(Forbes) If anything, for a large portion of the institutional investor community this high price market for oil and gas might represent an opportunity to accelerate getting out of the sector rather than jumping back in. I know several endowment managers, for example, who have been slowly transitioning out of fossil fuel holdings rather than take a bath in a quick “fire sale” of those assets all at once. Just as happened with Canadian energy companies six months ago, such endowment managers and even larger institutional investors with already-established goals to transition out of oil & gas may be seeing this as an opportunity to sell high.
Secondly, price spikes in a commodity sector may make it more attractive in the very near term, but it also highlights volatility in that sector, and for many institutional investors they’re not in the energy infrastructure sector to chase volatility. To overgeneralize, infrastructure investors are less prone to embrace volatility than other asset categories will. Fossil fuel infrastructure has always been seen as near-term volatile because of the merchant nature of most offtake (ie: they sell into commodity priced markets), and now are increasingly seen as risky in the long term as well, thanks to the climate change megatrend. Whereas renewable energy projects can often have firmer or at least more predictable costs and revenues, driving many conservative investors to shift their infrastructure allocations into these areas instead.
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