Bull vs. Bear: Is There a Future for Fossil Fuel Investments?

Bull vs. Bear is a weekly feature where the VettaFi writers’ room takes opposite sides for a debate on controversial stocks, strategies, or market ideas — with plenty of discussion of ETF ideas to play at either angle. For this edition of Bull vs. Bear, Elle Caruso and Karrie Gordon discussed the pros and cons of investing in fossil fuels.

Elle Caruso, staff writer, VettaFi: Hello, Karrie! I’m looking forward to our conversation on fossil fuel investments and how much exposure – if any – an investor should have to energy equities and crude oil/ natural gas futures.

I see an opportunity here for a long-term position and 2022 was a great demonstration of what exposure to crude oil/ natural gas can do for your portfolio. Last year, international benchmark Brent gained about 10% and West Texas Intermediate (WTI), the U.S. benchmark, rose 7%. The benchmarks gained 50% and 55% the year prior, rebounding from 2020 lows.

Even as energy commodity prices have softened in 2023, traditional energy companies have demonstrated resilience. Exxon Mobil Corp (XOM) and Chevron Corp (CVX) collectively reported $18 billion in profits during the first quarter, marking a record first quarter for Exxon. These companies are continuing to deliver value to shareholders in the form of generous dividends and stock buybacks.

Net-Zero Energy Transition Nukes Fossil Fuel Demand

Karrie Gordon, staff writer, VettaFi: Elle, I’m excited to talk with you today about a topic I’m very passionate about. I’m glad you’re happy to take the bull side because I’m extremely bearish on the outlook for fossil fuels long-term.