CNBC’s Jim Cramer on Wednesday offered a defense of his newfound optimism about investing in oil stocks, claiming he changed his mind after concluding that circumstances had changed.
“From an asset manager’s perspective, there’s no shame in wearing flip-flops. Call me crazy, but when the facts change, I change my mind. I want to make money,” he said “Bad Money” Host who stated in January 2020 that he was “Done with fossil fuels” and suggested oil stocks were the new tobacco.
At the time, Cramer offered a gloomy outlook on shareholders’ ability to make money from fossil fuel stocks because he believed concerns about climate change were keeping young investors away from these stocks.
Cramer said Wednesday he believes his thinking is justified.
“Was I wrong to call them uninvestable? I do not think so. Before hitting rock bottom in 2020, this group spent years in the kennel. Of course that’s no longer the case,” Cramer said, alluding to the fact that Energy ended in 2021 as the best performing sector in the S&P 500. Energy, too, has already increased by about 16% in 2022.
Cramer said there have been two major shifts at oil and gas companies that have helped stocks in the cohort surpass their previously lackluster returns. The first is that there is an “entirely new attitude” to efforts to reduce carbon emissions, Cramer claimed, pointing out chevrons $10 billion investment by 2028 and Exxon MobileI was recently announced Net zero promise by 2050.
From an investment perspective, however, Cramer said the more important change was that “both the majors and the independents have moved away from that ‘drill-baby-drill’ mentality.”
“Instead of spending a fortune to flood the market with new supply every time oil prices go up, they have become much more cautious. … Your reticence has helped the entire industry catch its breath, and that’s a key reason. ..why crude oil is now $86 a barrel,” he added, explaining that higher oil prices allow the company to be significantly more profitable.
“I spent years telling you all the issues with the oil industry — from an investing perspective — then these companies addressed each and every one of the issues that are important to me,” Cramer said.
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