Oil and Gas THE WORST sector in 2018 markets

This is a pretty great opening line about the ‘energy’ sector and how it did in the stock markets in 2018. It comes from an article from IEEFA (Institute for Energy Economics and Financial Analysis):

The stock market went to hell in December. And when it got there, it found that the energy sector had already moved in, signed a lease and decorated the place.

Tom Sanzillo, Director of Finance, IEEFA

I put energy sector in quotes because it has always seemed a misnomer to me, especially as renewable energy grows. The energy sector has come to mean the oil and gas sector, which is actually essentially mining. Yes, the oil and gas is burned to release energy (and toxic gases as well as greenhouse gases), but it’s not actually energy that is being mined. It is physical stuff.
But enough mini-rant.

The good news (for renewable energy fans) is that the oil and gas sector did indeed fall, significantly, during 2018. As IEEFA’s Director of Finance Tom Sanzillo points out in the IEEFA article: “The bottom line: for the second straight year, the stock performance of the energy sector was at or near the bottom of the S&P 500 – and in 2018, it was solidly in last place.”

Oil and gas. Last place. 11th out of 11 sectors. As they say… Let. That. Sink. In.

I am certainly no expert on stock prices or indices or what makes them go up or down, and obviously there can be a lot of argument about whether an index has anything to do with the demand for a product, as it could well be that huge demand is matched by hugely increased supply and suppliers.

But looking at the S&P Global Oil Index compared to the S&P 500 over the past 5 and 10 year periods, as seen on S&P Dow Jones Indices site, the ‘energy’ sector does not look like a big winner.

5 and 10 year returns, Oil and Gas (blue) vs. S&P 500 (black)

Tom Sanzillo DOES know a lot about this subject, and you can click »» here to read his complete IEEFA article

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