Kyle Bass believes blackballing oil is doomed as public support for less stable and more expensive energy alternatives is losing momentum in an economy where many households find it challenging to meet the basics.
The harsh reality could be that saving the planet takes a backseat if people can’t save themselves. Advanced economies cut off from an abundant supply of affordable energy deindustrialize, with Germany being the latest case study.
In his latest interview, Hayman Capital Management founder and CIO Kyle Bass believes blackballing oil is doomed, and he gave his reason in his latest interview.
There has been a mounting backlash against environmental, social, and governance investing in recent years, which has been primarily in response to the extreme demands of radical climate activists or “green” defenders.
“The harsh reality could be that saving the planet takes a backseat if people can’t save themselves”
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The crux of the debate is that Kyle Bass believes blackballing oil is doomed due to half a century’s transition from carbon to non-carbon alternatives
He said these activists were so disconnected from reality that their uncompromising stance on blackballing the fossil fuel industry without acknowledging that energy transitions can take upwards of half a century has fueled the backlash.
“The move from coal to natural gas took forty years. We can’t just flip a switch,” he said.
He believes a radical idea of abandoning fossil fuels triggered a backlash against energy alternatives.
Kyle Bass believes this could have been prevented, by moderating fossil fuel usage over decades.
He said the demands for banning fossil fuels were never realistic.
“The move from coal to natural gas took forty years. We can’t just flip a switch”
KYLE BASS
“There were all of these idiots that were just saying, if anyone is doing hydrocarbons, we’re going to blackball them from doing business or from receiving capital,” Bass said, adding, “And so Texas lashed back and said, if you’re going to blackball someone that’s producing hydrocarbons, we’re not going to do business with you either.”
He said, “Energy transitions take 40 or 50 years,” pointing out that people “think we can turn hydrocarbons off and turn on alternative power. But they have no idea how the grid and business works.”
“Skirting hydrocarbons is like bringing politics into investing” – Kyle Bass
He sees energy transition to nuclear energy as a long-term goal
Until then, he noted, fossil fuels and renewable energy sources are “going to coexist for decades and decades to come.”
“Skirting hydrocarbons is like bringing politics into investing,” adding, “If you’re willing to give up returns for that, then so be it. But I think that’s naive, and it’s a breach of fiduciary duty,” he said.
Half of the US power grid is powered by natural gas generators, according to a Bloomberg report. Moreover, the Summer of 2024 saw renewable energy power slide, as coal now produces more power than wind and solar.
Maybe it took an economic downturn to discover that ESG investing and woke energy policies demanding a complete ban on fossil fuels are unrealistic and threaten economic and social stability.
