The Future of Energy

We appear to be at an energy crossroads as reliance on fossil fuels may be on the way out, presumably offset by an ascension of renewable energy.  At least that seems to be the conventional wisdom.

Investors might want to take another look.

  • Exxon Mobil and Chevron, the two largest U.S. oil companies, have each committed to spending more than $50 billion to buy smaller companies in deals that would let them produce more oil and gas, more efficiently, for decades to come.
  • The International Energy Agency recently released a detailed report concluding that demand for fossil fuels would peak by 2030, as sales of electric cars and renewable energy surged.
  • China and India are aggressively adding coal fired electric generating capacity.
  • Rising interest rates have made renewable energy projects, particularly offshore wind, so expensive that several large projects have been shelved and may be abandoned.
  • Major vehicle manufacturers have significantly reduced EV production plans.
  • Automobile dealers are reporting increasing difficulty in selling EVs, as consumers appear to have lost interest in in the technology.
  • Hertz recently noted that its EVs have proven to cost around twice as much to repair as comparable internal combustion-engine vehicles, although this is partly offset by lower routine maintenance costs.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA