Warren Buffett Sees Natural Gas Sticking Around for a Long Time - Bloomberg

Warren Buffett Sees Natural Gas Sticking Around for a Long Time - Bloomberg:

Warren Buffett’s $9.7 billion bet on natural gas looks even more contrarian today.

As Democrat Joe Biden unveils a staggering $2 trillion clean-energy plan—the most ambitious climate package ever offered by a presumptive presidential nominee—Buffett’s recent deal to buy Dominion Energy Inc.’s natural gas assets is a stark sign he’s expecting that the market’s shift away from fossil fuels won’t happen overnight.

The deal is “a bet that the future doesn’t come as fast as some people think,” said Jim Shanahan, an analyst who covers Buffett’s Berkshire Hathaway Inc. at Edward Jones. “I think they want to be bigger in renewables, but it’s going to take time. In the meantime, they have to be able to provide power generation to their customers.”

On its face, Berkshire’s deal last week to buy gas assets including some 7,700 miles of pipelines seems risky even for a contrarian like Buffett. The energy industry is under increasing pressure from public officials and investors to abandon coal and natural gas. The use of natural gas for power generation, once hailed as a cleaner, cheaper alternative to coal, is now projected to drop to 36% in 2021 from 41% this year. In the last decade, prices for solar and onshore wind power have plummeted 90% and 70% respectively per megawatt-hour, according to BloombergNEF. Renewables now supply 20% of Americans’ power needs, up from 13% five years ago, according to the U.S. Energy Information Administration.