There is an honest problem with this approach. There are new technologies on the drawing board that will be available in the next ten years or less.When someone like WEB buys a company he applies a DCF or a FCF depending on his preferences. In fundamental value approaches to the market DCF/FCF methods pretty much over the long haul supply the numbers for what a stock issue should be priced. On a rolling basis a DCF/FCF in say XOM today looks good. I say a rolling basis because this is not a trading proposition, but a LTBH. On a rolling basis five years from now I dont expect XOM to look so good. Substitutes will be entering the energy market at a much more rapid pace.Many of the substitutes are localized. PV is not just a massive set of arrays in a field in Iowa. It can be the roof of your house or part of your back yard. New battery technologies are being developed to store the energy as well. And Fuel cells will have come a long way to begin the process of replacing gasoline powered cars about 10 to 15 years from now.Dave,You accurate about the energy and batteries. However, the losses in oil and gas may not be as much as you think. Even if we quit burning all oil and gas, we would still need to produce oil and gas as they are primary feed stocks for most of our advanced materials. Further, despite the apparent glut of carbon bases energy, the new energy sources are expensive, they require a great deal of on going labor to maintain. So, while we will probably see a continuing decrease in hydrocarbon demand, (in the U.S.) we will not see a decrease in hydrocarbon prices. Additionally, be sure and watch this entertaining video and revisit the demand for aircraft from Asia. This will give you a little shock as the idea that world wide demand for hydrocarbons will fall is a pipe dream.While Hans has a hope that the demand can fall by 25 percent as he shows in this video. http://www.gapminder.org/videos/hans-rosling-and-the-magic-w...The odds are, that the fall will be made, not by fear of climate change, but by the expense of hydrocarbons. As such the dollar amounts that the companies dealing in hydrocarbons can remain high, even while the volume starts to fall.CheersQazulight
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