Oil has been falling and falling! It does not seem like it will find a support any time soon. The US Oil ETF, USO, is almost single-digit. I think it will soon need a reverse split, or else, it might lose another 30% soon. Could this mean that, before long, oil will reach $30/barrel?!
Energy paradigms are shifting around the world. Coal is already on its way out. Take a look at the coal stocks such as BTU, CNX, and JOY. How about some names that are barely trading, such as WLT, RNO, and ANR. In 2011, BTU was a $70 stock. Where is it trading now? Less than $1.5!!
While I do not think oil will fall as fast, as it will take longer for renewable energies to completely replace oil, it has already been over-drilled and the usage is about to decline faster and faster. We all know that electric and hybrid cars are becoming more and more popular. TSLA stock has skyrocketed. Will we soon see hybrid/solar planes for commercial flights?
China is making big changes in its energy policy. It has pledged to increase its total energy budget on renewable, zero-emission energy sources to 20%!
The linked article states:
"China has been also investing heavily in solar power. In 2013, it installed a record 12 gigawatts of solar power. In 2014 the country added another 12 gigawatts of solar power, reports Bloomberg News, narrowly missing its goal of 14 gigawatts."
In one year, the biggest oil companies such as XOM and CVX have lost tremendous value. XOM is down about 30% and CVX has lost more than 40%! Smaller companies are doing worse. NOV, for example, has lost more than 50% of its market cap in just one year. Even Buffet ...