Ny times article
Why Investing in Fossil Fuels Is So Tricky
***Demand for oil and gas is rising, yet it is expected to decline in the future as the world responds to global warming. Where does that leave investors?
An oil pump in Loco Hills, New Mexico, in the Permian Basin, which also stretches into Texas. While energy prices have been rising lately, climate change may contribute to a reduction of long-term demand for oil.
An oil pump in Loco Hills, New Mexico, in the Permian Basin, which also stretches into Texas. While energy prices have been rising lately, climate change may contribute to a reduction of long-term demand for oil.Credit...Joel Angel Juarez for The New York Times
By Mark A. Stein
As concerns about climate change push the world economy toward a lower-carbon future, investing in oil may seem a risky bet. For the long term, that may be true.
Yet for the moment, at least, oil and gas prices appear likely to continue to rise as the economy recovers from the pandemic-driven shutdown of millions of businesses, big and small.
These countervailing trends — increasing demand now and falling demand at some point, perhaps in the not-too-distant future — create a dilemma for investors.
The good news is that an array of traditional mutual funds and exchange-traded funds are available to help them navigate these uncertain waters. Some funds focus on slices of the industry, such as extracting crude oil and gas from the ground or delivering refined products to consumers. Others focus on so-called integrated companies that do it all. Some spice their holdings with some exposure to wind, solar or other alternative energy sources.
While the range of options may seem intimidating at first glance, the variety is an advantage for investors because it offers many ways to diversify energy investments in the U.S. market, which is dominated by two integrated titans, Exxon Mobil and Chevron.
Still, investing in the oil and gas industry is not for everyone, especially these days. Some people object to putting money into the fossil fuel industry. Even if that isn’t an issue for you, energy has historically been a volatile industry, with astounding booms and devastating busts. Through March, the S&P Composite 1500 Energy Index rose 72 percent since the end of October, a period during which the Food and Drug Administration approved the first Covid-19 vaccine and President Biden’s election raised expectations of additional economic stimulus.***
Could be few yrs upward according to author