The ausbiz team regularly speaks with local and international energy experts and analysts to gain insights into the oil and gas sector, to better understand how energy investments will be impacted and what the energy market is reflecting about the broader economy.
ausbiz is also joined by the CEOs of Australian listed energy companies to determine how they are adapting to changes in the energy mix, consolidation in the sector and catalysts for future investment decisions.
Oil and gas has been a reliable long-term “bottom drawer” buy-and-hold investment as a developed economy always needed energy for households and businesses. But there are two crucial caveats when it comes to investing in energy stocks: the first has always been the case, the second is an evolving trend. The price of oil is highly volatile, a long-term chart can easily confirm this. Secondly, investors are increasingly demanding cleaner and/or renewable energy sources, threatening the long-term viability of the oil and gas industry.
Investing in oil and gas
Oil and gas have been the bedrock of modern economies for decades. Australia, along with overseas partners, spent $100 billion on the LNG boom of 2012-16. Today, households, existing vehicles (cars, trucks, trains and planes) and manufacturing in particular require oil and gas for energy.
Australia is rich in energy assets such as LNG and uranium, but we rely on imports of oil for the bulk of our industrial and retail needs.
In the near term, oil prices will continue to fluctuate. One of the most pronounced market shocks of 2020 was ‘negative oil.’ Oil prices fluctuate in response to business cycles, geopolitical risks and OPEC updates.
Investor focus is increasingly on a cleaner, carbon neutral and sustainable energy future. Oil and gas are now viewed as inconsistent with rising ESG priorities around the world. Still, Australia has some of the world’s leading oil and gas producers including Woodside, BHP, Oil Search and Santos.
Recent mergers between Santos and Oil Search, and BHP’s merger of its oil and gas assets with Woodside are examples of the rapid pace of changing sentiment towards the energy sector and its future.
Oil and gas on ausbiz
We bring in Australia's top fund managers, stock pickers and commodities analysts to give ausbiz investors insight into the performance energy companies and their prospects. Oil and gas companies have to adapt as ESG principles are widely adopted and as renewables gain ground, but economies will remain dependent on oil and gas for decades to come.
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