Yesterday I wrote about a potential general market “crash” from the US oil market collapse and that inspired an interesting series of questions from a reader.
– Are you saying short oil? When does this happen? It will probably take some time for the oil industry to go bankrupt, don’t you think? Exxon makes 10 billion a quarter.
First, I never suggest shorting anything, so, no. Second, I never suggested the oil industry would go bankrupt. I was pointing out the current pace of bankruptcies was on track to surpass the total number of bankruptcies in the Telecomm crash of 2002-2003, which caused a general market meltdown. I suggested it was possible that the current “busting up” of the US oil industry could cause a similar market meltdown, but it was less likely given the context of today’s energy market relative to the context of the Telecomm market at the turn of the last century.
– It was the second straight year U.S. investment in renewable energy projects has outpaced that of fossil fuels. Robust growth is once again predicted for this year.
The difference for today’s investor in the energy industry is that if you move money from oil to renewables because of the inevitable future, your money will grow (if you make the right choice), but if you move your money to another oil endeavor, such as Exxon (which makes $10 billion a quarter I am told), you might not get as good a return because that aspect of the energy market is getting hit hard and investors will be bailing, much like they did in the Telecomm bust.
Billions of dollars in private equity are going to construct massive new renewables projects, especially in the Sun Belt and Great Plains. Thousands of miles of new high-voltage transmission lines are also under construction.
There’s gold in them thar hills, or, that thar sun, or that thar wind, or …
