Bill McKibbin has some news - good news to some, bad news to others. Fossil energy markets are falling apart. The environmental activist (350.com) says energy stocks are suddenly weak.
Researchers at the Institute for Energy Economics and Financial Analysis minced no words: “In the past several years, oil industry financial statements have revealed significant signs of strain: Profits have dropped, cash flow is down, balance sheets are deteriorating and capital spending is falling. The stock market has recognized the sector’s overall weakness, punishing oil and gas shares over the past five years even as the market as a whole has soared.”Two other developments McKibbin notes: the rapid transition to electric power and successful efforts being made by the environmental movement to undermine fossil fuel investment.
The IEEFA report labeled the industry “weaker than it has been in decades” and laid out its basic frailties, the first of which is paradoxical. Fracking has produced a sudden surge of gas and oil into the market, lowering prices – which means many older investments (Canada’s tar sands, for instance) no longer make economic sense. Fossil fuel has been transformed into a pure commodity business, and since the margins on fracking are narrow at best, its financial performance has been woeful. The IEEFA describes investors as “shell-shocked” by poor returns.
Tesla, sure – but Volkswagen, having come clean about the dirtiness of diesel, is going to spend $84bn on electric drivetrains. China seems bent on converting its entire bus fleet to electric power. Every week seems to bring a new record-low price for clean energy: the most recent being a Nevada solar plant clocking in at 2.3 cents per kilowatt hour, even with Trump’s tariffs on Chinese panels.
...the third problem for the fossil fuel industry? According to IEEFA, that would be the climate movement – a material financial risk to oil and gas companies. “In addition to traditional lobbying and direct-action campaigns, climate activists have joined with an increasingly diverse set of allies – particularly the indigenous-rights movement – to put financial pressure on oil and gas companies through divestment campaigns, corporate accountability efforts, and targeting of banks and financial institutions. These campaigns threaten not only to undercut financing for particular projects, but also to raise financing costs for oil and gas companies across the board.”Sorry, Rachel. Sorry, Jason and you too, Justin, sorry but you're all arriving to the party 20-years too late. It's just bad luck that when Manitou was distributing energy resources around the world he gave Canada the shit end of the stick - bitumen.