A dozen years ago I sat on the only all natural gas-powered motorcycle and I thought I saw the future. The late Aubrey McClendon, a pioneer in the natural gas field, had built it from the ground up as a prototype for the bridge fuel that he felt natural gas would become because it was plentiful and cleaner than diesel or gasoline.
Now Aubrey had his faults but when many thought our country was going to have to import natural gas he knew that we had it in abundance. He and our team went to Ohio to drill for oil and all we found was natural gas. Aubrey was confident that the motorcycle would be the beginning of the end of oil, though, because of the Marcellus, in Pennsylvania, the Utica in Ohio, where he had tapped into, and all the natural gas in Oklahoma, Louisiana and Texas.
It never happened and five years ago Aubrey was killed in an accident that many thought was suicide because the government had decided to prosecute him for antitrust. The dream died with him.
Fast forward to now. Monday the premier oil company ever since John D. Rockefeller created it, Exxon Mobil (XOM) , announced that it was adding Jeffrey Ubben, a brilliant investor, to its board, in order to put a powerful voice in the room to make Exxon more carbon free.
Exxon is the essence of gasoline. But when I look at what I can only call a very liberal board, one that I think believes in climate change, this is monumental and, more important, it says that Exxon knows that its gasoline days are numbered.
The combination of the money being given to electric vehicles, mostly because of the Tesla (TSLA) paradigm, and green hydrogen for long haul, at the behest of Plug Power (PLUG) , is too unassailable. The number of SPACs devoted to electric vehicles is extraordinary. The commitment of Ford (F) to go electric for the F-150 series, the plans of General Motors' (GM) Mary Barra to become the most important force in EV worldwide, the power of EV's hold over Europe say that it's when, not if, and Exxon's being wise to change up its board to challenge a company that currently thinks its lower methane profile than others and its algae energy alternative initiative may be enough to forestall the ESG mob. You can't lip service electric vehicles anymore.
So when is when. The oil companies tend to think that when is so far off that it's important to keep drilling and keep pumping and keep building out the current infrastructure. They are worried about depletion and the need to constantly come up with more oil.
But the EV movement is so powerful that you can see that the current 3% percentage of EV around the globe could double and double again in the next decade.
That's the challenge for the old paradigm and the joy of the new. This is the year where I think the ESG-oriented funds put pressure on the oil companies by suggesting that they shouldn't be owned. Oil has had a remarkable comeback in 2021, that's undeniable, but a lot of that is the Saudis restricting production and fear thar President Biden means business when it comes to climate change, which means supporting whatever rushes EV to the market.
McClendon had no timeframe when natural gas would take over.
The EV people do: 2030 is their year. They may be laughed at behind the scenes in the oil patch but when I see the money that's flowing to the alternatives I say that Aubrey's non-gasoline future is going to come true, except it's going to be based on non-combustible engines and it's going to happen so fast that Exxon's not trying to appease anyone, it's trying to adjust to the new world and it needs teachers in the boardroom and that's exactly what they got Monday.
Aside from Rockefeller, the founder of the antecedents of Exxon, rolling over in his grave, it's an amazing thing to see, an electric gold rush and it is happening far faster than anyone, including Aubrey would have ever believed even five years ago.
(Ford is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells F? Learn more now.)
