Literally on a daily basis I read something that implies that the end of oil is nigh. This something is usually related to electric vehicles and the demise of the internal combustion engine. Broadly speaking, I think that oil is finished and is on its way out. The real issue is the time frame, especially in terms of peak demand.

An article published in the Wall Street Journal in May 2017, stated that the International Energy Agency saw growing demand for oil, albeit slow, going past 2040. That said, it also went on to point out the wide variations in predicting peak demand – ranging from Statoil believing it could be reached in the mid 2020s through to Aramco that does not see the peak in sight at all.

However you view it, estimating the demise of oil is largely guesswork. There are simply too many variables – technological, legal, ecological, political, etc. That said, there are certain undeniable factors such as the numbers of vehicles currently using combustion engines and the means to ensure that they can be refuelled and serviced. Safely replacing all those vehicles and putting in place the infrastructure to service a new generation of electric vehicles will be expensive and time consuming. As regards the airline industry, in 2016 it consumed some 6% of the world's total oil output. I would suggest that the prospect for an electric airline fleet is a very long way off. And there is the not so small issue that some 50% of oil is not used for transport but goes into industrial processes such as making plastics.

For investors, I would argue, the real point is this. Sure, oil is in its twilight years. But we need to get things into perspective. Between now and its ultimate death may be a very long wait. In the meantime, there could be substantial profits to be gained from an industry that is no longer perceived as go go or glamorous. By comparison, biotech is far sexier than oil but from an investors' perspective it appears to be a minefield – losses, no dividends and cash calls are often the norm. Whereas there are many profitable, cash generating, oil companies. And again, getting it into context, the FDA issues drug patents lasting 20 years. But that does not stop a rival company producing something…

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