Well dang, who would have thunk it? I don’t even follow Buffet but I’m guessing he hasn’t lost his touch?
Don’t blame me, I drive a Micra and share building heating with 49 other owners.
Tim
OPEC+ is adding production of just 430,000 barrels a day in May 2022. Note that global oil consumption is nearly 100M BPD, of which Russia accounts for 4M barrels.
Buffett and his two investment executives are buying into mature situations. Like buying Apple and HP. Buffett’s investment team is not swinging for the fences. I see BRK making institutional plays for the very long run. Long after all of us are gone.
Biden has scheduled a meeting with MBS in Saudi Arabia. Obviously there are production increases guaranteed before hand.
probably not the ideal time for buying O&G. Prices are high and the record run may be ready to fold as the world slowly grinds to a halt. We have seen this before and it did not turn out well for anyone buying in when O&G was heating up and prices per barrel were hitting historic highs
O&G is a commodity and nobody cares whose barrel they buy when they fill up.Personally bought into severely over leveraged companies paying nice dividends who ended up BK and me? Out of luck.
We are near historic highs for a price per barrel. Maybe not the ideal time to get into this particular very fungible commodity.In 2008, the prices per barrel hit almost $140 per barrel. When the worst of the recession started to bite oil went to the $30s. O&G cannot make money at these prices and those with too much leverage folded up their assets and left shareholders with big losses. Still bitter about Linn Energy
The 2008 Financial Crisis and Its Effects on Gas and Oil
By THE INVESTOPEDIA TEAM Updated July 17, 2021
Fact checked by TIMOTHY LI
The 2008 financial crisis and the Great Recession that followed had a pronounced negative impact on the oil and gas sector as it led to a steep decline in oil and gas prices and a contraction in credit. The decline in prices resulted in falling revenues for oil and gas companies. The financial crisis also led to tight credit conditions that resulted in many explorers and producers paying high interest rates when raising capital, thus crimping future earnings.
Better strategy is to by these bad boys when they are struggling during the recession that’s going to come. Stick with the big guys who have cash flow, moderate debt and have a history of paying shareholders reliably. Chevron is a good example. In 2009 CVX could be bought for around $65.Before the crash shares were $100. Over the years as O&G falls out of favor and the world reacts to weak economic data by killing the share price It happened in 2010, 2012, 2015 and spectacularly in 2020 when the pandemic created panic. CVX was $72 in July 2020. Today? Almost $180. When would you be inclined to buy a commodity? Now when the world is in thrall to a round of massive inflation worry and gloomy predictions of recession, or even worse stagflation(thanks Janet)?Or maybe back in 2020 before it more than doubled on momentary short supply?
In spite of this significant run up, CVX pays a yield of 3.2%. Unlike Conoco, Chevron always pays.
Owning O&G is no longer PC. However, buying shares has little direct benefit for the company in the amounts that we buy. Whether you buy it or not has no impact on climate It is a matter of conscience and if you feel passing on O&G is good for the soul I would pass now and forever.
