How to Grab Your Stake in the Great Energy Switchover

Any industry reliant on technology eventually gets overhauled.

Companies that either produce fossil fuels…or rely upon them…are no different.

They have fought against their own redundancy using litigation, billions in lobbying dollars, and downright sabotage.

This war against their own obsolescence goes back over 100 years…

Few people know this, but way back in the early 20th century Thomas Edison and Henry Ford developed an electric vehicle…

Operating on a nickel iron battery, and able to go more than 80 kilometres on a charge, Ford believed it had a bigger future than his gas guzzlers:

Electricity is the thing. There are no whirring and grinding gears with their numerous levers to confuse. There is not that almost terrifying uncertain throb and whirr of the powerful combustion engine. There is no water-circulating system to get out of order – no dangerous and evil-smelling gasoline and no noise.

What happened next?

Well, years of development finally came to nothing. And a fire in Edison’s workshop almost destroyed the valuable R&D.

Why?

At the time, Ford was a subsidiary of Standard Oil. Some believe the fire was a warning to put an end to the idea of electric cars replacing those chugging along with petrol-powered engines.

That may or may not be true. It’s impossible to say.

But the years of resistance, coverups and dirty tricks that followed this symbolic ‘electric moment’ that never was does make you wonder.

They have fought the rise of renewables tooth and nail.

From lying about their findings regarding climate change…

 ‘Just as Big Tobacco did about smoking, ExxonMobil lied about what it knew about global warming’ — MarketWatch

Attempting to hide a history of toxic dumping…

‘How UK oil company Trafigura tried to cover up African pollution disaster’ — The Guardian

To Volkswagen’s emissions scandal a few years back…

‘How VW tried to cover up the emissions scandal’ — BBC

To spending fortunes to block the inevitable transition into clean energy…

‘Top oil firms spending millions lobbying to block climate change policies, says report’ — The Guardian

I could go on and on. But you get the idea.

Big Energy and Big Auto have done everything they can to fight against progress.

And lost.

This is the year that their defeat has become resounding.

2020: The year Dirty Energy threw in the towel

Pretty much every major auto manufacturer in the world has or is developing a line of electric vehicles…

And Big Oil is desperately scrambling to pivot into clean energy…

‘Some of the oil majors have invested heavily in renewables, such as wind and solar, as they look to transition towards cleaner energy sources’ — NS Energy

They need to move quickly.

See here — look at the red circle on Chevron’s chart…

Now look at Exxon…

And finally, BP…

The red circle is where we are now.

Earlier this year, the oil market crashed when the coronavirus pandemic landed in the developed world.

The International Energy Agency says that the pandemic lockdown reduced global demand by an estimated 29 million barrels a day.

Oil majors’ share prices — well, you can see here — got CREAMED. According to The Washington Post:

During what are normally busy driving months of April, May and June, BP lost $16.8 billion, Exxon netted $1.1 billion in losses and Chevron — the Dow’s last remaining oil firm — shed $8.3 billion.

Many people now believe the oil industry is doomed…

The Week

The Week

In terminal decline…pushing a dirty product the world no longer wants…

Forbes

Forbes

…at a price that’s uncompetitive…

Bloomberg

Bloomberg

…to a market with different needs and desires.

CNBC

CNBC

Even the oil industry itself appears to know its time is up.

In June, BP wrote down assets to the tune of US$17.5 billion. The company’s CEO, Bernard Looney, told the Financial Times in May:

I don’t think we know how this is going to play out. I certainly don’t know. Could it be peak oil? Possibly. I would not write that off.

Trouble is, investors aren’t prepared to wait around for this to ‘play out’. They can see that the writing is on the wall for fossil fuels. And, as I just showed you, they’re getting out now — freeing up their capital to hunt for bigger and better returns.

If you want proof that investors are rapidly losing interest in big oil companies, take a look at this chart from Pickering Energy Partners…

Apple Vs the S&P500 Energy Companies

See here — you can now fit all the major oil companies in the world inside of Apple’s market cap.

You’ve got to remember — Exxon was the most valuable company in the world back in 2013.

Seven years later, it’s not even listed on the Dow.

In fact, in 2020, the largest utility company in the world is a SOLAR AND WIND FIRM — NextEra Energy.

According to Forbes, had you invested in NextEra a decade ago, your total return up to 3 October this year, including dividends, would have been 600%. That’s a phenomenal return.

In contrast, had you invested in Exxon a decade ago, your share value would have declined by half. Add in the dividends, and the total 10-year return of ExxonMobil is -25%.

That would have been unthinkable 10 years ago.

And yet, here we are.

And if that STILL doesn’t give you a good idea of where capital is headed FROM, and where it’s headed TO, let me show you one last chart…

This really does show you where the energy sector is now…and where it could be heading over the next few years…

The Energy Transition Framework Chart

Source: Cepconsult

Now, this is a forecast — so you have to take it as that. We can’t guarantee the future will turn out exactly like this. I can only tell you that it’s based on the extrapolation of hard demand data.

Data gathered by none other than Shell — one of the biggest of the ‘big oil’ giants. Who now — frankly — must be thinking about diversifying its business interests!

It basically maps existing demand curves for fossil fuels and renewables…and uses that data to forecast out to the end of this century.

See that red circle?

That’s where we are now — 2020.

They call it ‘the knee of the curve’…the moment just before exponential growth.

Stop and look at it for a moment.

Yes, it’s a forecast. No, it’s not a crystal ball. But it’s the clearest indication I’ve ever seen that the age of oil could be over…and we’ve arrived at the ‘lift-off point’ for renewable energy.

As an investor, what more incentive do you need to get involved?

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