Barron’s Magazine put out a piece last week that was very bullish on oil and gas stock investing based on predictions that the oil market would return to “normalcy” where demand picks up to pre covid levels, and the price of oil goes up to the $60 level so these companies can make money. Doug sent in the following letter, which was published this weekend:
To the Editor:
Your story was very disappointing (“10 Energy Stocks to Buy Now, According to Barron’s Experts,” 2020 Energy Roundtable, May 1). These oil companies have to dramatically shrink production in the next 10 years, or we are going to destroy the Earth.
How will they navigate, and can they make money for shareholders in the process? Before Covid-19 hit, oil stocks were already down 50% over the past five years, while the S&P 500 index is up 50%. The U.S. oil companies come each year and say how next year is going to be great, and then it isn’t. They pay lip service to climate change, but say the world still needs a lot of oil.
Smart investors know the magnitude of the problem and have been exiting in droves. Corporations across the globe are dramatically cutting their fossil-fuel consumption in favor of cheaper solar, wind, and storage. Climate change will continue to progress like clockwork, and the horror stories will multiply. The implications for the fossil-fuel industrial complex are enormous.