Fossil Fuel Stocks Soar In 2022… WHAT!

Happy first day of Summer everybody here in Australia! Although you probably wouldn’t know it. It’s bloody cold where I am. South East Queensland has experienced one of its coldest starts to Summer on record. Anyway, that’s neither here nor there.Show more

In my last video, I looked at vaccine stocks, like Novavax, which has fallen 88.46% so far in 2022. But while I was doing research for that video, I was surprised to see which stocks were doing really, really well this year. And I’m afraid to say it’s to do with fossil fuels. Now I’m not suggesting you should race out and buy any stocks. This is not me giving financial advice. This is just me making an observation.

I’m sure you’ve heard of the divestment movement where climate and environmental activists have pushed organisations to divest in fossil fuels. The activists are attempting to starve fossil fuel companies of the investments they need to develop new resources. The idea is to reduce fossil fuel consumption by curbing supplies. But the problem is, it just doesn’t work. It’s not based in reality.

Now I’m all for solar panels or whatever. I’d love to see the world move away from fossil fuels, but I’m also a realist. My daily life requires fossil fuel. I still use things made of plastic. I still use power from the grid that is made from coal. I still drive a car that uses petrol. I simply couldn’t afford to buy a fully electric car. That said, I do try to walk more often, and I do try to recycle where I can.

The thing is, when you curb supply of fossil fuels, this does not change demand. People still need power and still need fuel for their car. If you curb supply without also decreasing demand, you cause the price of oil and gas to rise, which in turn, causes the value of the companies that produce the oil and gas to rise. And we’re seeing this playing out in the markets.

Woodside Energy Group is Australia’s largest independent dedicated oil and gas company. It’s share price has risen 61.62% this year. Origin Energy, which owns and operates Australia’s largest coal-fired power station, has gone up 48.41%. American company, Exxon Mobil, one of the world’s largest oil and gas companies, has gone up 75.23% so far this year. Occidental Petroleum out of Texas is up 123.73%! Whitehaven Coal in Australia, 258.33%! You get the idea. The fossil fuel companies are raking it in!

Reducing supply by divesting or whatever, while there’s still huge demand for fossil fuel in society does not hurt these companies. It only hurts us, the consumer. We now have to spend more on our energy needs. Sure, increasing the price of a commodity over time is an effective way to decrease its consumption, but there has to be cheap alternatives otherwise people can’t afford it. Electric cars are all well and good, but only if they’re affordable.

Another problem is that high energy prices are not politically popular. Politicians who preside over high energy prices tend not to get reelected. So politicians, or course, even those who are sympathetic to the cause of reducing fossil fuel consumption, are working to counteract energy price increases. Case in point, President Biden released millions of barrels of oil this year from the Strategic Petroleum Reserve to help counteract high gasoline prices. Apparently the environment is not so important after all. Of course, I’m being facetious. But the point is, the world still needs fossil fuel. There is still a huge demand for it.

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