Over the past few years, Warren Buffett and Berkshire Hathaway have been doubling down on their energy investments. A lot of this has been through the shale oil producer, Occidental Petroleum, of which Berkshire owns almost 25%.
For years, Warren Buffett’s right-hand man Charlie Munger has argued that concerns about climate change are overblown. So we shouldn’t be too surprised that they are doubling-down on oil and gas investments. (Importantly, Munger doesn’t disagree with the science of carbon dioxide trapped in the atmosphere warming the planet. He just doesn’t believe the consequences will be as bad as predicted).
This article takes a look at Berkshire’s recent action in the energy space. In particular, it looks back on what Warren and Charlie have said about Occidental and about their other big oil investment, Chevron.
Whatever you think about oil and gas, the fact of the matter is that 60% of the world’s energy still comes from oil, gas and coal. And even after we (if we) transition away from these fossil fuels for energy, the world will still rely on oil as the basis for a number of chemicals and for products like plastic. Similarly, natural gas will still be an important component in fertiliser. And green steel and green cement remain at the research stage, meaning that even if coal-fired power plants are phased out tomorrow, we will still rely on coal for some time to come. All of that is to say that the world is just at the very start of its decarbonisation journey. And in the meantime, Warren Buffett and Charlie Munger plan to make money while the world still relies on oil.
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