For the last few months or years oil has been in a slump. On a five year chart, Oil is down 72%. Ever since 2014 oil has just been on a tear downward. Here are the reasons why I don’t think oil will ever return to it’s glory days and why I believe that betting on alternative and renewable energy is a better investment.
- Oil is old news
The fact of the matter is that oil is a fuel of the past. This is in part due to the enormous price gouging drivers experienced when gas prices soared which pushed people into hybrids and now electric vehicles. Additionally, with the push against climate change (real or fake) people are also more conscious of the fumes they put into the atmosphere. As a result, we not only see clean vehicles but we also see more solar panels on homes, wind and even ocean turbines, all of which replace oil and other non clean fuels.
If you look at the above chart for Tesla, you will see that around the time that Tesla stock started to run is the same time that oil started to tank. I dont think this is a coincidence. This is significant because now that the Model 3 is releasing even more people are going to be no longer dependent upon oil. The Model S is like the first iPhone and the Model 3 is like when Apple made the iPhone affordable to everyone. After that happened it was a wrap for all other cell phones and for phone carriers that didn’t carry the iPhone.
2. Pipeline deals will actually make oil prices cheaper
A lot of people were pushing back against the building of different pipelines in America. I never really understood why though. By constructing pipelines we increase the supply of oil to the country and as a result help drive down the cost of oil. I believe that with Donald Trump approving and pushing through the pipeline deals, unlike Obama who was heavily against them, this increase in supply will create more jobs but it will also continue to drive down the cost of oil. High supply equals lower costs and lower cost means lower oil prices. This also means higher profits for the oil companies though. So its really a win win. It boggles my mind sometimes why liberals do the things they do.
3. Oil companies knew this day would come
The fact is that oil companies knew that the time would come when they would either run out of oil or when technology would render oil moot. There is nothing wrong with that, they made their money and paid very little taxes in the process. I don’t feel bad for them.
The key is that some industries never return. We aren’t talking a start up that slumped and has the promise of great things in the future. We are talking about an industry that could eventually be rendered obsolete OR at the very lease, never return to its old glory days. What you need to be doing is instead investing where the market is going. Buy stocks in solar, wind, electric cars, hydrogen cars etc. Invest in new forms of energy. Invest in emerging markets. Invest for wealth.
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