The International Energy Agency last week said demand for all three major fossil fuels will peak this decade. Even beyond a crass “go woke, go broke,” many investors just don’t agree, and the replacement sources have their own issues. Surging costs have put key U.S. offshore wind projects in jeopardy, as a writedown from Ørsted brought into view, as nuclear projects globally also run into a myriad of cost and operational issues.
And even if you do agree that oil is near its peak, the ESG movement is limiting both the money and places that can be drilled, notes famed investment author John Mauldin. “Economics 101 says that if you reduce a supply of something that has an increasing demand the price is going to rise,” says Mauldin, who it should be noted is affiliated with an independent oil and gas operator. And that’s what has happened, particularly for offshore oil plays. The VanEck Oil Services ETF
has shot up 51% over the last 52 weeks, a period in which the S&P 500 has gained 15%. The stock of one oil services company, Weatherford International
has surged 202% over that time frame, a period in which Nvidia
shares have gained 228%. Transocean
are pretty close to tripling their value over the last 52 weeks.