Then it all switched. A number of unforeseeable crises such as Ukraine shifted everything.
What is the long term forecast for each? I note that the world is finally ramping scale for electric vehicles, and batteries, a lot faster than building power plants. My hypothesis is thus related. A demand surge for e-cars in years ahead will gradually spike power demand with no concurrent supply leading to average power rates jumping and done winners in utilities. If anything, natural disaster supply shortages in California, Texas and others have highlighted grid vulnerabilities reducing supply and creating spikes for winners.
On the fossil fuel side, I would therefore guess that demand will persist as North America does not support infrastructure to reduce or even maintain electricity costs at present levels.
Any thoughts welcome- this is no longer a new subject but should be among our most important as investors…I’m also looking out at the smoke everywhere and thinking this discussion isn’t going away.
Thanks
Peter
The discussion of course could fill a book, and has. We do not expect oil to go away anytime soon. We think even decades from now it will still be important. Demand may rise as prices fall (economics 101). EV growth will continue, but still the ramp up is slower than many expected. But for autos we think EVs will continue to gain market share, moving up to 50%+ over time. But right now EVs are only 5% of the market in Canada and less than 3% in the US, so we are talking a long time here. Thus, we are not overly worried about the electrical grid's ability to handle the growth. Demand typically sees an industry response (again, economics). Certainly some states and countries will be better positioned than others, but we do not envision a scenario where cars cannot get charged (but of course costs may rise). On oil, the lack of spending could result in shortages, however, if there is a demand spike for any reason (China, or simply global growth).