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Fossil Fuels Are Becoming Stranded Assets

Jul. 03, 2017 10:00 AM ETHASI, JKS, NEP20 Comments
Solar Investing profile picture
Solar Investing


  • We're seeing big price declines in fossil fuels.
  • Technology is the hero -- or culprit, depending on your point of view.
  • EVs will be the death knell for oil.
  • The move away from fossil fuels: Is it just in time?
  • Here are three clean energy stocks to consider.

In January, Exxon Mobil (XOM) wrote $2 billion off the value of its U.S. natural gas fields. Then, in February, the company wiped 3.3 billion barrels of oil off its books. Exxon Mobil is not alone. As of mid-2016, oil and gas companies wrote off over $185 billion off the value of their fossil fuel reserves.

Big price declines in fossil fuels

Not too long ago, investors (myself included), thought some of the best companies to invest in were those which controlled huge amounts of coal, oil, or gas. After all, a growing, energy-hungry world needs increasing amounts of these fossil fuels. Right?

And how well did that strategy work out?

Well... Peabody (BTU), the U.S.'s largest coal producer, went bankrupt. Canadian Oil Sands (OTCQX:COSWF), with its massive oil sand holdings, failed. Chesapeake Energy (CHK) has extensive natural gas acreage yet saw its stock fall 90%.

In retrospect, investing in energy companies which control large amounts of coal, oil, and gas was a terrible strategy. Only a few years ago, with Peak Oil thinking in vogue, who would've guessed?

Today, all three major fossil fuels -- coal, oil, and natural gas -- are priced below their 2009 Great Recession lows. This is especially surprising considering the huge central bank fueled monetary supply expansions since 2007. (Wasn't that was supposed to be inflationary?)

Peabody and other coal company bankruptcies show that renewables are killing coal in the U.S., China, India, and elsewhere. In a touch of irony some coal plants are being resurrected as solar farms. (I guess they figure much of the infrastructure can be recycled and there are likely very few other buyers for old coal power facilities.)

Oil is faring no better. Prices for oil were mostly over $100/bbl from mid 2010 through 2014. Now they hover around $45/bbl. The low prices have

This article was written by

Solar Investing profile picture
I am retired and have been in the market since the late 1970s. I currently have a diversified portfolio of technology, REIT, renewable, and precious metal equities.I am especially interested in the renewables sector, primarily solar. I have solar panels on my house and own a Tesla Model 3,The dark clouds of climate change are on the horizon and for our children and grandchildren's sake, we need to move away from fossil fuels, and soon. There are many opportunities for investors to profit here but sorting them out is tricky so let's explore this together.

Analyst’s Disclosure: I am/we are long NEP, HASI, JKS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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