Some thoughts on the great oil panic of 2022
The average cost to fill up a car tank is currently over $50. The average cost to charge an EV is currently around $11. From the data I can gather, this is the widest spread ever between the two.
I am actually in agreement with Cathie Wood - and yes, I am aware that a lot of people give her a hard time. Her ARKK funds have been crushed as of lately, and she said crude oil would go back to $12. Those are not great calls and she has been wrong. So I kind of understand the criticism, but she has also built one of the largest actively managed funds in an industry of mostly males. I like to think of myself as a contrarian at times, and what she's done is amazingly contrarian. Against all odds she has $20+ billion in AUM.
But, back to the point, electrical vehicle adoption has been rising pretty fast. Some estimates see 25% of all vehicles being EVs in the next few years. And now oil is rising, headlines everywhere. What does that mean? I like to think it will be more bullish marketing for EVs. Think about what Covid did to tech adoption from video calls to company chats. Monumental events like this can speed up adoption curves up even more.
I also understand what a shock to supply can do to the demand curve. Suddenly there is less supply of oil, but the demand curve remains, and oil prices has no other option to go up. But one thing I have always observed time and time again, no matter how bad a situation is - humans are pretty clever and usually find a way to do things better, faster, and more efficient.
In the short-term I am thinking about all the oil in the world today. Is it possible to drill for oil and go green at the same time? I think so. America, Canada, and Mexico are sitting on some of the largest oil deposits on planet Earth. If you go into South America, both Brazil, Colombia, and even Ecuador have oil. So my view is that these kinds of events can sometimes also shift things really fast.
Bullish Latin America?
Bullish Canada?
Is there another country or company out there looking to fill the void?
All interesting things to consider. I will be scanning and looking for interesting ideas globally that fit this criteria.
Anyways, I am not making any bold claims about going long or short anything. But I am definitely betting on the side of innovation, especially EVs as a tool to combat prices in the long-term. Short-term panic and mania, long-term calm and collected.
I'll have more later, so stay tuned. I have thoughts about wheat and other commodities. Thanks for reading!
I am actually in agreement with Cathie Wood - and yes, I am aware that a lot of people give her a hard time. Her ARKK funds have been crushed as of lately, and she said crude oil would go back to $12. Those are not great calls and she has been wrong. So I kind of understand the criticism, but she has also built one of the largest actively managed funds in an industry of mostly males. I like to think of myself as a contrarian at times, and what she's done is amazingly contrarian. Against all odds she has $20+ billion in AUM.
But, back to the point, electrical vehicle adoption has been rising pretty fast. Some estimates see 25% of all vehicles being EVs in the next few years. And now oil is rising, headlines everywhere. What does that mean? I like to think it will be more bullish marketing for EVs. Think about what Covid did to tech adoption from video calls to company chats. Monumental events like this can speed up adoption curves up even more.
I also understand what a shock to supply can do to the demand curve. Suddenly there is less supply of oil, but the demand curve remains, and oil prices has no other option to go up. But one thing I have always observed time and time again, no matter how bad a situation is - humans are pretty clever and usually find a way to do things better, faster, and more efficient.
In the short-term I am thinking about all the oil in the world today. Is it possible to drill for oil and go green at the same time? I think so. America, Canada, and Mexico are sitting on some of the largest oil deposits on planet Earth. If you go into South America, both Brazil, Colombia, and even Ecuador have oil. So my view is that these kinds of events can sometimes also shift things really fast.
Bullish Latin America?
Bullish Canada?
Is there another country or company out there looking to fill the void?
All interesting things to consider. I will be scanning and looking for interesting ideas globally that fit this criteria.
Anyways, I am not making any bold claims about going long or short anything. But I am definitely betting on the side of innovation, especially EVs as a tool to combat prices in the long-term. Short-term panic and mania, long-term calm and collected.
I'll have more later, so stay tuned. I have thoughts about wheat and other commodities. Thanks for reading!
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Follow me on X here: x.com/scheplick
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