What does Buffett think of "old and new" energy?
Berkshire's moves in western oil have been "outrageous" this year.
Berkshire increased its stake in Western Oil 10.2425 million shares at a price of $698 million between July 5 and 6, with an average price of $57.94 per share, according to the latest SEC filings.The stake in western oil rose to about 18.7 per cent.
In fact, with warrants, Buffett can choose to buy up to 83.9 million more Western Oil shares, which would bring his stake to more than 26% of the company. The market is speculating whether Buffett will buy Western Oil, although there has been no response.
Interestingly, Buffett has pointed out in the past that he likes to maintain "less than 10% shareholding" for disclosure reasons, unless he has bigger plans. According to past experience, when he significantly exceeds this threshold, he will continue to buy the whole company.
During Buffett's "buying", Western oil rose from a range of $37 to $40 in February to a peak of $73.9, with the latest closing price of $60.67, echoed by the price of crude oil, which rose to $130 a barrel at one point and is now at about $100.
How to see the main line of energy investment behind Buffett's purchase of Western oil? There should be both "new and old energy sources".
Today, I recommend this article, which is a short article on the official account "brain fried eggs".
The author is a familiar friend of Cong Investment, who has been paying attention to learning Bamang and practicing the concept of price bidding. The article is very concise, but the point is very clear, and there is a lot of "voiceover" with more information. We are authorized to share the content with you.
In 2021, before the war had an impact on global energy, China had already experienced an energy crisis, marked by a doubling of thermal coal prices and then halving them.
If investors have an industrial perspective, they can clearly observe that the basic materials used in new energy, such as aluminum, nickel, tin, lithium, monocrystalline silicon, polysilicon and so on, are basically high energy-consuming materials.
In other words, if we want to realize the transformation from traditional energy to new energy in a short economic cycle, we needMore energy input in a short time, which results in orIt exacerbates the problem of short-term energy shortages.
The reason why new energy can achieve low carbon and economy is that it can cover short-term additional energy input in the long period in the future.
In mid-2021, thermal coal production data released from the Bureau of Statistics have shown that China's thermal coal production continues to grow, but still can not meet domestic demand.
Starting from the third quarter of 2021, China will use administrative measures to increase production in coal mines and sharply lower thermal coal prices in the same way, allowing coal and power companies to make profits at lower electricity prices. It not only ensures low-carbon development, but also does not burden the whole society with excessive costs.
The difference between oil and coal-fired power is that oil also affects the reform of cars, as evidenced by the rising prices of resource products such as lithium, nickel and aluminum. If the production of such resource products does not expand rapidly, the transformation from fuel cars to electric cars will be much slower than most people think, and it will not be so easy to get rid of dependence on oil.
In addition, the application field of petrochemical industry is more extensive than that of coal, but whether it is oil chemical industry or coal chemical industry, the demand of traditional energy in the chemical industry can not be replaced by new energy. And it is normal for such demand to continue to grow for 200 years.
The above two points are difficult to quantify and weigh, and Munger only gives "11 million barrels a day is not enough."
Finally, I would like to add that administrative means and geopolitics do not affect long-term logic, except that administrative measures will make prices a little smoother and a little lower, while war factors may make volatility a little more volatile and higher.
Buffett said at this year's shareholders' meeting:
"in fact, the federal government now stores almost billions of barrels of crude oil, but it is not enough for the size of our economy."
Buffett buys Western Oil, and he has a saying that "every decision made by the Western Oil Board is perfect." What the board of directors of Western Oil does is reduce capital expenditure and increase dividends. Invest from the perspective of dividend stocks, rather than relying entirely on a sharp rise in oil prices.
