Just a note about "We see this in oil markets right now: we’re not sure what our stance on the energy sector is, and that’s causing a lot of uncertainty." The policy is part of it, and it's a problem, but it's really only part of the problem. The decisions that are determining our current supply were made 4 or 5 years ago, which was certainly a great time to invest in fossil fuels from a US national policy standpoint.
There are real issues with forecasting demand, especially marginal demand, for fossil fuels on time frames longer than 5 years. How fast will electric cars grow and how will that growth be spread across different markets? Will solar continue to get cheaper and cheaper at anything approaching the rates we have seen in the recent past? New fossil fuel projects have long lead times between investment and return and a lot of companies got burned at the end of the fracking boom, so they may be more hesitant to plow a lot of money into new projects that will produce 4 or 5 years down the road when faced with uncertainty in demand.
Yeah, I think that's a good callout. Tried to nod at the fracking boom thing re: capital discipline, and there's likely added uncertainty around green tech, but even there... I'd say there's a policy component to it.
When we change our minds on how hard we're gonna lean into green tech, that moves the needle a lot. Most energy (green or otherwise) is subsidized or regulated depending on what we want to accomplish, and right now those motions feel like they're being done more for political optics than they are for long-term outcomes.
Really not sure if there are any safe havens at the moment. Stuff like 1-2y treasuries look attractive just because you can simply let them mature, but of course the Fed is still hiking so they'll bounce around a bit and it's not a good 'trade' strictly speaking.
Just a note about "We see this in oil markets right now: we’re not sure what our stance on the energy sector is, and that’s causing a lot of uncertainty." The policy is part of it, and it's a problem, but it's really only part of the problem. The decisions that are determining our current supply were made 4 or 5 years ago, which was certainly a great time to invest in fossil fuels from a US national policy standpoint.
There are real issues with forecasting demand, especially marginal demand, for fossil fuels on time frames longer than 5 years. How fast will electric cars grow and how will that growth be spread across different markets? Will solar continue to get cheaper and cheaper at anything approaching the rates we have seen in the recent past? New fossil fuel projects have long lead times between investment and return and a lot of companies got burned at the end of the fracking boom, so they may be more hesitant to plow a lot of money into new projects that will produce 4 or 5 years down the road when faced with uncertainty in demand.
Yeah, I think that's a good callout. Tried to nod at the fracking boom thing re: capital discipline, and there's likely added uncertainty around green tech, but even there... I'd say there's a policy component to it.
When we change our minds on how hard we're gonna lean into green tech, that moves the needle a lot. Most energy (green or otherwise) is subsidized or regulated depending on what we want to accomplish, and right now those motions feel like they're being done more for political optics than they are for long-term outcomes.
Really not sure if there are any safe havens at the moment. Stuff like 1-2y treasuries look attractive just because you can simply let them mature, but of course the Fed is still hiking so they'll bounce around a bit and it's not a good 'trade' strictly speaking.