Ted Bridges comments to the Omaha World Herald on Berkshire Hathaway’s move to control a bigger share of a seemingly out of favor energy commodity — crude oil. With the price of crude oil down more than 70 percent since the middle of 2014, many companies connected to the black stuff are under severe pressure. Production in some U.S. fields has been curtailed, and there’s even talk of coming bankruptcies by drillers if prices continue to fall.
That hasn’t seemed to scare off Berkshire Chairman and Chief Executive Warren Buffett — instead, he’s stocking up while the stock prices of oil-connected companies are battered.
“Berkshire’s interest in energy is clearly driven by the current level of energy prices, which have fallen materially over the last 18 months, with oil going from roughly $100 a barrel to about $30 a barrel,” said Ted Bridges, principal of Omaha wealth adviser Bridges Investment Management, which owns Berkshire shares among its $1.8 billion under management.
Buffett didn’t comment for this story. But Bridges said Berkshire and Buffett are reasoning that the energy glut will one day end amid high demand, “resulting in materially higher prices, which should drive higher profits for energy companies.”