Bernard Looney, the chief executive of global oil major BP, was asked a question this week: Have we reached 'peak oil'? His answer came as a shock to many, 'possibly'
. Benchmark oil prices Brent and West Texas Intermediate dropped 30 per cent immediately. On March 9, the ASX recorded its second–worst session in history, shedding $126 billion. Investors fled from energy stocks in particular, hitting oil and gas giants Woodside, Santos and Oil Search hard.
Meanwhile, other investors, including the so–called value investors, are taking a different approach. While they acknowledge prices may bounce back in the short term, they see the oil sector in structural decline and a poor long–term investment. Even after coronavirus, some say, the potential for reduced levels of international travel, more people working from home and the growing uptake of electric vehicles will hasten oil’s demise.
“Climate change is slowly filtering through to the finance world,” he says. “It’s definitely talked about more these days than it was a few years ago and people are now considering where capital is allocated.”Investors can profit from oil in two ways. Either through buying futures contracts or acquiring shares in oil producing companies. Futures contracts are risky at the best of times,
“Let’s frame this: even low-case forecasts are for the world to consume another trillion barrels of oil over the next 30 years,” said Henry earlier this week. “And that’s relative to 900 billion over the past 30 years.” Representatives for Australian oil and gas producers say the "double whammy" hit from the economic impact of coronavirus and the near record–low oil prices are causing an "incredibly challenging time" for the sector.
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