Super-Spiked Videopods (EP30): Profits Over Preaching

WATCH the video on YouTube by clicking the RED button above.LISTEN to audio only via the Substack player by clicking the BLUE button above.STREAM audio only on Apple Podcasts, Spotify, or your favorite podcast player app.DOWNLOAD a pdf of the slide deck by clicking the blue Download button below.Our video this week is titled Profits Over Preaching as we look to bring together a number of recent themes and address three interesting questions we have received while attending recent macro/industry events in Italy, Calgary, and New York. Q1: Will peak oil supply fears return? We admit to being surprised at this question being raised, but it’s a good one. Over the past month-plus we have spent considerable time discussing our view that there is no peak to oil (or natural gas and perhaps not even coal) demand coming anytime soon. Trying to guess a future round-number date misses the fact that the total addressable market of future energy demand for the 7 (soon to be 9) billion people in the Rest of the World is massive; we will need all forms of energy to meet that eventual and inevitable demand. We have also noted the steepening oil cost curve (a sign of a shrinking number of low-cost oil projects) and the low levels of industry CAPEX as pointing to a future supply crunch. To be clear, we have never believed the world will be resource short anytime soon but it does require making an effort via CAPEX to grow supply. Right now, economic uncertainty in China, Europe, and the USA have allowed demand to be met by a variety of supply sources and we have stuck with a Super Vol rather than Super Cycle framing. It likely will take a firmer global economic footing to spark an oil super cycle. Q2: What does XLE outperformance vs ICLN say about opportunities in traditional versus new energies? We highlight ICLN underperformance looks similar to what Goldman Sachs portfolio strategists have observed with unprofitable versus profitable tech. The market is clearly demanding evidence that business models are on-track to profitably scale and punishing those where there have been disappointments. While there is a role for government to play in establishing incentives, rules, and regulations, we believe caution is warranted for businesses where government is picking technology winners and fully subsidizing business models. Q3: Are we therefore just being polite when we say new energies have a future? No, we are not simply trying to be polite! One should be careful not to assume struggles in one area (e.g., offshore wind) indicate it is all doomed; it isn’t. In fact, new energy opportunities have a wide swath of business models, exposures, capital intensity, geographies, subsidy needs, and ownership structures. Tesla has shown $ trillion dreams can be realized. But even on a much smaller scale, there are many interesting opportunities to consider. No one should confuse our pragmatism with pessimism about new energies. We will need it all, both new and old, if the world is to meet its long-term energy needs.🔔 4 Ways to Subscribe* All Content: If you subscribe to Super-Spiked via email, you will receive all content to your inbox and it is also all on the Super-Spiked website. I have been aiming to publish about once a week, usually on Saturday.Subscribe to Super-Spiked to receive all content via email and directly interact with me. Also available at https://veriten.com.* Veriten: You can now also subscribe to Super-Spiked content via the Veriten website (here) and also receive Veriten’s flagship COBT video podcast.* YouTube channel for video only: You can subscribe directly to the video feed ofSuper-Spiked Videopods on my YouTube channel Super-Spiked by Arjun Murti.* Apple Podcasts, Spotify for audio only. You can subscribe directly to the audio only feed on Apple Podcasts, Spotify or your favorite podcast player app. The podcast is simply the audio for the YouTube videos.⚖️DisclaimerI certify that these are my personal, strongly held views at the time of this post. My views are my own and not attributable to any affiliation, past or present. This is not an investment newsletter and there is no financial advice explicitly or implicitly provided here. My views can and will change in the future as warranted by updated analyses and developments. Some of my comments are made in jest for entertainment purposes; I sincerely mean no offense to anyone that takes issue.📜 Credits* Intro & Outro music: Wolf Hoffman: Concerto for 2 Cellos in G Minor, Rv 531: I. Allegro Moderato.* This episode of Super-Spiked Videopods was edited and produced by Veriten Productions. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit arjunmurti.substack.com