Goldman’s Jeff Currie: It’s a Commodities Supercycle, and We Still Haven’t Hit Max Pain

Fossil Fuels

The investment landscape for fossil fuels is fraught with challenges, as Jeff Currie explains. He highlights that returns in the sector have been abysmal, with oil prices even turning negative last year, creating a hostile environment for investors 1. Currie notes that ESG constraints are not the primary issue; rather, it's the poor financial performance that deters investment. He states, "Show me a great company with fantastic returns that's not getting capital due to ESG" 1. Meanwhile, aluminum prices have surged due to China's production cuts, driven by carbon budget constraints, illustrating the complex interplay between energy conservation and commodity markets 2.

   

Green Energy

The push for green energy is reshaping global energy markets, with significant disruptions in China. Currie compares China's current situation to the US in the 1970s, highlighting the shuttering of toxic coal mines and the subsequent energy shortages 3. This has led to increased demand for alternative energy sources like LNG and oil, exacerbating global supply constraints. Currie emphasizes the need for effective ESG policies, arguing that divestment alone won't solve energy issues. He warns, "India should not have three days of coal stocks left right now," underscoring the precariousness of current energy strategies 4.