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09-02-2023, 08:45 AM
Why don’t traders invest in the energy industry despite oil companies having record profits?
#Econgram_World
Facts:
1) Fifteen of the twenty S&P 500* companies that recorded the highest returns operate in the oil industry.
2) In 2022, Shell, Chevron and Exxon Mobil together enjoyed over $132bn in annual profit and delivered $78bn to shareholders through dividends* and buybacks*. That is roughly 1.5 times bigger than the last time the oil price hit $100 in 2014.
3) However, the investors did not redirect a significant amount of their funds into the energy sector. Energy’s weighting within S&P 500 increased to 4.9%, up from the pandemic’s 2%. In contrast, it reached 16.2% in 2008.
Analysis:
1) Energy prices soared following the war in Ukraine.
2) Nonetheless, traders are afraid to invest in oil and gas producers after losing money in the 2010s. Besides, many financial institutions sold their energy holdings, stating that the industry causes greenhouse-gas emissions.
3) As governments incentivize to commit to the energy transition*, the current task for the oil producers is to decide how to invest their profits: continue investing in oil and gas or focus on renewable energy.
Inspired by WSJ
The Econgram
https://www.wsj.com/articles/oil-industr...1675564711
#Econgram_World
Facts:
1) Fifteen of the twenty S&P 500* companies that recorded the highest returns operate in the oil industry.
2) In 2022, Shell, Chevron and Exxon Mobil together enjoyed over $132bn in annual profit and delivered $78bn to shareholders through dividends* and buybacks*. That is roughly 1.5 times bigger than the last time the oil price hit $100 in 2014.
3) However, the investors did not redirect a significant amount of their funds into the energy sector. Energy’s weighting within S&P 500 increased to 4.9%, up from the pandemic’s 2%. In contrast, it reached 16.2% in 2008.
Analysis:
1) Energy prices soared following the war in Ukraine.
2) Nonetheless, traders are afraid to invest in oil and gas producers after losing money in the 2010s. Besides, many financial institutions sold their energy holdings, stating that the industry causes greenhouse-gas emissions.
3) As governments incentivize to commit to the energy transition*, the current task for the oil producers is to decide how to invest their profits: continue investing in oil and gas or focus on renewable energy.
Inspired by WSJ
The Econgram
https://www.wsj.com/articles/oil-industr...1675564711
