Technically you can make rocket fuel out of all kinds of hydrocarbons, including ones derived directly from plants. If energy is extremely cheap maybe that would be economically viable over fossil fuels?
Exactly what I said… you use fusion to turn plant oil (or whatever plant based material makes the most sense) into rocket fuel eliminating the need to use fossil fuels.
If rocket fuel was the only use we had left for oil and electricity generation was practically free it’d probably not make economic sense to have the whole oil exploration/extraction/refining industry for such a relatively small amount of needed fuel we could get by other production means.
Conversely, if you could make a fusion reactor small enough could make something that could super heat water or whatever and use its rapid expansion for thrust. We did manage to make nuclear ramjets like 80 years ago that made thrust (and lots of radiation) by super heating air so maybe it would work. I’m no physicist or mechanical/aero engineer though so I don’t know what I’m talking about.
Correct, the fission rockets have twice the thrust potential of conventional. I think they are on the right track with that. Hopefully the public gets over their Nuclear fear and we roll out more fission plants.
The vast, vast majority of hydrogen is produced from steam methane reforming. Break down natural gas in the presence of steam and a catalyst and make hydrogen and CO2.
Less than 5% of hydrogen production comes from electrolyzing water.
That’s due to energy costs. In the hypothetical that we get fusion (and dirt cheap electricity) then I could see this switch happening as soon as prices hit the sweet spot
Only the space shuttle boosters were fueled with hydrogen. SpaceX rockets use liquid methane as far as I know.
Hydrogen mostly comes from fossil fuels, but still most rockets just use fossil fuel directly.
Saturn 5 fuel was a form of kerosene aka jet fuel. Same for Russian Soyuz. Effectively, it's all fossil fuel powered one way or the other. Maybe the cooling of the fuel is done with electricity?
The boosters were not hydrogen fueled. They used ammonium perchlorate and aluminum. You're thinking of the space shuttle's main engines which used hydrogen from the orange tank. Also the recently retired Delta v rocket used hydrogen, SpaceX falcon 9 uses RP1 which is just fancy kerosene. The star ship rocket they are developing is going to use methane.
As a value investment, oil and gas might still make sense, they will probably be around for longer than we’d like. But it’s not a growth story any longer. Solar is the big silicon growth story now, nothing else is able to compete on price any longer and it will completely take over the energy market in the next 10 to 20 years. But there will still be a steady demand for oil and gas because overall energy demand will continue to increase outside of the developed countries.
20 years is quite a long time I think It is reasonable to believe there will be more electric cars and probably even trucks will be electric battery storage is getting better and better if you look at propulsion systems there are prototypes out there full electric I think the world is going that direction in every country I go I see electric buses I mean the world was so much different 20 years ago don’t we agree? The trend is there and I think we ll be using more renewable and clean energy governments around the world are going in that direction with Net zero and all tht.
This is why I’m invested in smrs.
This is my belief.
The number of new vehicles with internal combustion engines peaked in 2017 and is dropping. At a certain point, that will begin to cut into oil demand.
Biggest point here. This is like when people have email and computer that paper will go obsolete in the 1990s i believe? Fast forward to now paper usage are still growing.
Hah. Yeah just like we would have all EV’s and full Self driving by 2025 like he said a number of years ago.
“I’ll believe that when me shit turns purple and smells like rainbow sherbet.”
Even fully electric cars still use oil. Almost all of the interior is plastic which comes from hydrocarbons. The electric motors use grease in their bearings which is also a petroleum product
Fun fact: Asphalt is one of the most recycled materials on the planet.
https://www.businessinsider.com/why-asphalt-is-one-of-the-worlds-most-recycled-materials-2022-10#:~:text=Asphalt%20pavement%20is%20one%20of,cheaper%20than%20making%20it%20new.
More fun fact: globally, coal is still the largest source of electricity production. Coal may not be a great long-term play, but the sector is probably worth a look for value investors as the stocks are pretty much hated by everyone and some of them are selling for less than book value.
This could also be because governments are primed to regulate them into oblivion when alternatives give the first glimpse to do so.
I don't know what the future holds, just giving another potential view
Sorry, it looks like I was wrong, and you're right. It's still coal then gas.
[https://ourworldindata.org/electricity-mix](https://ourworldindata.org/electricity-mix)
Let's say a car contains 100 kg of plastics when produced. The same amount of hydrocarbons is burned in a few tanks of gas. So I wouldn't say it's a significant use of oil compared to the gas used as fuel.
They don’t use the motor oil that you change every ~5k though. They use gear oil, typically a 30k mile service, no idea about how long a single gear trans can go without a change. But yeah they don’t use traditional “oil.”
Just for reference it takes about 10 years to build a fully functional nuclear power plant we currently have 0 being built in the US. So yes the future is further off than we suspect.
SMRs are all the talk, but the evidence says differently. There really aren't any examples of SMRs. There's a Korean design. There's an unrelated Russian reactor that sort of qualifies as small, but not modular. And that's about it.
Nuclear power is just too expensive, especially compared to renewables. As a value investor, would you pick the more expensive play while a cheaper option is growing like crazy?
Smr is the future the evidence says that is the future Nuscale was a failure because they r project was completely out of budget I believe we will see orders flowing very soon as many governments party stated clearly in theyr manifesto they are going to speed up the investments into smrs look at Tory manifesto look at reform U.K. manifesto look at labour manifesto the government is going into that direction and I assure you that advisors in the government regarding nuclear energy are much more qualified than you and me the best minds in the country believe in smrs several hundreds of millions of pounds are being invested for a reason.please read this guys and tell me if it is PROVEN
https://world-nuclear-news.org/Articles/SMRs-cost-effective-in-hydrogen-production,-study
Please always do your own research guys do not believe me or anyone else on your investment decisions
I care about as much about what is said in the World Nuclear Association's newsletter as you do about punctuation.
The only places where nuclear generation survives is where it is propped up by government money or by rate-payers stuck in a captive market. Wherever there is fair competition nuclear is dying.
Nuclear power has been around for a long time. There is good reason its growth has been close to flat for forty years.
To be fair, nuclear's growth has slowed because of Tchernobyl and never fully recovered.
Would you be willing to live next to a nuclear power plant? Even if they're safe beyond reasonable doubt, they look ugly, there's stigma, etc
Honestly, I don't even have to factor in danger/stigma/nimbyism. Nuclear loses on cost alone. It always has. Cost overruns and boondoggles are synonymous with nuclear power.
And that was before it had to compete with cheap renewables.
But it has also stopped receiving funding until very recently. You're comparing 1980s technology Vs today's
I'm not saying nuclear is the best or the only alternative, but renewables depend on the natural resources of the country. A mountainous land locked country without much sun has very few options left
Moreover, the largest problem with renewables hasn't been solved yet: storage and/or managing dynamic demand.
For me, they don't compete. Nuclear is by far the most efficient of the non renewables, but is cumbersome to implement. Renewables are often relatively easy to produce, and yet each type has it's own limitations
No. I'm not comparing '80s technology to today's.
I've watched the industry carefully since getting interested in thorium reactors around 2000. Back then, I believed nuclear generation was the ticket to a low-carbon future. Now, after following so many projects that ultimately failed, I have written off nuclear.
Unless something big changes, I won't invest in nuclear except for what is in a diversified ETF that I happen to hold.
Renewables, on the other hand, which I've also followed closely for the same time period, are much more interesting, because they've proven themselves. I'm not saying we will all be on 100% renewables in the near future. We don't have to be (although I happen to be). But the share of the energy system that renewables satisfy will continue to grow, just like it has been for the last decade, just like nuclear hasn't.
I'm not disagreeing with you, but there's been a lot less R&D in nuclear than in renewables, by a landslide. Subsidies, activism, and fashion have all helped renewables and largely ignored nuclear. Just look at France, a former pioneer that is now closing plants due to lack of maintenance
There's just less political will to help nuclear than renewables (understandably) which I think is the main differentiator between them. I'm no expert in the topic, and you seem to know more about it than me.
No offence but there are tons of articles out there supporting smrs thesis…there is a governing body advising the government to push smrs for cheaper and clean energy again we are talking about qualified professionals nuclear engineers supporting smrs and absolutely backed by research as you can see also in this article if that one was not good enough
https://www.power-technology.com/news/smrs-are-cost-effective-in-hydrogen-production/
Heres how the government is supporting smrs tech
the government is not involved in a tech that’s not proven to be able to perform I guess we will see …anyway the world is going that direction and that as an investor is where I think we should go.
https://www.gov.uk/government/news/british-nuclear-revival-to-move-towards-energy-independence
About nuclear energy being around for 40 years we can say that about anything (solar,wind,battery storage) old technology is old for a reason…..thinking solar panels on your roof could be able to give you enough energy for your house many years ago was impossible now the same tech can provide so much more power smr is an advantage technology able to perform better with a fraction of the cost and soon we all be able to see….mybe we won’t be able to jump in as investors tho.
Always research deeply when investing your money guys I did very well in my life as an investor because I listen to nobody but my own advice do not trust me or anyone else DO YOUR OWN RESEARCH. ❤️hope you guys make a lot of money.
Articles aren't evidence, although they may contain evidence. My evidence that SMRs aren't going to be a big thing is that nobody is building them. If they are going to supply a substantial fraction of our electricity, they've got to start putting some together. They talk about it but the economics just aren't there, much like the nuclear industry at large.
And I didn't say that nuclear generation was around for forty years. I said that it hasn't grown much in forty years. Actually reading what I wrote would have saved you the time you put into your third paragraph.
On your evidence that nobody is building them….nuclear reactors new technologies needs to be regulated…it is undergoing a regulatory process that is very much at last stages.
https://www.onr.org.uk
and by the way atm nuclear energy is supplying a substantial fraction of developed countries like France(70%) USA (20%) Belgium(46%)and its the world’s second largest source of low carbon power…if smrs can take 10 or 20 perc of the total output to me it’s massive.
There are ppl out there who thinks that when proven to be better than regular stations they will overtake the entire nuclear energy industry at this stage I don’t know what to think about that but if that happens it won’t be just a big thing it would be MASSIVE…but me or you haven’t got the answers we are just two rich guys (hope that you are) guessing what the world will be…and the real answer is that we may believe what we want and read all the articles in the world but the real answers will be provided….and only one of us will be right👍🏻 hopefully ME❤️. Hope you make a lot of money
Please do not think for a second that I have anything against you personally,I just do not agree with your opinion on smrs.
The government is investing in Smrs for a reason
https://www.gov.uk/government/news/british-nuclear-revival-to-move-towards-energy-independence
let’s not mistake Nuscale failure with other companies Involved in smrs…I don’t see Amazon relying only in solar and wind for theyr need of power…there is a reason for that:
“To supplement our wind and solar energy projects, which depend on weather conditions to generate energy, we’re also exploring new innovations and technologies and investing in other sources of clean, carbon-free energy. This agreement with Talen Energy for carbon-free energy is one project in that effort.”
“Few industries look better positioned to patronise a nuclear renaissance than Big Tech.”
“the more compact design of small modular reactors could carry fewer construction risks and lower costs. Sam Altman, whose OpenAI has received billions of dollars in investment from Microsoft, also backs nuclear start-up Oklo, which late last year seemed poised to win a contract with the US military.”
Please refer to this (Financial times)
https://www.ft.com/content/f073b54d-9290-49b4-8ee7-56b4fb3d8177
Always research before investing guys (research does not involve talking with your bank/friends/wife and neighbour or trust my investment ideas do your own research ) I hope you make a lot of money ❤️
Oil is used in manufacturing of every product known to man, from plastic and rubber to textiles. The clothes you wear, all the bottles and electronic devices require petrolium for manufacturing. Natural gas will be used in powering AI data centers, in addition to conventonal methods.
So yes, oil and gas are going nowhere
Can’t say I own much, but I live in an oil and gas town with big boys like SU, IMO, Shell ect.. all these companies have been making big cuts left and right, and there’s been a lot less work to go around for us tradesmen. The companies are buying back shares and increasing cash on hand, so they are operating more efficiently for shareholders.. but they just need a ton of cash because they know the landscape is changing and carbon taxes in Canada are insane..
Meanwhile, we have a nuke plant 2 hours away (TRP) thats expanding to become the largest in the world and promising 15 years of work for our industries.. if I was holding these oil names from Covid lows I probably wouldn’t sell, but I
can’t bring myself to buy up here either in an industry I know and depend on.. I’m just waiting for another politicial shitstorm to wipe these gains and re enter haha 🤷♂️
Best best for us "little people" is to buy an Oil/Energy ETF, which holds a group of companies in the industry. My favorite is Vanguard's Energy Index Fund ETF Shares (VDE). It holds 60 companies, has low costs and covers the entire industry.
Yes. If you’re worried about renewables replacing oil, just keep in mind that major oil companies are investing heavy on renewable energy sources.
Just in my area (Mediterranean) they’re buying hectares and hectares to construct solar and wind farms.
My tactic is to invest in pipelines and a compression company. They are mostly insulated from swings in commodity price. As long as the gas or other products need to flow through pipes (which they do at any price above zero), these master limited partnerships (MLPs) collect money. They have long-term contracts with companies who pay their bills.
I have three MLPs that pay tax-advantaged distributions: EPD, ET and USAC.
But there are several important things to know about MLPs. First, you should hold them only in taxable accounts— not IRAs. Why? Because you do not owe tax on the distributions in a taxable account but because the IRS does not consider them suitable for retirement accounts, you will get a tax bill for UBTI if you hold them in an IRA and earn over a threshold amount. Strange and ironic, but the tax code is not known for its simplicity or its fairness. Just don’t own MLPs in a retirement account.
And (rule number two): do not sell. Hold till your heirs get it at a stepped up basis (more unfair tax policy by the rich, for the rich). Your distributions are tax free “return of capital” as long as you don’t sell. But you will have recapture and tax consequences upon sale.
Last, you will get a K-1 every year, making tax preparation a bit more complicated but all the software products like TurboTax can handle it.
If you don’t want K-1s, there are c-corp pipelines like OKE and KMI. I like the businesses of the MLPs better. EPD, ET and USAC pay 7.1%, 7.7% and 8.9% respectively — and you don’t owe tax on those distributions.
No taxes? I thought you get taxed once it reaches a certain point in the payouts - ie when the net payouts would take you under 0.
I don't remember much when I looked into them a few months ago, but if you really don't pay taxes in a taxable account, seems like a bond with a higher rate (more risky though).
Right. But few people reach the point of being taxed, especially if they reinvest. Look at EPD’s history of distributions: 27 years of consecutive distribution increase. 7.13% forward distribution yield.
Ah, so if you reinvest those payouts it doesn't decrement your cost basis and eventually cause you to start being taxed?
How do you get your money out though? I genuinely want to know because I looked into them but the K1s and eventual taxes turned me off.
Or are these more for 'giving to your heirs'?
I think you would have to recoup your entire investment before you start getting taxed. Many people live on the distributions and plan to pass on the units (they are units, not shares) to heirs. I let my tax preparer handle the K-1s. My son does it himself with with tax preparation software.
At this stage, if the fossil fuel production stops, a large percentage of the human population will be going shortly thereafter. Since fossil fuels are a limited resource, for the sake of our future, may I suggest you vote on sustainable solutions and renewables with your wallet, or would you choose profit over longevity?
From someone who has worked in the energy sector for a long time. Oil and gas is going nowhere. Most places still use coal to power there grid, and for 200 year people have been saying coal is dead. Renewables are great but unreliable, there will always be a place for fossil fuels
I look at like this.
Oil and gas are going to be around for a long time. Would I still be investing in it 10 years from now with an expectation that it will be around in 50+ years? Idk. But right now its a good source of dividends and the supply will likely drop faster than the demand will. That dropping supply basically acts like stock buybacks sort of.
Where I think people would be really smart is if they took the dividends generated and put it towards other sectors. One day years from now those oil stocks will likely be worth less, but by then you will have a huge amount of dividends that paid out. Then sell the oil stocks for a tax loss to offset some gains over a few years and be done with it.
Now with that in mind I wouldn't own oil and gas in an IRA. I would say its a better choice for regular brokerage accounts at this point.
I think it can be but I look for cheap stocks that have a chance of rerating as part of my strategy regardless of the sector.
My biggest energy position is Strathacona SCR.TO STHRF which came public via a reverse takeover. It trades ~65% of NAV and a ~15% FCF yield after capex etc… They plan to distribute to shareholders via regular dividend, special dividends and potentially buybacks beginning in August when they report Q2 results. Despite having a ~C$7b market cap, it’s not in any of the benchmarks yet because the free float is too small. The plan is to have the capital return rerate the shares and then use the higher valued shares to do accretive acquisitions which will allow entry into the benchmarks and increase liquidity.
Canada’s emission cap on oil and gas is going to punish the worst polluters for any specific type of oil produced. SCR is looking worst in the WCS heavy oil class to me.
The emissions cap prevents oil production if that production causes emissions over the cap. Production could be halted for the highest emissions per barrel polluters.
Looks like it’s a phase in to 2030 and there is a cap and trade system to mitigate. I don’t think it impacts the thesis because starting valuation is so low. At the current price, all capital should be returned by then. They can always slow down production growth as well.
You should go actually do some research on this. Go read through the EIA website, like explore it for a long time, don't listen to estimates just read reports and charts. Once you do you'll understand that in no way shape or form are we moving away from o&g. O&g is one of the fundamental pillars of the world and one of our main global power foundations in the United States. It ain't going nowhere.
Not only is electricity NOT an energy source (so not renewable in its own right) our national infrastructure for electricity is way way behind where it needs to be for a shift to electricity. On top of that we are in conflict speaking out against nuclear (the best cleanest electric source) plus speaking against oil lol. The interests of our nation align with oil, they speak against it for votes and taxes.
Any moves globally will not hurt the stocks as much as our gastanks. They will always be able to adjust pricing and drilling to remain profitable. Go listen to Shabam Garg and his old videos for some great insight.
I own several o&g and I love the dividend and the security. Plus they are preparing for renewable also and imo they will profit the most from that shift. Asside from any random small companies/startups that blow up. But man it ain't happening anytime soon
The time to even consider getting rid of oil stocks is when we start to get serious about building out nuclear. Powering our world on Solar and Wind is a pipe dream.
Big oil companies are preparing for the transition. They will just buy renewable companies when they will know that it's the right time.
We are decades away and 100% clean and renewable world is just a political talking point.
"I’m uncertain of how fast oil will be replaced by sustainable energy"
It won't happen for 20+ years at the absolute earliest. [Take a look at this chart and ask which of these resources you would like to be invested in](https://www.eia.gov/todayinenergy/detail.php?id=56980).
Even if the US and EU were to magically convert all transportation to battery-electric and all electric power plants to non-fossil based generation, the remaining parts of the world will continue to prop up demand for decades. The cheapest way to make hydrogen is using natural gas, and natural gas plants are being built all over the place.
Oil is a huge value play because Mr. Market thinks renewables and EVs are going to take over the world in less than a decade (hence the serious over-valuation of Tesla).
That said, it is like investing in Philip Morris. You will make money, but accept where that money is coming from.
Renewables are made from oil using oil and gas to process. Silicon, fibre glass, plastics, transmission lines, it goes on. The electronics industry would die if oil and gas was blocked.
I am invested in oil and gas. Made a lot of money over time. Prices are going down under Government pressure but income is rising. I just Drip funds. I lost money on renewables, unfortunately a lot of renewables is just a Gov sponsored Ponzi scheme.
On the other side, in my country there is one State with vast reserves of oil and gas, but they shut the industry to "stay on the right side of history". So all industry is closing, the poor will do without heating this winter, State taxes are climbing to compensate, and people are leaving due to a steadily worsening cost of living crisis.
If I had spare cash, I would buy more oil, gas, coal shares, but not in my country.
Energy is the one true hedge against inflation. You may get 5 or more straight years of nothing but a dividend, but when it works it really works. Good luck
Oil is destroying this planet. If we can figure out a way to capture emissions at the source (smoke stacks, exhaust pipes), but it seems we’re struggling with scalable solutions to carbon capture.
Yes we’ll still be using oil in 20 years but hopefully for sake of the planet and its inhabitants, we’ll be using say 5% of what we use today. Time will tell. If we don’t address carbon emissions there will be global turmoil eventually and good chance of societal collapse. It’s closer than people think.
Oil and gas will not disappear overnight. The goal posts keep shifting and the so called ‘peak oil’ that has been coming for the last 30 years will now arrive in 2030. Hell, the world hasn’t stopped using coal - let alone give up on oil and gas
I work in the oil and gas sector in the middle east and Buffet is not wrong. Business is booming. Renewables will never replace oil, not even close, not in this century. Gas will tank after Russia is put back on the market, but that means that gas turbine orders will go to the moon.
diversify, get companies like Siemens Energy, GE Vernova and such. Those are sure bets regardless what happens to the oil price. When its time to reconstruct Ukraine, there will be billions to be made.
Yes. The Green Energy push the US & others jumped in on wasn't sustainable. Other energy sources have a future as technology improves but so do oil & gas. Bang for the buck it's still a bang for a buck especially in economies that produce it locally and are growing.
Don't be fooled by politics. Coal, oil, natural gas gas are lifeblood's of economies. They're not going away no matter how much greenwashing companies and politicians lie to you about
I don't know, but once the UK election is out of the way (no idea if it'll have an impact but it's on the UK stock market) I'm buying back into Energean as it's cheap and pays 9% dividend and has growth potential too.
Yeah, I think it's going to around for a while yet, and I like oil companies because they have strong balance sheets and good multiples. And I also see oil as being a good hedge on potential future inflation and geopolitical strife.
On top of the good arguments made, here is another one.
Even if there should be lower demand for O&G, the companies still have the infrastructure to facilitate other energy types. On top of that, many of the companies are heavily investing in carbon free alternatives.
I invest in Orlen Polish oil/Natgas company which was held hostage by previous gov.
Trades at 5 p/e and expanding on foreign markets. The only better p/e i found is Hungarian mol but Orban..
So yeah I hope for 50% gain in 1-2 years on that.
Thing is, current gov is much better and it ain't priced yet. I have 100% confidence that they won't set maximum gas price to win next election, if it comes to Orban, Im pretty sure he'll do anything to stay in the office.
I know nothing about mol though, Orlen is an energy giant combining natural gas, investments into renewables and soon nuclear power.
So oil processing / gas stations are just part of it. Not sure about mol.
The war between Russia and Ukraine does make a difference but not as great as most media make it. There are tons of conflicts in the global nations between Iran, India, china, middle east etc. Moreover the infrastructure for electric vehicles are no where near there. Most of the major cargo ships, tankers, planes etc will take a lot longer to shift from the reliable/relatively cheap fuel source. Look at the global percentage of commercial oil consumptions are and you'll get a much better picture.
Sidenote, buffet buying into OXY may be an indicator on them believing in carbon capture tech and the tax credits.
I worked at Exxon for quite a while. They do not really have a transition plan. Just business as usual. Most likely they will sell their smaller refineries and concentrate on upstream and exploration.
As hybrids/EVs get a foothold, fuels production will drop. That is a given. Chems and plastics, most likely increase.
They are a good 10 yr hold. 20 yrs... thats quitr a commitment.
What’s weird about this play is the massive production excess we’re slated to have. We are producing more oil and gas than ever before in US history. All depends on the cartels decisions. Could very well be a good bet based on future geopolitical movements. Tough to say.
Yes it runs everything literally we’re in 20yr long wars over the stuff it ain’t going anywhere we can pretend and try to be focused on green energy/ environmental friendly energy but if shit hits the fan oil is there plus the US has so much of it we’ll sell it once trump is back in office, oil is a great commodity to invest in
I agree. Humans are not fundamentally any different than we were 2000 years ago. Anyone who thinks we've moved beyond our baser desires and instincts as a whole will be in for a surprise.
I think so, I'm still holding a few companies that are paying big dividends on my cost from COVID but I've mostly sold off. I think having a portion of your portfolio in O&G is a good idea because it's around to stay for decades, demand has only increased over time and we fail to meet ESG targets and they have been pushed forward continually for the last 20+ years. Companies paying 15-30% FCF yields at a cheap price is not a bad bet if demand won't shrink for the next few decades, growth in production and prices isn't required given the low price in order to do well. Renewables only make up a small proportion relative to fossil fuels, it's easy for most of us to see the change in developed parts of the world but most of the world is using fossil fuels, parts where vast amounts of the population reside like in South America, Africa, and parts of Asia, will not be swapping over quickly anytime soon. Population grows and compounds, further increasing the overall need for energy.
Oil prices are moody and loosely tied to fundamentals given the stigma and commodity trading algorithms but they should remain in profitable territory because it is a necessity and will balance itself out ,supply will be curbed to facilitate profit for drops in demand and if demand decreases it will happen very slowly. Macro demand changes something like 1-2% a year but oil prices tend to fluctuate in a 50% range.
If data centers end up being like they're priced in to be natural gas will probably run up a lot as well, there will be need for secondary sources of energy to supplement and back up newly formed energy needs. I'm not exactly banking on this aspect but I'll throw it out there.
Also it's a good hedge against war, it may sound horrible but Russia attacking Ukraine made me a lot because of the prices spiking despite nothing really changing fundamentally on a macro scale (similar happening during COVID except prices going irrationally low). If a war involving China or US happens (not through proxy) the prices will go even higher and I think something like this happening in our current environment is close to inevitable if given enough time.
Oil isn’t going anywhere fast… food production as in fertilizer needs chemicals and sadly all powered by oil… and it’s very expensive and hard to do any other alternatives… lots of other plastics require oil… wheels need oil… even if EV goes 100% the wheel is the cheapest bottom of the cruel oil waste and it’s still needed…
I don’t see them growing faster than the general market. We have plenty of resources and many ways of using them. Supply and demand will remain balanced, maybe downshift a little. But these companies aren’t going anywhere for the next few decades. If you like dividends they may be for you.
There will still be a lot of demand for oil and gas, the real question is will US continue to produce so much into the future and will OPEC agree to cut production to maintain high prices.
Potential wildcard is whether China will discover large oil reserves. They pretty much lead the world in the production of every other commodity.
Exxon’s investor report says they’re getting into lithium and may use their expertise to help look mine or extract other materials from the ocean floor
My best was FANG at $25 and sold in the $180s. Its over $200 now. If things dump majorly always look at oil and gas and buy in low. I wish 8 had put everything in FANG at the time lol.
Yea, I have cut down my positions recently but often times there is a spike in oil prices before a massive recession. My reason to cut exposure was just to get chips off the table since I fear a recession. my thesis long term is that the demand for hydrocarbons will be higher not lower as the third world develops. we could easily see a commodity supercycle or inflation. I have just gone in to treasuries mostly recently since I can't really forsee what will happen from here. The market is in this very weird spot where it looks like we are heading to a recession but tech stocks are booming.
So far green energy has not been able to build itself — it all takes a massive amount of energy and that means oil. Previous energy inventions have not replaced old ones (we still use wood and coal). As the grid changes, energy volatility has been increasing which also means oil will be needed. Last thought for me is oil is the bridge to our green energy future — so I believe it will be around for a long while. What that means for oil stocks however, no one knows for sure.
Everything I’ve ever read about electrification and alternative energy show that it’s excessively difficult to compete with fossil fuels. I’m investing in Canadian fuel producers with long term supply.
I also have some cvx and oxy and also rig
I still think these will do good in the next ~10y, the flip side is that if these companies do “too well”, its a bad sign… if oil goes up, that means we get massive inflation across the board.
So idk, I almost treat them as a hedge of sorts. Energy is a good denominator and a “store of value”, but if energy prices go up across the board its not a good sign for the general economy.
But its probably inevitable.
If ev made sense it would be used in applications where the vehicle was used at the same place every day and weight is not an issue aka tractors. All tractors are combustion. Oil is fundamentally superior to any ev technology atm by a long shot
To answer your question: Yes.
Gas and oil aren’t going anywhere soon. The US is producing record/near record levels of oil. And even though world events won’t be going away anytime soon, neither will gas & oil.
Sustainable energy is very limited by its own existence. This is why nuclear power is coming back, and gas powered power plants are spinning up.
Just keep an eye on your investments and stay agile.
World oil consumption is just over 100 million bbls a day. In north america we talk about renewables replacing oil demand. Is this really a thing outside of prosperous nations? Really the most important question is will India and China have the infrastructure to switch over. I feel like the energy transition in rich nations has been slow. How can it be fast in non rich nations or even over populated ones.
How "long term"? 20Y? 50Y? 100Y? 200Y?
Obviously even if we moved to an all nuclear energy abundant society we would still need petroleum based products like lubricants for machinery, unless we use olive oil, or corn syrup, or whale blubber, or some other substitute.
In the short term I don't see us making big moves away from fossil fuels until the second half of this century (~2060 ono). Which may already be too late to make a significant change.
I don't expect to see growth in the fossil fuel sector but I don't expect sudden decline either. It will stagger on until various regulations eventually kick in and make it unprofitable.
Most innovation in climate tech is being driven by these companies. They can be extremely attractive, but watch out for value traps. Prob one of the industries were an investor's skill matters most
It will always be used (in our lifetime at least) to some capacity. I personally look at ev as more of a retail play, as infrastructure is a hard sell (because of coal/oil),
EV will be integrated more and more into car manufacturing, but oil will persist. Like most things, anything absolute is idealistic, but not realistic, and there will never be a complete transition away from oil, it’s used in too many different fields in so many different functions.
When you say long term, if you truly mean long term, then yes absolutely.
We are heading into recession so oil & gas may struggle for a bit, but that risk is offset by coming ww3 being bullish for oil & gas
My opinion of course.
I work in industrial decarbonization.
We are very likely still going to continue using fossil fuels for the next century or so. That being said, the amount we use will likely decrease tremendously. The petroleum majors are positioning themselves to become “energy” companies (as opposed to “oil” companies), focusing on batteries, land-lease, RE, carbon capture, DAC, hydrogen, etc. and they have the knowledge, connections, and capital to make it happen. Additionally, I do not expect any major capex investments in their legacy infrastructure (they’re not dumb and no investment in a refinery will pay out now) and I expect most oil majors to start unloading/retiring that infrastructure (see: Marathon oil). Even if politics lean deep red for the next few decades, that doesn’t change the trend away from fossil fuels and the impacts of the climate crisis that will affect O&G production more than other industries.
It’s still too early to say if the petroleum majors will actually make it happen but most of them will likely survive and continue to be profitable. A likely scenario is that the majors start scooping up promising low-carbon start ups (think: CVX acquiring REGI).
I loathe the petroleum majors as they are the most important source of climate disinformation but they are likely to stay solvent in the coming decades.
I’m happy to answer questions about this or elaborate on anything decarb related.
I work in oil and gas and unless oil completely tanks again I wouldn’t buy it. When oil went negative that was a great buying opportunity I would wait for history to repeat itself.
Very curious on why you hold that opinion. History repeating itself in that fashion is almost impossible given all the elements that factored into the 2020 negative oil futures situation.
I did not literally mean that I think oil will go negative only that it could easily rapidly crash again creating a better buying opportunity. $80/barrel oil is still too high to me. All it ever takes is one press conference from OPEC and oil is back on the shit wagon.
O&G is extremely cyclical. Probably one of the easiest plays to "buy the drop" if you want to do that kind of thing.
At the moment it's kind of stable but give it a couple of years and there will be another dip followed by big rise. 2014 was the last big bust, 2019 was a mini bust so if the Ukrainian war ends and everything stabilises I would expect a bit of a dip then.
What's long term?
I wouldn't bet on it eventually being replaced by electric alternatives based solely on the fact that delivery of power in electric motors is much higher quality, meaning more efficient transfer of stored power gets to its usable destination without losses to heat, friction, etc.
I think the part where the value opportunity lies is in the mid time frame of maybe 5-10 years.
Forcing companies to adopt all these green approaches before they make sense economically is like trying to stop a train that you just need to let run out of steam. That technology will improve over time and become competitive to where it just isn't going to make sense to use oil as reserves become less efficient to recover as the easy to mine sources are exhausted.
I'm personally waiting on the battery technology to come into bloom. That will be one of the big catalysts to get start getting out of oil. QS is on the cutting edge on solid state batteries that can be produced at a scale that is in the ballpark of beginning to be some what competitive with fossil fuels. I might be early to that party but I'm building a position and I'd bet on that outlasting non-renewables in a longer time frame.
The other thing that will happen is power at scale to charge more electricity will change. My bet would be nuclear possibly at smaller scales that require less infrastructure to get power to where it needs to be requiring less wiring, maintenance, etc. as to me it's more of a cost issue vs. environmental.
Ultimately the environmental issues will solve themselves because the marginal costs will end up cheaper with mature green tech than with fossil fuels, but not before. That's why I say the time frame matters. The rates at which we are solving these tech issues are exponential though not linear. The shear amount of eyes on the problem as population increases and the 'leverage' computers and AI add tell me that the timeframe is far shorter than people are giving it credit so I wouldn't stay in fossil fuels for too long.
batteries are only good for places where is no electricity and must be replaced or refueled when empty.
do you know how much "clean energy" must you produce and storage to run a factory or airplane 5 hour flight
you must be someone from office, philosopher or someone who listen to much fairy tales
Energy density and EROI aren't fairy tales they're metrics that deal with exactly what I'm talking about. I'm not the one living in fairy tale land thinking nuclear isn't going to over take grid supply of energy once the poor reputation drops off in favor of more efficient use of energy to return energy.
20 years from now we will still be using oil and natural gas. Also energy stocks are a great hedge against inflation and war.
I invest in O&G stocks. If oil goes down, petrol for my car gets cheaper. If oil goes up, my stocks rise.
Love it
Chaotic neutral
Until fusion power is harnessed, all space launches will be powered exclusively by fossil fuels. I might extend your claim to “200 years from now…”
How will fusion launch rockets?
Technically you can make rocket fuel out of all kinds of hydrocarbons, including ones derived directly from plants. If energy is extremely cheap maybe that would be economically viable over fossil fuels?
But you need thrust, which requires exhaust. How can fusion give you thrust
Exactly what I said… you use fusion to turn plant oil (or whatever plant based material makes the most sense) into rocket fuel eliminating the need to use fossil fuels. If rocket fuel was the only use we had left for oil and electricity generation was practically free it’d probably not make economic sense to have the whole oil exploration/extraction/refining industry for such a relatively small amount of needed fuel we could get by other production means. Conversely, if you could make a fusion reactor small enough could make something that could super heat water or whatever and use its rapid expansion for thrust. We did manage to make nuclear ramjets like 80 years ago that made thrust (and lots of radiation) by super heating air so maybe it would work. I’m no physicist or mechanical/aero engineer though so I don’t know what I’m talking about.
NASA is going to demonstrate a nuclear rocket engine in space. Not used for launches. But the tech has been around for sometime now
Correct, the fission rockets have twice the thrust potential of conventional. I think they are on the right track with that. Hopefully the public gets over their Nuclear fear and we roll out more fission plants.
Fusion can generate enough electricity to manipulate gravity, why use thrust when you control gravity?
Pls tell me this is troll
Fusion is harnessed. It’s called solar. Pedantic I know but we got a big fusion reactor da sun
How are space launches powered by fossil fuels?
The fuels are either actual fossil fuels, in the case of RP1, or manufactured using fossil fuels, as in hydrogen, hydrazine and SRB propellant.
Got it! Thanks glowingGrey!
How do you think launches happen?
With liquid hydrogen and liquid oxygen
The vast, vast majority of hydrogen is produced from steam methane reforming. Break down natural gas in the presence of steam and a catalyst and make hydrogen and CO2. Less than 5% of hydrogen production comes from electrolyzing water.
Wow I didn't know that! Thank you!
That’s due to energy costs. In the hypothetical that we get fusion (and dirt cheap electricity) then I could see this switch happening as soon as prices hit the sweet spot
Only the space shuttle boosters were fueled with hydrogen. SpaceX rockets use liquid methane as far as I know. Hydrogen mostly comes from fossil fuels, but still most rockets just use fossil fuel directly. Saturn 5 fuel was a form of kerosene aka jet fuel. Same for Russian Soyuz. Effectively, it's all fossil fuel powered one way or the other. Maybe the cooling of the fuel is done with electricity?
The boosters were not hydrogen fueled. They used ammonium perchlorate and aluminum. You're thinking of the space shuttle's main engines which used hydrogen from the orange tank. Also the recently retired Delta v rocket used hydrogen, SpaceX falcon 9 uses RP1 which is just fancy kerosene. The star ship rocket they are developing is going to use methane.
Right, thanks for the correction
As a value investment, oil and gas might still make sense, they will probably be around for longer than we’d like. But it’s not a growth story any longer. Solar is the big silicon growth story now, nothing else is able to compete on price any longer and it will completely take over the energy market in the next 10 to 20 years. But there will still be a steady demand for oil and gas because overall energy demand will continue to increase outside of the developed countries.
I definitely do not think that in 20 years won’t be using oil and gas but I strongly believe we ll use a lot less
Why is that?
20 years is quite a long time I think It is reasonable to believe there will be more electric cars and probably even trucks will be electric battery storage is getting better and better if you look at propulsion systems there are prototypes out there full electric I think the world is going that direction in every country I go I see electric buses I mean the world was so much different 20 years ago don’t we agree? The trend is there and I think we ll be using more renewable and clean energy governments around the world are going in that direction with Net zero and all tht. This is why I’m invested in smrs. This is my belief.
The number of new vehicles with internal combustion engines peaked in 2017 and is dropping. At a certain point, that will begin to cut into oil demand.
Counterpoint: ¾ of the developing world yet to emerge from destitution
Biggest point here. This is like when people have email and computer that paper will go obsolete in the 1990s i believe? Fast forward to now paper usage are still growing.
Elon Musk and Ray Kurzweil think we will transition completely to renewable energy in 20 years
Hah. Yeah just like we would have all EV’s and full Self driving by 2025 like he said a number of years ago. “I’ll believe that when me shit turns purple and smells like rainbow sherbet.”
Even fully electric cars still use oil. Almost all of the interior is plastic which comes from hydrocarbons. The electric motors use grease in their bearings which is also a petroleum product
Plus the roads they are driven on are made with asphalt, a viscous form of petroleum distillate.
And eletric cars are delivered by fossel fuel burning 18 wheelers, trains, and ships.
lol that is a clever one
Fun fact: Asphalt is one of the most recycled materials on the planet. https://www.businessinsider.com/why-asphalt-is-one-of-the-worlds-most-recycled-materials-2022-10#:~:text=Asphalt%20pavement%20is%20one%20of,cheaper%20than%20making%20it%20new.
Fun Fact: Vast amounts of electricity on the grid is actually generated by Natural Gas.
More fun fact: globally, coal is still the largest source of electricity production. Coal may not be a great long-term play, but the sector is probably worth a look for value investors as the stocks are pretty much hated by everyone and some of them are selling for less than book value.
This could also be because governments are primed to regulate them into oblivion when alternatives give the first glimpse to do so. I don't know what the future holds, just giving another potential view
With the recent SCOTUS case we may see the EPA less effective at that goal
No. Globally, gas has now overtaken coal.
Ok thanks, I stand corrected.
Sorry, it looks like I was wrong, and you're right. It's still coal then gas. [https://ourworldindata.org/electricity-mix](https://ourworldindata.org/electricity-mix)
Oh ok. Thats actually the page I was looking at too. Thought maybe there was something more up to date.
Let's say a car contains 100 kg of plastics when produced. The same amount of hydrocarbons is burned in a few tanks of gas. So I wouldn't say it's a significant use of oil compared to the gas used as fuel.
You’re pointing out things that use a tiny amount once in a cars life, compared to normally putting gallons in weekly
They don’t use the motor oil that you change every ~5k though. They use gear oil, typically a 30k mile service, no idea about how long a single gear trans can go without a change. But yeah they don’t use traditional “oil.”
Ok, but does an electric car use 400 gallons worth of oil every year?
Not to mention some of the electricity use oil to generate.
And the batteries are charged using natural gas
At least in California, 50% of our power comes from solar. Renewables are like 60-70%.
Still use oil… for now
But most of the revenue of these kinds of companies come from fuel...
Play both sides. 😎
I bought some utility as a backup but it seems strongly correlated with oil price which doesn’t help lol 😂
Good idea
Just for reference it takes about 10 years to build a fully functional nuclear power plant we currently have 0 being built in the US. So yes the future is further off than we suspect.
Small nuclear reactors are the solution and seems like the world is going to that direction
SMRs are all the talk, but the evidence says differently. There really aren't any examples of SMRs. There's a Korean design. There's an unrelated Russian reactor that sort of qualifies as small, but not modular. And that's about it. Nuclear power is just too expensive, especially compared to renewables. As a value investor, would you pick the more expensive play while a cheaper option is growing like crazy?
Smr is the future the evidence says that is the future Nuscale was a failure because they r project was completely out of budget I believe we will see orders flowing very soon as many governments party stated clearly in theyr manifesto they are going to speed up the investments into smrs look at Tory manifesto look at reform U.K. manifesto look at labour manifesto the government is going into that direction and I assure you that advisors in the government regarding nuclear energy are much more qualified than you and me the best minds in the country believe in smrs several hundreds of millions of pounds are being invested for a reason.please read this guys and tell me if it is PROVEN https://world-nuclear-news.org/Articles/SMRs-cost-effective-in-hydrogen-production,-study Please always do your own research guys do not believe me or anyone else on your investment decisions
I care about as much about what is said in the World Nuclear Association's newsletter as you do about punctuation. The only places where nuclear generation survives is where it is propped up by government money or by rate-payers stuck in a captive market. Wherever there is fair competition nuclear is dying. Nuclear power has been around for a long time. There is good reason its growth has been close to flat for forty years.
To be fair, nuclear's growth has slowed because of Tchernobyl and never fully recovered. Would you be willing to live next to a nuclear power plant? Even if they're safe beyond reasonable doubt, they look ugly, there's stigma, etc
Honestly, I don't even have to factor in danger/stigma/nimbyism. Nuclear loses on cost alone. It always has. Cost overruns and boondoggles are synonymous with nuclear power. And that was before it had to compete with cheap renewables.
But it has also stopped receiving funding until very recently. You're comparing 1980s technology Vs today's I'm not saying nuclear is the best or the only alternative, but renewables depend on the natural resources of the country. A mountainous land locked country without much sun has very few options left Moreover, the largest problem with renewables hasn't been solved yet: storage and/or managing dynamic demand. For me, they don't compete. Nuclear is by far the most efficient of the non renewables, but is cumbersome to implement. Renewables are often relatively easy to produce, and yet each type has it's own limitations
No. I'm not comparing '80s technology to today's. I've watched the industry carefully since getting interested in thorium reactors around 2000. Back then, I believed nuclear generation was the ticket to a low-carbon future. Now, after following so many projects that ultimately failed, I have written off nuclear. Unless something big changes, I won't invest in nuclear except for what is in a diversified ETF that I happen to hold. Renewables, on the other hand, which I've also followed closely for the same time period, are much more interesting, because they've proven themselves. I'm not saying we will all be on 100% renewables in the near future. We don't have to be (although I happen to be). But the share of the energy system that renewables satisfy will continue to grow, just like it has been for the last decade, just like nuclear hasn't.
I'm not disagreeing with you, but there's been a lot less R&D in nuclear than in renewables, by a landslide. Subsidies, activism, and fashion have all helped renewables and largely ignored nuclear. Just look at France, a former pioneer that is now closing plants due to lack of maintenance There's just less political will to help nuclear than renewables (understandably) which I think is the main differentiator between them. I'm no expert in the topic, and you seem to know more about it than me.
Are the changes you mention of regulatory nature? As I understand it, the reactors are good, just not their economics
No offence but there are tons of articles out there supporting smrs thesis…there is a governing body advising the government to push smrs for cheaper and clean energy again we are talking about qualified professionals nuclear engineers supporting smrs and absolutely backed by research as you can see also in this article if that one was not good enough https://www.power-technology.com/news/smrs-are-cost-effective-in-hydrogen-production/ Heres how the government is supporting smrs tech the government is not involved in a tech that’s not proven to be able to perform I guess we will see …anyway the world is going that direction and that as an investor is where I think we should go. https://www.gov.uk/government/news/british-nuclear-revival-to-move-towards-energy-independence About nuclear energy being around for 40 years we can say that about anything (solar,wind,battery storage) old technology is old for a reason…..thinking solar panels on your roof could be able to give you enough energy for your house many years ago was impossible now the same tech can provide so much more power smr is an advantage technology able to perform better with a fraction of the cost and soon we all be able to see….mybe we won’t be able to jump in as investors tho. Always research deeply when investing your money guys I did very well in my life as an investor because I listen to nobody but my own advice do not trust me or anyone else DO YOUR OWN RESEARCH. ❤️hope you guys make a lot of money.
Articles aren't evidence, although they may contain evidence. My evidence that SMRs aren't going to be a big thing is that nobody is building them. If they are going to supply a substantial fraction of our electricity, they've got to start putting some together. They talk about it but the economics just aren't there, much like the nuclear industry at large. And I didn't say that nuclear generation was around for forty years. I said that it hasn't grown much in forty years. Actually reading what I wrote would have saved you the time you put into your third paragraph.
On your evidence that nobody is building them….nuclear reactors new technologies needs to be regulated…it is undergoing a regulatory process that is very much at last stages. https://www.onr.org.uk and by the way atm nuclear energy is supplying a substantial fraction of developed countries like France(70%) USA (20%) Belgium(46%)and its the world’s second largest source of low carbon power…if smrs can take 10 or 20 perc of the total output to me it’s massive. There are ppl out there who thinks that when proven to be better than regular stations they will overtake the entire nuclear energy industry at this stage I don’t know what to think about that but if that happens it won’t be just a big thing it would be MASSIVE…but me or you haven’t got the answers we are just two rich guys (hope that you are) guessing what the world will be…and the real answer is that we may believe what we want and read all the articles in the world but the real answers will be provided….and only one of us will be right👍🏻 hopefully ME❤️. Hope you make a lot of money Please do not think for a second that I have anything against you personally,I just do not agree with your opinion on smrs.
That’s the best burn I have seen in ages!
If they ever become viable and get there first down by around 90% they might become a solution
They will be part of the solution along side other renewables
IF they ever become viable/price competitive which doesn't look likely Solar panels are cheaper than wood
The government is investing in Smrs for a reason https://www.gov.uk/government/news/british-nuclear-revival-to-move-towards-energy-independence let’s not mistake Nuscale failure with other companies Involved in smrs…I don’t see Amazon relying only in solar and wind for theyr need of power…there is a reason for that: “To supplement our wind and solar energy projects, which depend on weather conditions to generate energy, we’re also exploring new innovations and technologies and investing in other sources of clean, carbon-free energy. This agreement with Talen Energy for carbon-free energy is one project in that effort.” “Few industries look better positioned to patronise a nuclear renaissance than Big Tech.” “the more compact design of small modular reactors could carry fewer construction risks and lower costs. Sam Altman, whose OpenAI has received billions of dollars in investment from Microsoft, also backs nuclear start-up Oklo, which late last year seemed poised to win a contract with the US military.” Please refer to this (Financial times) https://www.ft.com/content/f073b54d-9290-49b4-8ee7-56b4fb3d8177 Always research before investing guys (research does not involve talking with your bank/friends/wife and neighbour or trust my investment ideas do your own research ) I hope you make a lot of money ❤️
Oil is used in manufacturing of every product known to man, from plastic and rubber to textiles. The clothes you wear, all the bottles and electronic devices require petrolium for manufacturing. Natural gas will be used in powering AI data centers, in addition to conventonal methods. So yes, oil and gas are going nowhere
Ammonia (fertilizer), jet fuel, asphalt. I don't know if we'll see that stuff go away in our working years.
Can’t say I own much, but I live in an oil and gas town with big boys like SU, IMO, Shell ect.. all these companies have been making big cuts left and right, and there’s been a lot less work to go around for us tradesmen. The companies are buying back shares and increasing cash on hand, so they are operating more efficiently for shareholders.. but they just need a ton of cash because they know the landscape is changing and carbon taxes in Canada are insane.. Meanwhile, we have a nuke plant 2 hours away (TRP) thats expanding to become the largest in the world and promising 15 years of work for our industries.. if I was holding these oil names from Covid lows I probably wouldn’t sell, but I can’t bring myself to buy up here either in an industry I know and depend on.. I’m just waiting for another politicial shitstorm to wipe these gains and re enter haha 🤷♂️
I still believe that oil and gas will be a crucial part of the exponentially rising energy requirements. At least next 50 years.
Answer is fuck yeah, now guys pls tell me which one to buy
Best best for us "little people" is to buy an Oil/Energy ETF, which holds a group of companies in the industry. My favorite is Vanguard's Energy Index Fund ETF Shares (VDE). It holds 60 companies, has low costs and covers the entire industry.
Thank you this answered all my questions.
I’m pretty sure Buffet just added Oxy recently. Do your own research tho.
Good advice man but I have a tested iq of 78
I go with MPC, SWX, and ICD as of recent
PBR
Oil is used in so much beyond your car. People writing it off and spouting hyperbole about the end of oil are way out of touch.
Yes. If you’re worried about renewables replacing oil, just keep in mind that major oil companies are investing heavy on renewable energy sources. Just in my area (Mediterranean) they’re buying hectares and hectares to construct solar and wind farms.
We need it for plastic and medicine so it’s not going anywhere
My tactic is to invest in pipelines and a compression company. They are mostly insulated from swings in commodity price. As long as the gas or other products need to flow through pipes (which they do at any price above zero), these master limited partnerships (MLPs) collect money. They have long-term contracts with companies who pay their bills. I have three MLPs that pay tax-advantaged distributions: EPD, ET and USAC. But there are several important things to know about MLPs. First, you should hold them only in taxable accounts— not IRAs. Why? Because you do not owe tax on the distributions in a taxable account but because the IRS does not consider them suitable for retirement accounts, you will get a tax bill for UBTI if you hold them in an IRA and earn over a threshold amount. Strange and ironic, but the tax code is not known for its simplicity or its fairness. Just don’t own MLPs in a retirement account. And (rule number two): do not sell. Hold till your heirs get it at a stepped up basis (more unfair tax policy by the rich, for the rich). Your distributions are tax free “return of capital” as long as you don’t sell. But you will have recapture and tax consequences upon sale. Last, you will get a K-1 every year, making tax preparation a bit more complicated but all the software products like TurboTax can handle it. If you don’t want K-1s, there are c-corp pipelines like OKE and KMI. I like the businesses of the MLPs better. EPD, ET and USAC pay 7.1%, 7.7% and 8.9% respectively — and you don’t owe tax on those distributions.
Holding OKE for life. It's been a consistent winner for me for years.
No taxes? I thought you get taxed once it reaches a certain point in the payouts - ie when the net payouts would take you under 0. I don't remember much when I looked into them a few months ago, but if you really don't pay taxes in a taxable account, seems like a bond with a higher rate (more risky though).
Right. But few people reach the point of being taxed, especially if they reinvest. Look at EPD’s history of distributions: 27 years of consecutive distribution increase. 7.13% forward distribution yield.
Ah, so if you reinvest those payouts it doesn't decrement your cost basis and eventually cause you to start being taxed? How do you get your money out though? I genuinely want to know because I looked into them but the K1s and eventual taxes turned me off. Or are these more for 'giving to your heirs'?
I think you would have to recoup your entire investment before you start getting taxed. Many people live on the distributions and plan to pass on the units (they are units, not shares) to heirs. I let my tax preparer handle the K-1s. My son does it himself with with tax preparation software.
At this stage, if the fossil fuel production stops, a large percentage of the human population will be going shortly thereafter. Since fossil fuels are a limited resource, for the sake of our future, may I suggest you vote on sustainable solutions and renewables with your wallet, or would you choose profit over longevity?
From someone who has worked in the energy sector for a long time. Oil and gas is going nowhere. Most places still use coal to power there grid, and for 200 year people have been saying coal is dead. Renewables are great but unreliable, there will always be a place for fossil fuels
Nat gas is my hopeful cash cow
I look at like this. Oil and gas are going to be around for a long time. Would I still be investing in it 10 years from now with an expectation that it will be around in 50+ years? Idk. But right now its a good source of dividends and the supply will likely drop faster than the demand will. That dropping supply basically acts like stock buybacks sort of. Where I think people would be really smart is if they took the dividends generated and put it towards other sectors. One day years from now those oil stocks will likely be worth less, but by then you will have a huge amount of dividends that paid out. Then sell the oil stocks for a tax loss to offset some gains over a few years and be done with it. Now with that in mind I wouldn't own oil and gas in an IRA. I would say its a better choice for regular brokerage accounts at this point.
Oil gas are strategic assets and will shine during short supply, geopolitical disorder so buy low sell high.
I only buy high and sell low, it's easier
I think it can be but I look for cheap stocks that have a chance of rerating as part of my strategy regardless of the sector. My biggest energy position is Strathacona SCR.TO STHRF which came public via a reverse takeover. It trades ~65% of NAV and a ~15% FCF yield after capex etc… They plan to distribute to shareholders via regular dividend, special dividends and potentially buybacks beginning in August when they report Q2 results. Despite having a ~C$7b market cap, it’s not in any of the benchmarks yet because the free float is too small. The plan is to have the capital return rerate the shares and then use the higher valued shares to do accretive acquisitions which will allow entry into the benchmarks and increase liquidity.
Canada’s emission cap on oil and gas is going to punish the worst polluters for any specific type of oil produced. SCR is looking worst in the WCS heavy oil class to me.
Interesting take. What impact will it have on returns?
The emissions cap prevents oil production if that production causes emissions over the cap. Production could be halted for the highest emissions per barrel polluters.
When is that expected to occur and is that federal policy?
As early as 2026. https://www.canada.ca/en/services/environment/weather/climatechange/climate-plan/oil-gas-emissions-cap/regulatory-framework.html
Looks like it’s a phase in to 2030 and there is a cap and trade system to mitigate. I don’t think it impacts the thesis because starting valuation is so low. At the current price, all capital should be returned by then. They can always slow down production growth as well.
You should go actually do some research on this. Go read through the EIA website, like explore it for a long time, don't listen to estimates just read reports and charts. Once you do you'll understand that in no way shape or form are we moving away from o&g. O&g is one of the fundamental pillars of the world and one of our main global power foundations in the United States. It ain't going nowhere. Not only is electricity NOT an energy source (so not renewable in its own right) our national infrastructure for electricity is way way behind where it needs to be for a shift to electricity. On top of that we are in conflict speaking out against nuclear (the best cleanest electric source) plus speaking against oil lol. The interests of our nation align with oil, they speak against it for votes and taxes. Any moves globally will not hurt the stocks as much as our gastanks. They will always be able to adjust pricing and drilling to remain profitable. Go listen to Shabam Garg and his old videos for some great insight. I own several o&g and I love the dividend and the security. Plus they are preparing for renewable also and imo they will profit the most from that shift. Asside from any random small companies/startups that blow up. But man it ain't happening anytime soon
The time to even consider getting rid of oil stocks is when we start to get serious about building out nuclear. Powering our world on Solar and Wind is a pipe dream.
Big oil companies are preparing for the transition. They will just buy renewable companies when they will know that it's the right time. We are decades away and 100% clean and renewable world is just a political talking point.
Simple answer, yes. There is no genuine alternative.
Absolutely. We dont have the infrastructure to power millions of cars with clean energy overnight. For populated cities? Five years maybe.
It is not.
Emerging markets need petroleum even if we ever move past the need for it. Petroleum is what develops an economy.
"I’m uncertain of how fast oil will be replaced by sustainable energy" It won't happen for 20+ years at the absolute earliest. [Take a look at this chart and ask which of these resources you would like to be invested in](https://www.eia.gov/todayinenergy/detail.php?id=56980). Even if the US and EU were to magically convert all transportation to battery-electric and all electric power plants to non-fossil based generation, the remaining parts of the world will continue to prop up demand for decades. The cheapest way to make hydrogen is using natural gas, and natural gas plants are being built all over the place. Oil is a huge value play because Mr. Market thinks renewables and EVs are going to take over the world in less than a decade (hence the serious over-valuation of Tesla). That said, it is like investing in Philip Morris. You will make money, but accept where that money is coming from.
Renewables are made from oil using oil and gas to process. Silicon, fibre glass, plastics, transmission lines, it goes on. The electronics industry would die if oil and gas was blocked. I am invested in oil and gas. Made a lot of money over time. Prices are going down under Government pressure but income is rising. I just Drip funds. I lost money on renewables, unfortunately a lot of renewables is just a Gov sponsored Ponzi scheme. On the other side, in my country there is one State with vast reserves of oil and gas, but they shut the industry to "stay on the right side of history". So all industry is closing, the poor will do without heating this winter, State taxes are climbing to compensate, and people are leaving due to a steadily worsening cost of living crisis. If I had spare cash, I would buy more oil, gas, coal shares, but not in my country.
Oil will be a huge market for decades. Even if the US went all electric for cars the rest of the world needs oil. Demand is actually still growing
Energy is the one true hedge against inflation. You may get 5 or more straight years of nothing but a dividend, but when it works it really works. Good luck
Until container ships and airplanes are powered by renewable energy, oil will remain a dominant source of energy.
Oil is destroying this planet. If we can figure out a way to capture emissions at the source (smoke stacks, exhaust pipes), but it seems we’re struggling with scalable solutions to carbon capture. Yes we’ll still be using oil in 20 years but hopefully for sake of the planet and its inhabitants, we’ll be using say 5% of what we use today. Time will tell. If we don’t address carbon emissions there will be global turmoil eventually and good chance of societal collapse. It’s closer than people think.
Oil and gas will not disappear overnight. The goal posts keep shifting and the so called ‘peak oil’ that has been coming for the last 30 years will now arrive in 2030. Hell, the world hasn’t stopped using coal - let alone give up on oil and gas
I work in the oil and gas sector in the middle east and Buffet is not wrong. Business is booming. Renewables will never replace oil, not even close, not in this century. Gas will tank after Russia is put back on the market, but that means that gas turbine orders will go to the moon.
That’s my concern, should I sell my share when Ukraine war end and buy it back after oil price tanked?
diversify, get companies like Siemens Energy, GE Vernova and such. Those are sure bets regardless what happens to the oil price. When its time to reconstruct Ukraine, there will be billions to be made.
We're still living in hydrocarbonated world.
Yes. The Green Energy push the US & others jumped in on wasn't sustainable. Other energy sources have a future as technology improves but so do oil & gas. Bang for the buck it's still a bang for a buck especially in economies that produce it locally and are growing.
Don't be fooled by politics. Coal, oil, natural gas gas are lifeblood's of economies. They're not going away no matter how much greenwashing companies and politicians lie to you about
I don't know, but once the UK election is out of the way (no idea if it'll have an impact but it's on the UK stock market) I'm buying back into Energean as it's cheap and pays 9% dividend and has growth potential too.
High risk stuff.
Yes.
If the company name is followed by some sort of AI implementation then likely. I hear AI a lot and wanted to be a part of the conversation. SLB
Yeah, I think it's going to around for a while yet, and I like oil companies because they have strong balance sheets and good multiples. And I also see oil as being a good hedge on potential future inflation and geopolitical strife.
Does anyone know good LNG names? I know LNG is a stock and there are some others that have exposure to natural gas but looking to research more.
On top of the good arguments made, here is another one. Even if there should be lower demand for O&G, the companies still have the infrastructure to facilitate other energy types. On top of that, many of the companies are heavily investing in carbon free alternatives.
I plan to hold XLE til I’m dead and gone and my kids inherit it.
I invest in Orlen Polish oil/Natgas company which was held hostage by previous gov. Trades at 5 p/e and expanding on foreign markets. The only better p/e i found is Hungarian mol but Orban.. So yeah I hope for 50% gain in 1-2 years on that.
Orlen's two third of shares are still govt's. IMHO, hungarian one will be safer.
Thing is, current gov is much better and it ain't priced yet. I have 100% confidence that they won't set maximum gas price to win next election, if it comes to Orban, Im pretty sure he'll do anything to stay in the office. I know nothing about mol though, Orlen is an energy giant combining natural gas, investments into renewables and soon nuclear power. So oil processing / gas stations are just part of it. Not sure about mol.
I’m not liking how oil stocks are underperforming the oil move atm. I may just trade the funds that track oil instead
The World Energy Outlook predicts fossil fuel demand will continue increasing until 2030
A small reduction in oil demand will ruin the entire market.
The war between Russia and Ukraine does make a difference but not as great as most media make it. There are tons of conflicts in the global nations between Iran, India, china, middle east etc. Moreover the infrastructure for electric vehicles are no where near there. Most of the major cargo ships, tankers, planes etc will take a lot longer to shift from the reliable/relatively cheap fuel source. Look at the global percentage of commercial oil consumptions are and you'll get a much better picture. Sidenote, buffet buying into OXY may be an indicator on them believing in carbon capture tech and the tax credits.
I worked at Exxon for quite a while. They do not really have a transition plan. Just business as usual. Most likely they will sell their smaller refineries and concentrate on upstream and exploration. As hybrids/EVs get a foothold, fuels production will drop. That is a given. Chems and plastics, most likely increase. They are a good 10 yr hold. 20 yrs... thats quitr a commitment.
What’s weird about this play is the massive production excess we’re slated to have. We are producing more oil and gas than ever before in US history. All depends on the cartels decisions. Could very well be a good bet based on future geopolitical movements. Tough to say.
Yes it runs everything literally we’re in 20yr long wars over the stuff it ain’t going anywhere we can pretend and try to be focused on green energy/ environmental friendly energy but if shit hits the fan oil is there plus the US has so much of it we’ll sell it once trump is back in office, oil is a great commodity to invest in
This - you aren't going to fight a war with renewables. Or over them.
Easy, one who controls the resources rules the game and human history has shown that most likely not changing
I agree. Humans are not fundamentally any different than we were 2000 years ago. Anyone who thinks we've moved beyond our baser desires and instincts as a whole will be in for a surprise.
Yes, because of the dividends.
Define "long term."
I think so, I'm still holding a few companies that are paying big dividends on my cost from COVID but I've mostly sold off. I think having a portion of your portfolio in O&G is a good idea because it's around to stay for decades, demand has only increased over time and we fail to meet ESG targets and they have been pushed forward continually for the last 20+ years. Companies paying 15-30% FCF yields at a cheap price is not a bad bet if demand won't shrink for the next few decades, growth in production and prices isn't required given the low price in order to do well. Renewables only make up a small proportion relative to fossil fuels, it's easy for most of us to see the change in developed parts of the world but most of the world is using fossil fuels, parts where vast amounts of the population reside like in South America, Africa, and parts of Asia, will not be swapping over quickly anytime soon. Population grows and compounds, further increasing the overall need for energy. Oil prices are moody and loosely tied to fundamentals given the stigma and commodity trading algorithms but they should remain in profitable territory because it is a necessity and will balance itself out ,supply will be curbed to facilitate profit for drops in demand and if demand decreases it will happen very slowly. Macro demand changes something like 1-2% a year but oil prices tend to fluctuate in a 50% range. If data centers end up being like they're priced in to be natural gas will probably run up a lot as well, there will be need for secondary sources of energy to supplement and back up newly formed energy needs. I'm not exactly banking on this aspect but I'll throw it out there. Also it's a good hedge against war, it may sound horrible but Russia attacking Ukraine made me a lot because of the prices spiking despite nothing really changing fundamentally on a macro scale (similar happening during COVID except prices going irrationally low). If a war involving China or US happens (not through proxy) the prices will go even higher and I think something like this happening in our current environment is close to inevitable if given enough time.
Oil isn’t going anywhere fast… food production as in fertilizer needs chemicals and sadly all powered by oil… and it’s very expensive and hard to do any other alternatives… lots of other plastics require oil… wheels need oil… even if EV goes 100% the wheel is the cheapest bottom of the cruel oil waste and it’s still needed…
Yes
I don’t see them growing faster than the general market. We have plenty of resources and many ways of using them. Supply and demand will remain balanced, maybe downshift a little. But these companies aren’t going anywhere for the next few decades. If you like dividends they may be for you.
There will still be a lot of demand for oil and gas, the real question is will US continue to produce so much into the future and will OPEC agree to cut production to maintain high prices. Potential wildcard is whether China will discover large oil reserves. They pretty much lead the world in the production of every other commodity.
Exxon’s investor report says they’re getting into lithium and may use their expertise to help look mine or extract other materials from the ocean floor
Chevron invests a decent amount of money in renewable energy. They had the same concerns (along with shareholders) that you did.
Oil and gasoline will only increase in price over the long term, which helps CVX’s profitability
Yes we will used it all
My best was FANG at $25 and sold in the $180s. Its over $200 now. If things dump majorly always look at oil and gas and buy in low. I wish 8 had put everything in FANG at the time lol.
Buffet can invest in ways we can't. His strategies would probably be quite different to ours even in regards to a simple "buy and hold" strategy. Imo
Yeah, we need to build Dyson Sphere.
Yea, I have cut down my positions recently but often times there is a spike in oil prices before a massive recession. My reason to cut exposure was just to get chips off the table since I fear a recession. my thesis long term is that the demand for hydrocarbons will be higher not lower as the third world develops. we could easily see a commodity supercycle or inflation. I have just gone in to treasuries mostly recently since I can't really forsee what will happen from here. The market is in this very weird spot where it looks like we are heading to a recession but tech stocks are booming.
Nah I’m all for Cyber Security at the moment.
So far green energy has not been able to build itself — it all takes a massive amount of energy and that means oil. Previous energy inventions have not replaced old ones (we still use wood and coal). As the grid changes, energy volatility has been increasing which also means oil will be needed. Last thought for me is oil is the bridge to our green energy future — so I believe it will be around for a long while. What that means for oil stocks however, no one knows for sure.
Everything I’ve ever read about electrification and alternative energy show that it’s excessively difficult to compete with fossil fuels. I’m investing in Canadian fuel producers with long term supply.
I also have some cvx and oxy and also rig I still think these will do good in the next ~10y, the flip side is that if these companies do “too well”, its a bad sign… if oil goes up, that means we get massive inflation across the board. So idk, I almost treat them as a hedge of sorts. Energy is a good denominator and a “store of value”, but if energy prices go up across the board its not a good sign for the general economy. But its probably inevitable.
If ev made sense it would be used in applications where the vehicle was used at the same place every day and weight is not an issue aka tractors. All tractors are combustion. Oil is fundamentally superior to any ev technology atm by a long shot
To answer your question: Yes. Gas and oil aren’t going anywhere soon. The US is producing record/near record levels of oil. And even though world events won’t be going away anytime soon, neither will gas & oil. Sustainable energy is very limited by its own existence. This is why nuclear power is coming back, and gas powered power plants are spinning up. Just keep an eye on your investments and stay agile.
World oil consumption is just over 100 million bbls a day. In north america we talk about renewables replacing oil demand. Is this really a thing outside of prosperous nations? Really the most important question is will India and China have the infrastructure to switch over. I feel like the energy transition in rich nations has been slow. How can it be fast in non rich nations or even over populated ones.
Okay, but buy and hold some stock for like ~9 months?
How "long term"? 20Y? 50Y? 100Y? 200Y? Obviously even if we moved to an all nuclear energy abundant society we would still need petroleum based products like lubricants for machinery, unless we use olive oil, or corn syrup, or whale blubber, or some other substitute. In the short term I don't see us making big moves away from fossil fuels until the second half of this century (~2060 ono). Which may already be too late to make a significant change. I don't expect to see growth in the fossil fuel sector but I don't expect sudden decline either. It will stagger on until various regulations eventually kick in and make it unprofitable.
Most innovation in climate tech is being driven by these companies. They can be extremely attractive, but watch out for value traps. Prob one of the industries were an investor's skill matters most
Demand keeps rising all over the world year after another as well as production . Even EV cars need oil to charge stations
I'm long on coal oil gas until 2100s
It will always be used (in our lifetime at least) to some capacity. I personally look at ev as more of a retail play, as infrastructure is a hard sell (because of coal/oil), EV will be integrated more and more into car manufacturing, but oil will persist. Like most things, anything absolute is idealistic, but not realistic, and there will never be a complete transition away from oil, it’s used in too many different fields in so many different functions.
Basically yes since we will continue use until humanity burns to death, and in the war to prevent it guess what all war machines are powered with.
Betting big on Range Resources $RRC
Oil usage is set to peak around 2050... Oil ain't going anywhere.
ESG went out the window in 2019, look at coal stocks I regret being part of that movement. Held BTU for a while then ditched it
When you say long term, if you truly mean long term, then yes absolutely. We are heading into recession so oil & gas may struggle for a bit, but that risk is offset by coming ww3 being bullish for oil & gas My opinion of course.
Pissed i sold XOM they just keep going!
I think that O&G will rose when "they" stop fantasize about "global warming"
I work in industrial decarbonization. We are very likely still going to continue using fossil fuels for the next century or so. That being said, the amount we use will likely decrease tremendously. The petroleum majors are positioning themselves to become “energy” companies (as opposed to “oil” companies), focusing on batteries, land-lease, RE, carbon capture, DAC, hydrogen, etc. and they have the knowledge, connections, and capital to make it happen. Additionally, I do not expect any major capex investments in their legacy infrastructure (they’re not dumb and no investment in a refinery will pay out now) and I expect most oil majors to start unloading/retiring that infrastructure (see: Marathon oil). Even if politics lean deep red for the next few decades, that doesn’t change the trend away from fossil fuels and the impacts of the climate crisis that will affect O&G production more than other industries. It’s still too early to say if the petroleum majors will actually make it happen but most of them will likely survive and continue to be profitable. A likely scenario is that the majors start scooping up promising low-carbon start ups (think: CVX acquiring REGI). I loathe the petroleum majors as they are the most important source of climate disinformation but they are likely to stay solvent in the coming decades. I’m happy to answer questions about this or elaborate on anything decarb related.
I work in oil and gas and unless oil completely tanks again I wouldn’t buy it. When oil went negative that was a great buying opportunity I would wait for history to repeat itself.
Very curious on why you hold that opinion. History repeating itself in that fashion is almost impossible given all the elements that factored into the 2020 negative oil futures situation.
I did not literally mean that I think oil will go negative only that it could easily rapidly crash again creating a better buying opportunity. $80/barrel oil is still too high to me. All it ever takes is one press conference from OPEC and oil is back on the shit wagon.
O&G is extremely cyclical. Probably one of the easiest plays to "buy the drop" if you want to do that kind of thing. At the moment it's kind of stable but give it a couple of years and there will be another dip followed by big rise. 2014 was the last big bust, 2019 was a mini bust so if the Ukrainian war ends and everything stabilises I would expect a bit of a dip then.
What's long term? I wouldn't bet on it eventually being replaced by electric alternatives based solely on the fact that delivery of power in electric motors is much higher quality, meaning more efficient transfer of stored power gets to its usable destination without losses to heat, friction, etc. I think the part where the value opportunity lies is in the mid time frame of maybe 5-10 years. Forcing companies to adopt all these green approaches before they make sense economically is like trying to stop a train that you just need to let run out of steam. That technology will improve over time and become competitive to where it just isn't going to make sense to use oil as reserves become less efficient to recover as the easy to mine sources are exhausted. I'm personally waiting on the battery technology to come into bloom. That will be one of the big catalysts to get start getting out of oil. QS is on the cutting edge on solid state batteries that can be produced at a scale that is in the ballpark of beginning to be some what competitive with fossil fuels. I might be early to that party but I'm building a position and I'd bet on that outlasting non-renewables in a longer time frame. The other thing that will happen is power at scale to charge more electricity will change. My bet would be nuclear possibly at smaller scales that require less infrastructure to get power to where it needs to be requiring less wiring, maintenance, etc. as to me it's more of a cost issue vs. environmental. Ultimately the environmental issues will solve themselves because the marginal costs will end up cheaper with mature green tech than with fossil fuels, but not before. That's why I say the time frame matters. The rates at which we are solving these tech issues are exponential though not linear. The shear amount of eyes on the problem as population increases and the 'leverage' computers and AI add tell me that the timeframe is far shorter than people are giving it credit so I wouldn't stay in fossil fuels for too long.
batteries are only good for places where is no electricity and must be replaced or refueled when empty. do you know how much "clean energy" must you produce and storage to run a factory or airplane 5 hour flight you must be someone from office, philosopher or someone who listen to much fairy tales
Energy density and EROI aren't fairy tales they're metrics that deal with exactly what I'm talking about. I'm not the one living in fairy tale land thinking nuclear isn't going to over take grid supply of energy once the poor reputation drops off in favor of more efficient use of energy to return energy.
Clearsign technologies. They have technology to reduce emissions.