Oil Company Stocks? (fund, margin, calls, cash)

[Toyman at Jewel Lake]

Oil company stocks have (generally) been doing well and are promoted by the experts. As expected with the runup in fuel prices and the shift towards value stocks. Thing is-there is a strong...sentiment for the conversion to electric vehicles. Well underway already in China and Europe, and well started here. All the legacy automakers are committed to EVs. Given that, demand for oil and gas will obviously be expected to stabilize and drop over the next few years.

So, given that-just how wise are oil company stocks as an investment? Short term, several months, sure. But longer than that? Obviously oil is used in far more than transportation, but that's still where the vast majority of the use is.

[Chas863]

I think it will be at least 15 years before EV's make a SERIOUS dent in the demand for oil and gasoline in the US, and much longer than that for most of the rest of the world. I don't see oil company stocks declining in value or demand anytime soon. They're the single biggest sector in MY portfolio.

[Newporttom]

The exact opposite of what Chas863 says.

[mojo101]

The big oil companies have been under pressure to reduce fossil ,leaving the field to independent E & P,thats why you see price of crude and natural gas rising.
With the Russian and Ukraine crisis,it will get worse ,more so for Western Europe.
If they buy LNG from us,our natural gas price will move higher.

[bmw335xi]

It's too early to know what will be the strong sectors after this correction/bear market.

[foulball]

Cathie Wood said oil is dead. Jim Cramer said oil is "un-investable". Look at their calls and track record. Enough said.

[T Block]

The major oil companies are also involved in liquefied-natural-gas. They have a smaller involvement in carbon-neutral liquid fuels such as for jet fuel but who is going to make carbon-neutral jet fuel except for the fuel companies ? But compare to the power-grid and the power-grid is not carbon-free and not even carbon-neutral. In fact, coal use increased, in the U.S., in the year 2021.

European oil companies are also involved in electricity generation and in hydrogen production. Oil companies are involved in industrial carbon-capture. Oil companies are involved in expensive level-3 BEV chargers placed at their retail location affiliations.

The oil companies actually represent a significant technological stand for the problems of the future. The electricity distribution companies are doing very little. Well, the State of Texas, for instance, legislated wind power to the electricity distribution companies.

Now exploration for oil is down as the oil companies concentrate on high-margin projects. Fracking has held-on because it is quick start-up and quick shut-down. But fracking is based on producer hedging and so if the oil price drops at the time that the hedges wind-down, then fracking ends. Cash flow is up for oil companies because of less exploration.

Saudi Arabia can pump oil out of the ground at a cost of $10 a barrel for the next 300 years. Maybe we should use oil in industrial operations that capture carbon-dioxide ?

The shocking fundamental is that battery-powered-electric-vehicles don't solve the problem of global carbon release. BEV's have significant attributable release of carbon-dioxide. Personally, I suggested that the efficiency of BEV's should be scaled by the efficiency of the electricity generating plant that they depend-on. Then I can link to a scientific paper that does that and more. Or other scientific views just calculate attributable grams-per-mile of carbon release.

Basically, demand for electricity is expected to increase 50% by the year 2050 and at that time renewable electricity will only be about 45% of the powergrid. The only thing that can save use is massive use of modular-nuclear-power. Also, residential ground-source heat-pumps could become popular if energy were rationed, taxed, or expensive.

Oil companies produce plastic and paints. But the food and beverage industry recently rejected plastic that is quickly biodegradable. They want risk-free long shelf life instead. The oil companies do need to reduce carbon-release at refineries and at petro-chemical plants.

[Toyman at Jewel Lake]

Good point on all the above. I guess the other point is these oil companies have big resources, some very, very smart people working for them and infrastructure across the world in terms of "gas stations". If they see a demand for EV charging, there is every reason to expect them to get into it-including I tend to think...generation. I read that BP already is embracing EV charging and makes nearly as much off an EV charger as a gas pump. All without the risks of oil production, transportation, refining and distribution, or dependence on foreign sources. Ultimately we need to think of them as energy companies, not oil companies.

[Chas863]

"Saudi Arabia can pump oil out of the ground at a cost of $10 a barrel for the next 300 years. Maybe we should use oil in industrial operations that capture carbon-dioxide ?"

There's one huge problem with that first statement. It doesn't take into consideration the RATE at which wells can be pumped down. If they're pumped too fast, they can be ruined. Besides, it would not be in the Saudi's best interest to flood the market with oil because that would simply lower the price and in effect cut their own throat.

Slow, steady, long-term strategy is best for ALL oil producers... including the US. EV's require considerable infrastructure to make a serious dent in world oil consumption, and today that infrastructure barely exists anywhere in the world. It will take decades for EV's to make a serious dent in worldwide oil demand.

[mojo101]

I read that BP already is embracing EV charging and makes nearly as much off an EV charger as a gas pump. All without the risks of oil production, transportation, refining and distribution, or
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I doubt it,besides Germany and NOrway,EV sales in Europe is not that robust.
Norway govt subsidizes EV sales.