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Strategies & Market Trends : ajtj's Post-Lobotomy Market Charts and Thoughts

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robert b furman

To: Jacob Snyder who wrote (28554)	6/21/2021 8:35:35 PM
From: Sun Tzu	2 Recommendations of 96562

Much has been made of the coop in Exxon's boardroom. But few news outlets actually discussed the reasons. Exxon's strategy had been to be the last traditional oil producer standing. It was similar to what Philip Morris was doing - they knew that the trend is against smoking, and they wanted to capture market share are from rivals who exited the tobacco business. Similarly, Exxon's goal was to remain the old fashioned oil company that filled in the gaps left behind by BP, Shell, etc. What the news outlets failed to reveal was that the shareholders did not approve of the activists on moral grounds. It is that the activists presented a compelling case that there may not be a future in oil business at all, and that by failing to pursue alternative venues, XOM's management was endangering the long term viability of the business. I have heard people making similar cases against midstream (pipelines) such as ENB. Sure, you get a high dividend and attractive valuations now, but it's not a long term buy and hold b/c there may not be a future for them - or so the argument goes. I wish we had decent news that would actually dig into the issues so we could judge for ourselves. But as it stands, all we know is that somehow the activists convinced the major shareholders (most of whom are very big global asset managers) that the current management's approach is negligent. What I am getting at here is that it may not be about what is fashionable or PC. Maybe the oil producers know better than us and that is why they are not trying to develop new oil wells. Maybe they know that it will not be worth the expenses. Or maybe they see every car going electrical and wonder who they will sell their oil to in 15 years. Or maybe they think that a cheaper alternative will be found with 10 - 20 years and they'd better start working on that. There are many possible explanations. just a thought to consider. PS This will make $100 oil very likely - but that doesn't necessarily mean that the oil producers will be making more money off the expensive oil if the consumption drops.

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