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A Very Serious Warning for Oil Investors

Written By Jeff Siegel

Posted November 3, 2016

Check out this recent headline from Reuters …


Certainly the world’s treehuggers must be doing back flips over this.

Imagine, Big Oil finally giving in and embracing clean, renewable energy!

But just imagine it, because it isn’t true.

This Friday, the chief executives of seven oil and gas companies, including BP, Saudi Aramco, and Royal Dutch Shell will announce the details of a new fund designed to develop renewable energy technologies. Or at least that’s how it’s being pitched.

Of course, as with any PR move from the Big Oil machine, after you do a bit of digging you’ll discover it’s mostly a wonderfully-crafted public relations scam intended to make you believe that the oil companies give two shits about the environment.

Don’t get me wrong. I don’t say this to attack the oil companies. In fact, I’ve long argued that Big Oil should stop trying to placate the masses with “eco-friendly” PR campaigns, and just do what they do best – produce oil and gas.

After all, it’s not as if we’re all going to decide tomorrow to trade in our internal combustion vehicles for electric cars. Even as electric car momentum picks up steam, it’ll be decades before the internal combustion engine goes gently into that good night.

That being said, most oil companies do know that it’s probably in their best interests to appease the architects of the 2015 Paris Agreement to phase out man-made greenhouse gases over the next 30 years. And that, dear reader, is why this fund has been put together.

This Whole Thing is a Joke

According to Reuters, this new fund will focus on developing technologies to lower emissions and increase car engine and fuel efficiency.

This is something they fought for years, but now that electric vehicles are proving that the internal combustion engine is an outdated technology that should be in museums and not under the hoods of our passenger vehicles, they’re suddenly enamored with the idea of making a more efficient engine.

But it’s too late for that.

By the time these assholes come up with a truly exceptional internal combustion engine capable of delivering twice what the average fuel economy is of today’s vehicles, Elon Musk will be selling you state-of-the-art Teslas with 500-mile ranges.

In 1975, the average estimated fuel economy was less than 15 miles per gallon. Today, it’s about 28 miles per gallon.


It took 40 years to double the fuel economy of our internal combustion vehicles. And of course, prices have increased, too.

Now consider this …

In 2011, GM started selling the Chevy Volt – a plug-in hybrid electric vehicle.

On a single charge, you could drive in “electric-only” mode for about 30 miles.

At the end of 2016 (roughly five years later), GM will start selling the Chevy Bolt (not to be confused with the Volt), which is an all-electric vehicle capable of delivering about 200 miles on a single charge.

It took the internal combustion vehicle 40 years to double its fuel economy. It’s taken five years for the electric vehicle to quintuple its range, representing a 556% increase in “fuel” economy in just six years.

And by the way, the 2011 Chevy Volt started at $41,000. The Bolt will start at around $37,000.

Not only has the technology dramatically improved, but the newer version of GM’s electric car is cheaper!

Of course, this isn’t completely an apples to apples comparison. After all, the Volt is a Plug-In Hybrid Electric vehicle, which means that if you deplete your charge, the car can continue to travel for another 400 miles utilizing its internal combustion engine.

But looking solely at what’s offered for “electric-only” driving, one cannot deny that this is a massive jump in terms of driving range on a single charge.

And GM isn’t the only one delivering 200-mile electric cars. Coming up next will be Tesla’s Model 3 and Nissan’s next-generation LEAF. These two vehicles are expected to debut in 2017.

So here’s my prediction …

Big Oil will use this new fund in an attempt to polish up the dinosaur turd known as the internal combustion vehicle. Ten years later, no major fuel economy improvements will be made. But in the same ten years, the costs of battery production will plummet even further while the technology will improve dramatically.

In ten years, a 500-mile electric car will not be uncommon, and it will take only minutes to re-charge it on road trips. Wireless charging will be available, too, as will new model options ranging from pick-up trucks to cargo vans.

So while you’re likely to hear a lot about these oil majors “getting serious” about clean energy options, the real heavy lifting will be going on in the labs and manufacturing facilities of today’s legitimate game-changers.

Oil investors can still make some money during this transition, but rest assured, this transition will come to an end a lot faster than most folks realize. And Big Oil – at least in its current form – will be on the losing end.

Invest accordingly.