I shared this tweet yesterday to investigate what themes or problems have mindshare on energy Twitter.
The answers were classically Twitter - some serious, some snarky, and some entertaining.
They also ran across a wide spectrum. The multi-disciplinary aspect of energy has always been one of the best parts of the sector. People with backgrounds in geopolitics, supply chain, chemistry, physics, economics, and finance all have interesting viewpoints.
While no one had my exact answer, a few were close. Returns, free cash flow, and investing were all mentioned.
So, what do I become more obsessed with as I spend more time in energy? It probably comes as no surprise that my answer ties back to my job.
The more I learn about energy, the more I become obsessed with capital allocation.
Much like the multi-disciplinary aspect of energy, the energy transition will be an opportunity for all asset classes. Venture, private equity, debt, infrastructure, and public equities all have the potential for outsized returns, and all are required to make the transition work.
Not only will great investments be made, but capital allocators will be the primary force behind driving swift change. We've already seen this with Blackrock and Vanguard's climate initiatives plus Exxon's recent board changes as a result of pressure from activist investors.
From a micro-perspective, consumers are also capital allocators. We'll see Gen Z's purchasing power increase over the next decade and it's clear they prefer brands who consider their carbon footprint.
Net, people, companies, and investors vote with their dollars. I firmly believe that understanding the flows of capital and the opportunities that come with it is fundamental to understanding the direction of the energy transition.