Something’s changed in the oil market: even the most stubborn of bulls are “losing their religion” and accepting that they may never again see the price back above $100 a barrel. Look at the dynamics of supply and demand and you can see why. On the supply side it’s all about shale. And on the demand side, all the bulls need to look at to chuck in the towel is Volvo. The firm announced last week that it intends to stop producing petrol and diesel engines from 2019 – they will all be hybrid or electric only.
This could also mark something of an inflexion point in the history of energy. While we wait to see if it does, a quick thought on what this news might prompt you to sell and to buy. For the former, think about Tesla. Earlier this year its market cap overtook those of both Ford and GM. It has fallen off, but is still “offensively overpriced” and now about to lose its “rarity value” to an efficient global brand, says Jonathan Allum of SMBC Nikko. For the latter, how about a great house on a really busy road? These sell for 20% to 40% less than those away from roads. Buy a nice foursquare Georgian rectory at the end of a pretty lane today, says buying agent Henry Pryor, and you’ll pay a good 30% more for it than its twin on an A road.
That makes perfect sense at the moment – busy roads are dangerous (emissions and collisions) and the noise can be miserable. But the rise of the electric car will get rid of both these problems.
The danger should go – the emissions will be confined to the power plant producing the electricity and the risk of accidents will fall with the concurrent rise of sensor technology. At the same time the noise will vanish. Once all that is done, the discount on houses on busy roads should all but disappear.
One to look at might be The Manor House in Fordwich near Canterbury (on sale with Humberts). It’s Grade II-listed, comes with a gorgeous garden and sits pleasingly close to the main road. Without the road it would be priced at about £1.1m. But it could be yours for a mere £895,000 (or possibly less). This is clearly a long-term bet – electric cars come with lots of short-term problems (battery strength, charging infrastructure). But if, like many of our readers, you just can’t be put off investing in residential property, I don’t think it’s a bad one. If you can, there are (as usual) other ideas aplenty in the magazine – see our cover story for a cheap French car firm that is also beginning to turn electric.
Finally, I wanted to let you know about a change here at MoneyWeek. We have been owned by US publishing firm Agora for many years, but have just been bought by Dennis Publishing – owner of The Week and The Week Junior. We are hugely grateful to Bill Bonner (owner of Agora) for supporting us in the past and we look forward enormously to working with Dennis in the future.