A question to ponder about Conoco/Exxon/Chevron & other big oil/NG players
I am long COP and plan on keeping it that way hopefully for decades. But last month I was reading Exxon's long-term energy outlook and it stated that a substantial amount of the world's automobiles would not only be moving away from gasoline in the coming decades but would be electric.
I've got COP as my largest energy holding and it's primarly because of the dividend. I have no problems at all keeping this in my portfolio another 40 years. My question is "if" indeed most of the world's transportation vehicles are electric say 30-40 years from now, where does that leave major players like COP/XOM or CVX? My feeling is that so long as there are fossil fuels in the ground to be retrieved, these companies are going to be just fine and will continue business as usual. But how much of an impact would it have on COP and other major oil/NG companies if the scenario XOM projects comes to fruition?
First of all, we have been hearing about electric cars for a very long time. They are expensive, and have limited range. It isn't likely that electric cars are going to replace gasoline cars in the near future. We have been hearing about the depletion of oil reserves from the very first oil well drilling, but that hasn't happened either. I am holding COP as I have for the last 13 years. I don't think that the future is going to hurt COP. Heating oils, natural gas heat most homes in the US, The conversion to electricity seems highly unlikely.
The problem with electric cars is the batteries. Unless some new break through comes in storing electricity, this is a pipe dream. There physical limitations to storing energy via batteries. They are also expensive and require a lot of metals which are also not environmentally friendly. I see a massive move to using natural gas for powering cars trucks and rail.
Even if we phase out the use of some oil, it is harder and harder to produce because all the easy oil has been found. The older large fields are also losing volume at the rate of about 5 million barrels a day per year. Just to stay even the world needs to produce an additional 5 million barrels from new wells. Those figures also include NGL's, which is huge in the US shale plays. COP is also a huge natural gas producer. Once we shift a significant amount of transportation to run on gas and build LNG terminals for export, gas should bounce back to the $5 range and COP and other large producers will do real well.
I'm a retired old man and one of the fixtures for my retirement income is energy/oil/gas dividend stocks. I just gotta laugh when I say that the rumor of 'electric' automobiles taking over the roads has been ongoing for over 50 years. Like the predicted 'depletion' of the world's oil supplies, it's never happened.
Electric cars cost quite a bit more than gasoline engine cars. That extra expense almost pays for the gasoline costs for five years of owning a vehicle. But if the electric auto ever does take over the highways, then utilities would be the place to invest in.
Electric vehicles will not impact your COP in any way, in my opinion.
Natural gas trucks were supposed to impact trucking several years back when Boone Pickens pushed for this. Talk about slow to gain traction.
I am long COP and enjoy the dividend. Oil prices remain steady around $90/barrel, so I think we are in good shape.
another thing to think about when mentioning electric cars(which can't compete without govt subsidies) is what is used to create the electricity? the answer is mostly fossil fuels, nuclear, and water turbines. The most friendly is water turbines and they are the least used as that would interfere with recreation at most lakes and the green people don't want to mess with their fun. lol