Today’s indisputable un-investable asset class is energy broadly and crude oil specifically. Oil has been (and remains) the most important input to economic growth in the post-World War II world. However, in the span of only a few short years, oil’s importance has gone from being widely accepted to thoroughly rejected. The financial press argues that oil should beavoided at all costs.
Investors are convinced that global oil demand has already peaked and will decline steadily going forward. In such a world, the oil industry’s billions of dollars of upstream capital investments would become economically unviable or “stranded.” Environmentalists meanwhile are beginning to clamor for the oil industry to pay “damages” for the carbon released over the last 50 years, leaving investors to ponder whether energy assets are actually liabilities.
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