Seems like more than just a supply issue this time around. If that were the case, people wouldn't be likening O&G to tobacco. The environment has become to O&G what cancer is to tobacco. Investor sentiment is the problem and there are two causes: 1. The industry has overpromised and under-delivered for too long and has lost all credibility, and 2. There is serious pressure for fund managers to avoid investing in companies that are not environmentally "friendly". Makes it very easy for investors (retail, money managers, capital markets, private equity - everyone) to just write us off like they did to tobacco long ago. And if O&G is only 5% of the S&P500 (the index many of them will be judged against), why would they put their neck on the line investing in O&G when they don't have to.

Agree that O&G isn't going anywhere - just like tobacco hasn't. But a return to a respected market sector seems unlikely.

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Posted by Thib-a-doe Tiger

Member since Nov 2012

35860 posts

Posted on 2/10/20 at 2:38 pm to Negatiger1986

quote:
Agree that O&G isn't going anywhere - just like tobacco hasn't. But a return to a respected market sector seems unlikely.

Respected or not, as someone who sold investments, I would tell people that other people are going to smoke whether you like it or not, might as well make some $ off of them.

The sentiment, especially in this category, is almost meaningless, as the entire world would shut down tomorrow if oil was gone.

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Posted by Decisions

Member since Mar 2015

1514 posts

Posted on 2/10/20 at 3:36 pm to Negatiger1986

quote:
The environment has become to O&G what cancer is to tobacco.

The problem with this comparison is that O&G is infinitely more valuable to a functional global economy than tobacco. Just because a person doesn’t like the (potential) consequences of its use doesn’t mean they can quit it cold turkey like they could cigarettes.

quote:
1. The industry has overpromised and under-delivered for too long and has lost all credibility

This will sort itself out. Capitalism is at its finest during these sort of downturns.

quote:
2. There is serious pressure for fund managers to avoid investing in companies that are not environmentally "friendly"

I’m going to let you in on a little secret: fund managers and the vast majority of their clients only care about profits. To the exclusion of all else. Anything they say otherwise is merely posturing.

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