In 2013 Suncor Energy Incorporated was given a boost of confidence when Berkshire Hathaway made an initial investment in the company. Suncor is one of Canada’s giant oil sands company.
In 2015 Warren Buffet gave Berkshire Hathaway his holding company approval to make another investment in the company. Then in 2016, it seemed that Berkshire Hathaway changed its mind and got out of Suncor. While Berkshire did not give a reason it has people wondering what is wrong with Suncor.
Some of the possible reasons for Berkshire’s exit are;
1. The bickering of OPEC,
2. Pipeline problems.
3. The long-term demand for oil,
4. Investors and what should they do and,
5. What is the bottom line?
When oil went from $30.00 to $50.00 per barrel in 2016 the market believed that the major players in oil supply were going to agree to freeze output. Yet Saudi Arabia was reporting record production.
In Canada oil companies waiting for a major pipeline to be built that connects Alberta with the coast. This would mean that they could international prices for their oil. The pipeline died but it could be back on the table during Trump’s reign as the president. Even if he did approve the pipeline it would not mean that Canada would get favorable terms.
Berkshire could be thinking that with green energy being the main focus that investing in Suncor an oil company could cause them to lose money.