The COVID-19 Stock Hit — Oil and Coal Stocks are a Headache

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Coil and Oil Stocks a Headache - Non Renewable Energy Stocks

I left you the other day with the notion that oil and coal stocks bring a whole lot of headaches.

One of those is the tidal wave of litigation that might be coming.

The second is big institutional investors divesting the stocks from their portfolios.

We’ve just had another notable example…

Reuters reports…

Coutts, British wealth manager and private banker to the Queen, plans to cut carbon emissions in its funds and portfolios by 25% before the end of 2021 and has introduced climate-linked exclusions for the first time.

The bank, part of RBS Group (RBS.L), said it would exclude all companies that get more than 5% of their revenues from thermal coal extraction, tar sands, or Arctic oil and gas exploration.

We already know the Norwegian Sovereign Wealth Fund is doing the same thing.

How long before the big funds here follow suit, if they aren’t already?

A very good friend of mine lives in Canada. His wife is high up in one of their big oil firms. She makes good money, too.

They live in the oil town, Fort McMurray.

I’m not sure that’s a place I’d bank on buying a house, or long-term job prospects!

Back here at home, we have a mighty big clash coming.

Currently, the states and federal governments are still looking for coal and gas to create jobs, lower power prices, and pay up royalties.

But how long before the market decides these projects are too great a risk?

We’ll find out on that.

The Future of Renewable Energy in Australia

But Australia’s top brass better start putting a coherent energy policy together before the current unsustainable dynamic crumbles completely.

Australia is getting left behind here.

Take Texas, for example. Most of us have a vague idea that oil is a big industry there, and always has been.

And it is! But so are renewables.

Some even call it the ‘wild west of wind’.

Seems to me that Texas has a bet each way. That way, no matter what the future holds, they’ll have a flourishing energy industry.

Can Australia say the same thing?

I don’t think so.

To give us an idea of the brewing chaos, see this report from South Australia…

Solar households in South Australia are facing mounting risks of their rooftop panels being shut down to avoid destabilising the grid as regulators, policymakers and network owners race against time to reform market rules and modify the power system.

The energy market operator last week emphasised the increasing difficulty of keeping the grid stable amid world-leading levels of “invisible and uncontrolled” rooftop solar.

If you have any insight into the Australian energy market, I’d like to hear from you. Let me know your thoughts at letters@profitwatch.com.au.

I mentioned futurist Tony Seba’s new book the other day too.

He thinks the 2020s will be the most disruptive decade in the history of the world.

For example, technology is going to blow apart traditional industries.

That leaves governments with the choice of propping up redundant companies, or putting thousands of people either on job support or retraining.

We can see it in Britain right now. One of the traditional manufacturing industries about to crumble is the traditional car.

The Guardian:

The UK motor industry has called for a dedicated “restart package” to drive consumer demand and ease cashflow problems as the sector gears up again, warning that the coronavirus crisis has put one in six jobs at risk.

Here’s the reality…

It’s no good propping it up until COVID-19 leads back to regular sales. The entire concept of private car ownership is going.

Autonomous cars are already here. It’s only regulation and inertia holding them back. Tesla’s Autopilot is already five times safer than any human driver.

The car fleet will likely be autonomous robotaxis within 5–10 years.

(Arnie Schwarzenegger predicted this in Total Recall back in 1990!)

But don’t just let me tell you about it! Read Tony Seba’s new book yourself for free here.

One of the takeaways from the book is that he expects volatility to ramp up to a level we’re not used to.

That’s because there’ll be so many industries now taken for granted that’ll permanently crumble.

If you think you can passively let ‘the market’ take care of your wealth…you might be in for a rude shock indeed.

Best wishes,

Callum Newman Signature

Callum Newman,
Editor, Profit Watch

PS: Our publication Profit Watch is a fantastic place to start your investment journey. We talk about the big trends driving the most innovative stocks. Learn all about it here.