Are oil stocks still cheap?

Are oil stocks still cheap?

Good morning. Another messy day in markets on Monday, with stocks down and Treasury yields up across the curve. Normal jitters, as we approach a Fed meeting and the Ukraine war grinds on. Let us know what we should be watching in this extraordinary time. Email us: [email protected] and [email protected].

Are the US oil majors a bargain?

Lots of people don’t want to own oil stocks, and that is reasonable.

Of course, it won’t make any difference to the environment if even a large majority of public market investors take fossil fuels out of their portfolios. The industry is not capital constrained, and there are ample sources of private, ethically flexible capital that can supply such needs as it has. As long as demand for oil, gas and coal persists, who owns what financial instrument will not change industry operations.

But if you don’t want to collect dividends from (say) ExxonMobil, I get that. I myself pray that a faster than expected energy transition crushes the fossil fuel industry. So it’s odd for me to bet my savings on that not happening.

What follows puts all that aside. There has been a shock to the energy market, and we’re all trying to figure it out.