, just look at how draconian covid prevention measure have worked out. Hindsight, it look like countries with the more flexible/voluntary covid measure recovered the fastest while china

[Oldnagger]

I was always privileged to work in the 80 s  in Montreal rather than Toronto . That afforded me the  opportunity to study the more important things in life such as who had the best cigars , wine , eateries and women . All of which Montreal won hands down. A few times a year however it was necessary to make a trek to T.O. where we invariably had to be lectured on our incompetence. My

[Experienced]

I had the opportunity to meet Rick in the 90s. My impression at the time was that he was a true gentleman and made of the right stuff and as you point out - not full of himself like so many others in that business. Sad that he got sick and died at such an early age.

[mrbb]

this is how green technology work  

[Oldnagger]

Just a few more thoughts, particularly with your methodology for share price evaluation , for which I whole heartedly agree. That makes two of us !! Seems somedays that there are not many more. Where we disagree is on the future value. Well for that I rather like using companies estimates of reserve values discounted at some risk adjusted rate. That is my starting point and for that I make my own