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Petroleum: The Investment Enigma We Shouldn’t Ignore By Ravi Rach

By Ravi Rach, CEO of Freshwater Petroleum

In a world captivated by the shiny new objects of renewable energy — solar, wind, and the glamorous electric vehicle — it is easy to overlook a classic: petroleum. As we rush toward a cleaner future, it is tempting to write off this age-old asset as irrelevant, perhaps even archaic. But dismissing it would be a grave error, akin to ditching Shakespeare because “video content is the future.” Here is why petroleum should still be part of your investment vocabulary, even if you are reciting the sonnets of a sustainable future.

The Inflationary Elephant in the Room

Let us get real about inflation. Sure, gold has been the traditional go-to when it comes to hedging against the devaluation of currency. But what about petroleum? Consider this: inflation does not just mean you pay more for a loaf of bread. It often also means increased manufacturing costs, higher demand for transportation fuel, and escalating costs across sectors. In short, inflation can turn up the heat on the demand for petroleum. Isn’t it about time we regard this fossil fuel as the multifaceted inflation hedge it truly is?

Playing Chess on a Global Board

When you invest in petroleum, you are not just navigating economic waves; you are playing geopolitical chess. From the power moves of OPEC to the strategy of Russia in exporting its crude, the petroleum market is like a John le Carré novel set in the world of finance — complicated, fascinating, and not for the uninitiated. There is a thrill, a complexity to petroleum investment that you do not get with a straightforward clean energy ETF. You are not just an investor; you are a geopolitical strategist. And for those who can read between the lines of international politics, the dividends go beyond mere financial gain.

The Portfolio Harmony, You Didn’t Know You Needed

Now, I am not saying you chuck your green energy stocks or your Tesla shares. By all means, keep them and cherish them. But consider adding some good ol’ petroleum to your portfolio mix. Think of it as the baseline in your energy investment symphony, the steadying force amid the soaring violins of renewables. Why? Because these sectors often behave in a counter-cyclical manner. When the economy is booming, your green assets might shine. When it is shaky, petroleum can offer a stabilizing counterpoint. That’s portfolio harmony, my friends.

Green Today, But Made Possible by Black Gold

It is easy to revel in the rise of clean energy. But take a moment to consider what made this green revolution possible. The solar panels? They need petroleum-based components. The wind turbines towering in fields? Ditto. Even the batteries in your brand-new EV need petroleum by-products. Clean energy is not born out of thin air; it is facilitated by the very fossil fuel we often vilify. The idea of petroleum as a ‘transition fuel’ is not just some fancy term; it is a reality we live every day.

Embrace Complexity, Reject Simplification

Finally, let us talk about the buzzword that’s all the rage these days: ESG — Environmental, Social, Governance. Yes, the oil industry has its sins. It is far from perfect. But many petroleum companies are making significant strides toward sustainability. They are not just sitting in their plush offices ignoring climate change; they are researching carbon capture, refining processes, and even investing in renewable tech. It is easy to slap a ‘bad guy’ label on the entire sector, but life — and investment — is more complicated than that.

Final Thoughts

The landscape of investment is forever changing, and so too is the role of petroleum in that landscape. It is not the villain that some make it out to be, nor is it a relic to be discarded. It is a complex, evolving asset that deserves a place in our portfolios, and more importantly, in our broader understanding of what smart, diversified investing really looks like. In a world that can sometimes be too quick to simplify, embracing complexity might just be the smartest move you can make.

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