Fossil fuels will challenge investor returns

Article Excerpt

Companies involved in the production of carbon-based energy have generally underperformed for investors over the past several years (see table at right). Volatile commodity prices are nothing new to the industry, with both oil and natural gas prices now at about half the highs reached in mid-2014. Environmental concerns about the ongoing use of carbon-based fuels are also starting to create real headwinds for the producers. The question is whether the reduced share prices of these stocks adequately compensate investors for the obvious risks. We consider a number of aspects, including the predictions for the ongoing use of carbon-based fuels as a source of energy. Second, we look at the valuations of some of the key companies represented in the major energy ETFs. Global demand for energy will continue to grow The International Energy Agency’s World Energy Outlook 2019 suggests that global demand, based on current consumption trends, will continue to grow by 1.3% per year until 2040. That’s thanks in large part to…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.