52!
No way to know until later. 
I was at a retirement celebration on Friday afternoon, but had I been home at my computer, I likely would have sold some more puts.
Saudis and OPEC are keeping the production, the demand is slowing especially with Chinese economic malaise. Oil is going down, Oil futures are lower than the spot market and wall street firms are now projecting Oil going to $60.
Separately, if Trump wins, he is vowing to increase the drilling and reduce Oil prices by 50%. Anyone remember shale wars? Hopefully, Oil companies have found their religion and not going to go back to âdrill baby, drillâ and maintain their capital discipline.
I am not going to argue against coat-tailing WEB. Still I would encourage you to see how OXY will do in $65, $60 oil and see whether the current price is a bargain on those scenarios.
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OXY is around $51.5 now.
This story gets more interesting. Buffett has been on a relentless buying spree for many years. The stock continues to go down.
I have some leaps with corresponding coverred calls that I am going to roll down.
Meanwhile:
Occidentalâs Texas direct air capture hub awarded up to $500M in DoE funding
Iâm a little surprised that Berkshire isnât buying some more at these lower prices.
He was relentlessly buying all these years and the stock kept going down. I wonder if WEBâs conviction is shaken in OXY.
Berkshire is owning 33%. Now the coattails are wondering about his confidence?
I would say that BRK shareholders should be concerned.
CEO has deployed $Billions into OXY. Does he know what he is doing ? Is this another KHC or Precision Cast Parts ?
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Oil is a very cyclical business and WEB/ Berkshire may make money on full cycle and ride the downtrend. Average shareholders have no reasons to worry about OXY because it is just $15 B or so investment, and 1.5% of the market cap.
When the stock price was moving up you were cheering and even buying leaps. Now the stock price is down, you want Berkshire and Buffett to be backstopping by buying more shares. About a month ago you were bullish(?) about OXY, wo you cannot be suddenly worried about the viability of the business.
In any case, if you want to invest in Oil/ Energy, understand it is a very cyclical business, in up cycle it throws tons of cash and in down cycle it sucks badly. Berkshire can handle that easily, as they are not dependent on the cash produced by OXY, and care very little about stock price. They may be focused on full cycle cash generation.
Separately, China has started QE, so Chinese demand might emerge. Providing some back stop to the oil price.
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Berkshire Hathawayâs stake in Occidental has grown to about 255.2 million shares, approximately $15B and is Berkshireâs 6th largest holding. He also has quite a bit of CVX which is his 5th largest holding, worth $18B.
With the advent of EVs, I think the whole Oil ppb reversion is in question.
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- The stock is in stage 4 decline.
- Crude oil has fallen $20 within the last four months.
Remember, WEBâs lesson when a genius capital allocator meets lousy industry, the reputation of the lousy industry wins.
I have some XOM, CVX paying better dividend than OXY, of course much higher dividend yield if you take my purchase price.
I was trying to understand where Buffettâs conviction is coming from. In the Annual report he sounded lukewarm.
- Vicky Hollub is good
- From Vicky: Lack of investments in Oil will start showing up in increased oil prices in 2025
- Jury is still out on Carbon capture business opportunity
In my opinion this time is different. EV sales and Hybrid sales are putting a downward pressure on oil demand and it is not going to let up.
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Iâm wondering where you see this âdownward pressureâ.
Covid did, certainly, and EV use may moderate the upward trend, but I donât see any sign of âdownwardâ pressure; indeed, I see âmore oil in use going forward.â
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The chart you posted is what happened. I am speculating what will happen.
Oil investments are based on a thesis that demand for oil is ever growing.
Now supply is growing and demand for oil will be constrained. That is the downward pressure. China and Norway are leading the way and the world will follow.
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OK. So when you say â EV sales and Hybrid sales are putting a downward pressure on oil demand and it is not going to let upâ in a declarative sentence, I should regard that as âspeculativeâ in spite of no evidence of it being true. Got it.
Two outlier cases, one an immense statist autocracy with centrally directed planning, the other a tiny country with vast oil wealth able to make the transition by use of government incentives, disincentives, subsidies, and a history of socialized economic planning. What other countries do you find that fit either of those scenarios?
This is not to dispute that EVs are, and will continue to make progress, even if a side trip through hybrids sets the timetable back by years. Just that the investment thesis for âoil demand drying upâ is not just speculative, but flies in the face of âreasonable disruption timelinesâ, not to mention all of economic history since the advent of cheap oil.
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China sells 25 million cars a year, twice the closest country (US).
More than 50% of cars sold in China were PHEV or BEV. Calling this a âstatistical outlierâ is putting your head in the sand.
Reminds me of advent of internet and Buffet bought newspapers or people buying Blockbuster stocks.
People banging on the table for high growth oil demand and peak oil prices are looking backwards and longing for good old times.
Here is the reality check. OXY chart
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You understand that China is heavily subsidizing the production and ownership of electric vehicles right? And that itâs almost impossible to get a license for a new gas vehicle, right?
Hangzhou, alongside Beijing, Shanghai, Shenzhen, and Guangzhou, has had such restrictions for nearly a decade. Hangzhouâs city authorities have been granting just 80,000 new license plates for gasoline and diesel-powered cars per year, in a lottery. To compare, in February 2023, more than 800,000 residents registered to take part in the lottery to win fewer than 5,000 license plates, Caixin notes.https://oilprice.com/Latest-Energy-News/World-News/Chinese-Cities-Ease-Gasoline-Car-Restrictions-to-Boost-Economy.html
So - for this one city 800,000 people wanted a license for a gas car, and 5,000 got it. The rest, presumably had a choice between an EV and public transportation. Perhaps you can understand why EV adoption in so high in China now?
More over, where in the US there is more than one car per adult, in China itâs more like 7 in 10 own a car, and by a large they are smaller with higher fuel efficiencies in the first place. So the replacement of gas cars isnât making a huge dent in gas sales, and indeed most of those gas cars will be on the road for another decade, maybe two, in the used car market.
Because of longevity of the product, 90% of the cars in China are gas powered, and while that number is sure to come down it will do so slowly, just as it has in the other lauded example (Norway, where 75% of cars on the road are still gas powered.)
Before you go off on Norway also being a good example, in Norway here are the incentives over the past decade:
- No purchase/import tax on EVs (1990-2022). From 2023 some purchase tax based on the carsâ weight on all new EVs.
- Exemption from 25% VAT on purchase (2001-2022). From 2023, Norway will implement a 25% VAT on the purchase price excluding the first 500 000 kroner
- No annual road tax (1996-2021). Reduced tax from 2021-
- No charges on toll roads (1997- 2017).
- No charges on ferries (2009- 2017).
- Maximum 50% of the total amount on ferry fares for electric vehicles (2018)
- Maximum 50% of the total amount on toll roads (2018-2022). From 2023 70%
- Free municipal parking (1999- 2017)
- Access to bus lanes (2005-). New rules allow local authorities to limit the access to only include EVs that carry one or more passengers (2016-)
- 25% reduced company car tax (2000-2008). 50% reduced company car tax (2009-2017). Company car tax reduction reduced to 40% (2018-2021) and 20 percent from 2022.
- Exemption from 25% VAT on leasing (2015-)
- The Norwegian Parliament decided on a national goal that all new cars sold by 2025 should be zero-emission (electric or hydrogen) (2017).
- «Charging right» for people living in apartment buildings was established (2017-)
- Public procurement:â From 2022 cars needs to be ZEVâ. From 2025 the same applies to city busesâ
Additionally apartment buildings over a certain size were required to install chargers, and businesses were given incentive to do the same - so in addition to home chargers there are thousands of others.
In the US the EV âincentiveâ was $7500, I think. In Norway, by eliminating the taxes, the incentive is more like $27,000. Big difference, no?
If this is anything like what you find in the US or other countries, please let me know, because Iâm living in the wrong place. Meanwhile EV adoption in the US continues to grow, but slowly.
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This is trying to justify why people will continue to buy newspapers at the advent of the internet.
In CA, 25% of the car sales are already EV. ICE is getting replaced and the pace is accelerating.
Battery costs are coming down drastically.
Let us get some facts clearâŠ
I havenât seen anyone banging the table for high oil growth demand. If anyone, it is you. You are the one who is arguing for higher oil price and bought OXY. At least I have argued against that, I know we are not directly debating it.
Oil demand is cyclical and you are arguing it is in secular decline. If it is in secular decline then what are you doing by owning OXY leaps?
Look, I have competing, sometimes directly contradictory views. But I am clear, the reason I hold those views simultaneously is because I am not sure what the future holds and wanted to be prepared for both possibilities.
Your posts are very confusing. You are complaining about WEB owning OXY, yet purchased OXY leaps coat-tailing him, and you are negative on Oil because you think TSLA or EV is going to be fatal to Oil.
If you want to own both OXY and TSLA, that is okay. But just have the clarity why you are holding them.
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Impressive statistic! Here is it graphically:
So there are a million EVs in California. Out of 35,700,000 total registrations in California. Which puts EVs at not quite 3% of cars on the road in California. In what is arguably the highest penetration state in the country.
Yeah, big oil is about to collapse, I can tell.
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You keep looking at it backwards for what has happened.
Its like counting how many newspaper subscriptions people have when internet was in its infancy,
Today every BEV and PHEV sold is making a dent in oil demand. This trend is not only accelerating, it will go exponential.
Here is the TAM for EVs. It is about to explode.
People (including Buffett) who are looking for peak oil prices are for an awakening. South east asia also now has rising number of EV two wheelers, auto rickshaws.
You guys can hang on to peak ppb for oil. Its not going to happen. The trend is unmistakable !
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