During over seven hundred and fifty thousand people using Chezy's to build long term wealth and vest with no minimum across the US, Australian and New Zealand share markets. Download the cheesys app to get started. You're listening to a Charsy's podcast continuing on with the election. If we just dig into the energy sectors, one that's coming up a bit like.
Can you talk about about you.
Know, what's happening there or what's going on and what impact that could have.
Yeah, for sure.
So there's a couple things going with energy and the kind of it's a bit of a mess, so you're right to kind of call it out. In particular, we've got, on one hand, both by the energy by the ways, it's really big, a morphous thing because it kind of includes lithium for batteries and coal for power stations and oil for general use largely transportation other things.
It's going to go energy broader, So what is that.
So on one hand, you've got the government promising their Future Made in Australia Fund which as part of that the invest in local solar panel manufacturing. Now that's energy, and the SENSUS Renewable Energy, So that that's kind of important. You've got the opposition who are promisely take money out of things like the Clean Energy Finance Corporation, which potentially reduced the investment in renewables. The opposition also saying they're going to have a policy to build at least seven
nuclear power plants around the country for power generation. That's kind of going on. You've got the energy subsidies that are currently on power bills from the current government.
They're probably to extend that for another six months.
The opposition saying well they will do it with fuel instead, will reduce the fuel exercise. That means more oil and gas being sold in Australia. So there's lots of those pieces that are really moving all over the place. I didn't touch on lithium. I will touch on lithium very quickly. I think there's some lessons for lithium so on you.
And this is not the end of the story, by the way, but I will I will talked to the story to date, and that was people went, hey, lithium equal EV's equals batteries.
Batteries equals lithium. Therefore lithium is good if.
EV sales grow, right, that's not actually wrong. That's entirely logical from a demand perspective. What lots of people miss, and I'll get back to why I'm talking about this with energy more broadly, but lithium in particular matters as well is what people didn't.
The factor in was the supply response.
So we had a boom and e boom in batteries, boom and home batteries as mentioned that before, and then an even bigger boom in supply.
So we know.
You know, there's no iron laws in economics, but one of the closest to an iron law is the law of supply and demand. If demand goes up, prices go up at the given level of supply. If demand goes up and supply goes up more, the curves shift and I won't go through the boring economics of it, and price actually can come down. So even though EV sales are boomed, batteries are boomed and again I'm all for it, right, but supplies grown by more, so the price is absolutely created.
So people who said and again think about thematically, I'm by lithium because evs are going to be big.
There's only half the story, and that's why it's.
Really important back to energy more broadly, the other problem with half the story we've seen go back to unfortunately going to go back to tariffs for a second.
The world is freaked out about the potential of a US and all global recession.
We know when there's economic downturns, oil prices or volumes tend to fall because oil tends to power the global economy at leat until we fix that properly with renewables once and for all. But for now, at least oil powers the global economy. When there's fears of it downturned, guess what the oil price falls meaningfully. And so all we've actually seen as well as all this sort of
stuff is in the energy space. Petrol prices, diesel prices are coming down because the oil price is coming down because the world's no longer sure we can use as much as we used to if things do get tougher.
And so you ask at the energy sector.
My broadest fiel and energy, honestly, mate, is trying to predict energy prices a really really, really really tough game because you've got to predict the supply and the demand. And again, if you don't believe me, go back three and a half weeks and say, who predicted the oil price would fall because Trump would unveil these massive so called reciprocal tariffs, you know, horribly disproportioned to anything else
going on. And the oil price tanks, I mean maybe three people predicted it, and I'll say predicted and again the air quotes because they've probably predicted oil price falling in Outher twenty five times and it hasn't happened.
But you had to kind of have a.
View on that, have a view on the price of woodside patroleum for examples, that energy, or Santos or something else.
Because no matter what they do themselves, great production.
High no lost time, injuries, great scale, do all the things they can do correctly, but every morning you've got to look outside, you open open the blinds and go, oh, what's the price today, and kind of cringe as they check it.
They have no control over that.
And that's the biggest part by far, of any lithium, coal, oil gas.
Pick your energy source.
It's the global market price that termines your returns, far far, far more than then the company itself can do. And I'm yet to find anyone who can reliably predict the energy price to any reasonable degree to make it worth an investment. So there are local issues.
There are local implications for the energy sective for sure.
I just want people to kind of make sure they take the bigger picture, like the lithium supply and demand story.
Government policy is one small bit of it, and it's not a tiny bit.
Individual companies may get those government contracts for the future made in Australia.
There's other things that could happen.
Of course, nuclear power plants could be built and designed, and there's lots of possibles. The other thing, by the way, is if you're betting on government policy for an investment thesis, you're probably taking more risks than you know and probably more than you should.
I think investing involves for risk, you might lose the money you start with. We recommend talking to a licensed financial advisor. We also recommend breeding product disclosure documents before deciding to invest.