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Much-watched Buffett adds to fossil fuels stake, after cautious investor trend toward renewables

Berkshire Hathaway appears to be taking a balanced approach amid the global energy transition.

Published: July 25, 2023 11:48pm

Warren Buffett, a multibillionaire and CEO of the investment conglomerate Berkshire Hathaway, has joined others in significantly boosting their stake in fossil fuels this year, signaling a potential dip in renewable energy financing. 

Last month, Buffett’s company purchased 2.14 million shares of U.S.-based oil company Occidental Petroleum, totaling just over $122 million, in addition to the 4.5 million shares Berkshire purchased in June, according to Reuters. Buffett now owns about one-fourth of the entire company’s outstanding shares.

Also in July, Berkshire reached a $3.3 billion deal to buy Dominion Energy’s investment in a Maryland-based liquefied natural gas (LNG) project. 

Such sizable investments in traditional energy appear to signal that Buffet and others – despite the global push for renewable energy – see the potential for higher gains in fossil fuel industry in the months and years ahead.

"Returns on capital in coal, oil and gas are off the charts compared with other sectors," Smead Capital Management CEO Cole Smead told Bloomberg this week.

Brent and crude oil just hit their highest prices since April.

Berkshire Hathaway isn’t the only corporation holding on to fossil fuels.

ExxonMobil sees a "very bullish" market for it, says CEO Andrew Barry.

The company is set to nearly double its annual volume of LNG, from 22 million tons to 40 million tons, by 2030.

Exxon’s competitor Shell is purportedly trying to dilute its green energy stake for more oil and gas purchases, and its CEO recently acknowledged the world "desperately" depends on these energy sources to keep the lights on.

Still, Berkshire, Exxon, Shell, and others are not completely out of the green energy game.

Berkshire Hathaway Energy has invested billions in renewables, and its overall approach to energy appears to be one of balance.

CEO Greg Abel said at a shareholders meeting in May that his group is playing the long game with delivering power to people's homes.

"There’s no question there’s an energy transformation going on," he said, and that his group is "well on the path" to hitting its carbon reduction goal of 50% relative to 2005 by 2030.

However, he argued: "You can’t just wake up one day and solve this problem."

BHE’s website states that its investment portfolio is "diversified" across the energy sector as "an essential component of keeping our business sustainable."

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