Comm: Precious

(San Francisco)

One of the world’s most mundane and commonplace features, a bastion of modern transport infrastructure, shall cease to exist in the reasonably near future. Electric cars, which many see as the future, will require a different model for refueling. In particular, they will be charged not at stations, but in parking lots, ultimately eliminating the need for gas stations. The only ones that will eventually be needed will be along highways, where distances traveled will exceed single charge ranges for electric cars. However, getting to this reality will be a challenge, as a century of infrastructure development has been centered on building gas stations on every corner.


FINSUM: We think it will take a long time to get to this stage, and that some gas stations will remain, but eventually we might get here. There are some interesting companies working in this area which could prove great long-term investments.

(Houston)

It might seem like it is an over-stretched forecast, but Barron’s is warning investors to prepare for another steep and prolonged drop in oil prices. While prices had a recent bottom in early 2016 at below $30, they have held steady just below $50 of late. The issue is that confidence in OPEC is running very low. The first round of cuts it did clearly didn’t work out, but it renewed them. Since the new deal has been ineffective it is now suspected that several countries will start to cheat on the agreement by overproducing, or pull out of it altogether, which could lead to a sharp and destabilizing drop in prices.


FINSUM: With confidence already so low, a single day dissolution of the OPEC cut agreement could be just the catalyst oil needs to head back down to the $30s.

(Riyadh)

The oil market is closing in on an almost three-year run of bad news. Oil originally fell because of over-supply to the market, and that theme—despite OPEC’s cuts—has persisted for years, with US shale more than accounting for OPEC’s cuts and keeping the market flooded. Electric cars are slowly sapping oil demand as well, and now a government-driven trend will deliver another blow. That gut punch will be the rising trend of governments banning the use of gasoline and diesel vehicles in some locations. For instance, the UK and France have already passed sweeping rules aiming to phase out all fossil fuel based cars.


FINSUM: Oil continues to receive more and more bad news and our view, which we have maintained for some time, is that prices will likely never regain their former glory (or at least not until oil becomes a niche product long in the future).

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