| | | HI Bull Ridah,
I am posting on a subject that you brought up for me to consider, the idea of fossil fuels not having a future as they become displaced by renewables and subsequently possible "value traps".
That very idea is very much in in vogue these days.
I propose this subject as food for thought.
I believe it has gained so much traction, the result of a lot of mistruths regarding renewables.
In every case where countries have committed billions in currencies to the "renewable energy' for green purposes, electricity costs have skyrocketed. In Germany's case (which is perhaps the poster child for huge green commitments) ,electrical rates have tripled and the costs have landed squarely on the poor, as industry is getting rebates to subsidize the cost in an effort to keep their national industries competitive.
Bottom line - going green is expensive and is being sadly misrepresented!
Below I'll post some links that make sense of the misinformation we are all being exposed to.
First and Foremost I present this data thinking that in the long run, the fossil fuel companies will prevail and become once again national treasures - particularly within the U.S..
We are blessed with shale deposits for oil. Along with fracing for that oil, comes very valuable byproducts of liquid natural gas(methane, ethane to name a few) and natural gas. All of which are source products for plastics and chemicals.
All of these are huge future export products are just now beginning to be shipped to the needy world, as long term infrastructure projects are beginning to add to our export capabilities/realities.
1) Going green is expensive :
politico.eu
instituteforenergyresearch.org
2)Going green has unintended consequences besides price:
BBC: Green Energy Boom Forcing Increased Production of a Potent Greenhouse Gas
Eric Worrall September 13, 2019
 Sulfur Hexafluoride, a potent Greenhouse Gas Guest chuckle by Eric Worrall
The BBC claims the potent greenhouse gas sulfur hexafluoride leaking from EU wind turbines and other renewable electricity infrastructure components produces the global warming equivalent of putting an extra million new cars on the road.
Climate change: Electrical industry’s ‘dirty secret’ boosts warming
By Matt McGrath
Environment correspondent
It’s the most powerful greenhouse gas known to humanity, and emissions have risen rapidly in recent years, the BBC has learned.
Sulphur hexafluoride, or SF6, is widely used in the electrical industry to prevent short circuits and accidents.
But leaks of the little-known gas in the UK and the rest of the EU in 2017 were the equivalent of putting an extra 1.3 million cars on the road.
Levels are rising as an unintended consequence of the green energy boom.
Cheap and non-flammable, SF6 is a colourless, odourless, synthetic gas. It makes a hugely effective insulating material for medium and high-voltage electrical installations.
It is widely used across the industry, from large power stations to wind turbines to electrical sub-stations in towns and cities. It prevents electrical accidents and fires.
However, the significant downside to using the gas is that it has the highest global warming potential of any known substance. It is 23,500 times more warming than carbon dioxide (CO2).
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3)The bottom line - Fossil fuels are here to stay for at least as long as we boomers are alive:
Message 32508270
4) Natural gas works:
naturalgasnow.org
We are being bombarded by a lot of mistruths and the environmental rebates are hiding the true cost of going green with renewables.
Sooner or later the best solution will be coupled with what works at the lowest price. This will be the only true global answer. Sadly in between that final solution, a lot of expensive and detrimental techniques will have been placed into permanency.
All of this barrage of mistruths and and refusal to acknowledge what is really working, has without a doubt tainted the valuations of some very solid "fortress like balance sheet" vertically integrated oil explration companies (XOM and CVX).
Given time, the truth of what is effective will come out.
The margins of these legacy oil and gas exploration companies will experience large differential headwinds:
1) costs of fracing and ultra deep sea drilling have been substantially reduced by the "peak oil myth" being discredited.
2) the alternative green solutions have been falsely represented to be cheap - this will allow the more effective fossil fuel solutions a substantial "overhead margin expansion to their alternative competition"
All of the above will be a long term transition, as the real solutions prove out and the true costs become more clearly recognized.
The tainting of fossil fuel valuations is a generational value opportunity!
In these lofty overall market valuations, there are bubble like valuations being built into "renewable" green solutions and EV vehicles.
I remember well how ubiquitous the internet was to be, and twenty years later it has transformed much.
It was not without a brutaL COLLAPSE. A collapse that wiped out those story stocks that had no profits.
During the distribution top of the Dot.com era (1999) I remember Microsoft was a laggard as they had no "solution to an internet browser"
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Microsoft is now one of the few AAA credit ranked corporations and their dividend has never been higher and market capitalization has never been higher. :https://www.screencast.com/t/l97XqOM5zUp. Although Mr. Softee's dividend is relatively new since the dot.com era its stock has gone up a whopping 46 bagger.
Getting paid 5.25% by owning XOM or CVX to wait for the real valuation to surface isn't a bad way to get rich!
When the inevitable corrective decline of the market besieges us, I'll want my money in fossil fuel stocks that will pay a wonderful dividend (5% to 6%) - and oh yes by the way I'll be short these overstuffed balloon "Green Companies".
I rest my case with this tidbit :
(GRAPHIC: U.S. automakers' market cap history - here)
Fueled by a surprise third-quarter profit, progress at a new factory in China and better-than-expected car deliveries in the fourth quarter, Tesla’s stock has more than doubled in the past three months.
Underscoring investors’ confidence in Musk and his company’s future growth, its market capitalization has outpaced its U.S. rivals, even as their businesses dwarf Tesla’s. GM and Ford each delivered more than 2 million vehicles in the United States last year, compared with Tesla’s worldwide deliveries of 367,500 vehicles.
(GRAPHIC: U.S. automakers' expected sales - here)
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