Energy Prospectus

Note from Morningstar 12/8/2021

We're Closer to the Bulls Than the Bears on Long-Term Oil Demand

Given the discussion around achieving net-zero carbon emissions by 2050, many analysts
are having a hard time forecasting oil demand. Rather than projecting a base case, most
are simply throwing up their hands and instead electing to present a variety of scenarios.
That's the gap we aim to fill in our latest Energy Observer by providing a high-quality
base-case forecast. We aim to address what we think will actually happen to oil, not
what is needed to bring about decarbonization or other goals.

We project oil demand to peak around 2030, with demand decreasing only gradually after
that--an overall 11% decline through 2050. This oil demand forecast
comes in spite of our upbeat views on electric vehicles (which will slash road fuels
demand), because not every part of oil demand can be electrified.

On the whole, this puts us closer to the bulls than the bears on oil demand.
-------------------------
MY TAKE: I personally think it is "wishful thinking" by the environmental wackos that demand for oil will peak in 2030. The only thing that will make oil demand peak is much higher oil prices because supply peaks.

Wind and solar are going to be very expensive and they will deliver disappointing results. The bullish forecasts for EVs will be capped by the very expensive and the lack of materials to build them. Only a small percentage of the population will be able to afford EVs and rolling blackouts in areas with too much wind and solar will keep ICE vehicles more practical.

IMO the best way to invest in the "Energy Transition" it to own stocks of companies that produce the materials like Ero Copper (ERO).

Send me an email if you would like to read the full Morningstar Report, which does have a lot of charts and details.
dmsteffens@comcast.net

Keep in mind that the goals of the wackos and reality are much different.

From the Morningstar Report:

This year, at the COP26 climate summit, nations agreed to commit to reducing carbon,
which causes global warming, by replanting forests and slashing emissions of methane,
one of the most dangerous greenhouse gases. Next year, they'll meet again with the aim
of declaring more robust goals centered around achieving net-zero emissions by 2050.

But emissions are outpacing the world's plans to limit global warming. In late October, a
United Nations report found that current commitments for emissions cuts still leave the
world on track for a global temperature increase of at least 2.7 degrees Celsius this
century, even though nations have sought to cap that increase to 2.0 degrees or below.

But we urge investors to heed caution with expectations around these goals. While some
oil demand forecasts do assume that goals outlined in the 2015 Paris Agreement will be
achieved (including net-zero emissions by around 2050), our forecast is a realistic
assessment of which policies will be implemented. The failure of prior goals (such as the
Kyoto Protocol of the 1990s) demonstrates that we shouldn't take for granted that
today's ambitious goals will be reached.