Energy Reliability & Security to Remain a Major Investment Theme in 2023

In January 2020 President Biden entered office and declared he was going to change the energy policy in America at a record pace. We were going green baby and Biden was the man to take us there in record time. Then a few months later in March of 2020 when the markets thought the world was coming to an end because of Covid-19 and the markets lost more than 50% of its value in a matter of weeks, one economic sector caught our eye. The energy sector has long been a bellwether but had not performed well in the QE era (from 2009 to 2019). At the peak of the selloff in March 2020 oil spot price went negative, and they were literally giving oil away, (Oil traded below zero for a few hours) we knew this was a dislocated market and we started to overweight energy in our portfolios at that time.

Fast forward, today we are overweighted energy in our portfolios and the performance has been great. Energy is our top holding and will probably continue as our top holding Into 2023. In November, the energy sector has had a difficult month in terms of both absolute and relative performance. This makes sense to the extent to which investors are increasingly worried about a recession next year. Still, we believe there are a variety of structural forces that should keep a bid in both the price of the underlying commodities and the prices of the shares of companies that represent the sector. They include: the emergence of the ESG movement; an American administration hostile to the fossil fuel industry; a global political elite insistent on the adoption of the rapid use of renewable energy sources regardless of cost; the end of negative real interest rates; growing geopolitical instability; and a growing desire on the part of major oil companies to return money to shareholders rather than punch holes. These circumstances have led to two consecutive annual gains of 50% for the S&P 500 Energy sector. To the extent to which there remain roughly one billion people on the planet without reliable access to electricity, it is not difficult to understand how demand for crude oil and liquid fuels remains somewhat inelastic. In our opinion, continued capital discipline will determine whether the sector will continue to outperform. We have not yet seen any signs to the contrary.


Total World Crude Oil & Liquid Fuels Consumption




1) The share of personal consumption on energy goods and services had risen rapidly to 5.1% from all-time lows of 3.3% before falling back to 4.5% more recently. This relationship is worth watching for a country that is so dependent upon consumer spending. In the 1970s, energy garnered a much larger share of consumption topping out at more than 9.0%.


Personal Consumption: Energy Goods & Services as a Percent of Total Consumption


2) Oil expenditures are on pace to exceed the post financial crisis high which occurred in 2013. While oil prices have fallen from their 2022 highs, the average daily price in 2022 remains elevated at $95. Demand in the U.S. is nearly back to 2019 levels.


3) U.S. stocks of crude oil sit roughly 275 million barrels below their 10-year average. The size of our Strategic Petroleum Reserve is at its lowest level since 1984. Since President Biden took office, the SPR has declined by roughly 40% from 640 million barrels to 390 million barrels.


U.S. Stocks of Crude Oil Including SPR


4) U.S. field production of crude oil as of the end of September was 12.3 million barrels per day. Since the bottom in May of 2020, production has slowly increased over the past two years. At 12.3 mbd, field production is still below the pre-Covid peak levels of 13 mbd produced at the end of 2019.


U.S. Field Production of Crude Oil (mb/d) vs. Year-Over-Year Percent Change in Production


5) Over the last twelve months, the S&P 500 Energy sector has produced $193 billion in profits. Quarterly profit levels are likely to decline given current prices in the underlying commodities, however. Still, the consensus believes the sector will earn between $40-50 billion each quarter for 2023.


S&P 500 Energy Sector Quarterly Profits (In Billions)


6) S&P 500 energy sector capex is about 75% below the levels seen at the height of the shale boom. Based on the trailing twelve-month data, energy companies have spent roughly $60bn despite spending more than $100bn the last time oil prices were at comparable levels. The uptick seen over the last two quarters is largely attributed to inflation rather than new projects.


S&P 500 Energy Trailing 12 Month Capex in Billions vs. WTI Crude Oil in Cost Per Barrel


7) Prior to 2020, simply not owning the Energy and Basic Materials sectors was a source of outperformance over the trailing 3, 5, 7, and 10 years. We believe this dynamic will be difficult to repeat given the current difficulties in obtaining energy project permits and the demand for commodities most often used in Electric Vehicles.


S&P 500 vs. Ex. Energy vs. 500 Ex. Energy & Materials


8) During the Biden Administration there have only been 130k Federal acres leased for oil & gas production. Not since Harry Truman has a president leased fewer acres of federal land or offshore rights to develop oil and gas resources. (Offshore drilling was in its infancy during the Truman years.)


Federal Acres Leased for Oil-and-Gas Production (First 19 Months of Administration)


9) A simple comparison of each sector’s contribution to the earnings of the S&P 500 and its respective market cap weight in the Index indicates that the Energy sector currently provides investors with the greatest earnings power. The sector’s earnings weight is more than double its weight in the overall index.


S&P 500 Earnings Weight & Sector Weight Differential


10) Energy is now 4.9% of the market cap of the S&P 500, which remains less than half of its long-term average of 11% since the 1970s.


Energy Sector's Weight in the S&P 500 by Percent

Source: Strategas

Market & Index Changes

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance or specific investments. Data provided by Refinitiv. 



Fortem Financial
(760) 206-8500


Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017, 2018 Five Star Wealth Managers!

Awards and recognitions by unaffiliated rating services, companies, and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Fortem is engaged, or continues to be engaged, to provide investment advisory services; nor should they be construed as a current or past endorsement of Fortem or its representatives by any of its clients. Rankings published by magazines and others are generally based on information prepared and/or submitted by the recognized advisor. Awards may not be indicative of one client’s experience or of the Firm’s future performance. Neither Fortem nor the recognized advisor has paid a fee for inclusion on a list, nor purchased any additional material from the award provider. The criteria for each award is listed below:

Five Star Professional Disclosure:
The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided. Additional information about this award is available at:
Fortem Financial 2016. All rights reserved.

Data Sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/ Market Data (oil spot price, WTI Cushing, OK); (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.

Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. The opinions expressed are solely those of the author, and do not represent those of Fortem Financial, LLC or any of its affiliates. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful. Forward looking statements are based on current expectations and assumptions, the economy, and future conditions. As such, forward-looking statements are subject to inherent uncertainty, risks, and changes in circumstance that are difficult to predict. Actual results may differ materially from the anticipated outcomes. Carefully consider investment objectives, risk factors and charges and expenses before investing. Fortem Financial is a registered investment adviser with the SEC. Advisory services are offered through Fortem Financial.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighed index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

Fortem Financial

Recent Posts


Fortem Financial Group, LLC, has adopted this policy with recognition that protecting the privacy and security of the non-public personal information we obtain about our customers is an important responsibility.

All financial companies choose how they share your non-public personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your non-public personal information. Even when you are no longer our customer, we will only share your non-public personal information as described in this notice. So, please read this notice carefully to understand what we do.

The types of non-public personal information we collect and share depend on the product or service you have with us. This information can include items such as your Social Security number and income, your account balances and transaction history, and your investment experience and account transactions.

We collect your non-public personal information in a variety of ways. For example, we obtain your non-public personal information when you open an account or give us your income information, tell us about your portfolio or deposit money, or enter into an investment advisory contract. We also collect your non-public personal information from other companies. For example, from the custodians who hold your account assets.

All financial companies need to share customer’s non-public personal information to run their everyday business. Below, we describe the reasons we can share your non-public personal information and whether you can limit this sharing.

We share your non-public personal information for our everyday business purposes such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, report to credit bureaus, to protect the confidentiality or security of your records, or as permitted by law. We may also share your non-public personal information for our own firm’s marketing purposes; so that we can offer our products and services to you.

Federal law gives you the right to limit only sharing non-public personal information about your credit worthiness for our affiliates’ everyday business purposes; sharing non-public personal information about you with our affiliates to market to you; and sharing non-public personal information with non-affiliates to market to you.

We don’t share non-public personal information about your creditworthiness with our affiliates for their everyday business purposes. We don’t share your non-public personal information with our affiliates to market to you. We don’t share your non-public personal information with non-affiliates to market to you. We also don’t share your non-public personal information for joint marketing with other financial companies. State laws and individual companies may give you additional rights to limit sharing.

We share non-public personal information with our parent company affiliate, Focus Financial Partners, Inc, for its internal and external auditing purposes. We also share your non-public personal information with a non-affiliate for the purpose of aggregating it and providing summary information based on this data to our parent company, Focus Financial Partners, Inc.

To protect your non-public personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.

Our policy about obtaining and disclosing non-public personal information may change from time to time. We will provide you notice of any material change to this policy before we implement the change.

If you have questions please call us at 760-206-8500 or go to our website at


Fortem Financial Group, LLC ("Fortem Financial" or the "Firm") is a federally registered investment adviser with offices in California. Fortem Financial and its representatives are in compliance with the current registration and notice filing requirements imposed upon federally registered investment advisers by those states in which Fortem Financial maintains clients. Fortem Financial may only transact business in those states in which it is notice filed, or qualifies for an exemption or exclusion from notice filing requirements.

This website is limited to the dissemination of general information regarding the Firm's investment advisory services offered to U.S. residents residing in states where providing such information is not prohibited by applicable law. Accordingly, the publication of Fortem Financial' website on the Internet should not be construed by any consumer and/or prospective client as a solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment, tax or legal advice. Furthermore, the information resulting from the use of any tools or other information on this website should not be construed, in any manner whatsoever, as the receipt of, or a substitute for, personalized individual advice from Fortem Financial. Any subsequent direct communication from Fortem Financial with a prospective client will be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. Fortem Financial does not make any representations as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to this website or incorporated herein, and takes no responsibility therefore. All such information is provided for convenience purposes only and all users thereof should be guided accordingly.

All statements and opinions included on this website are subject to change as economic and market conditions dictate, and do not necessarily represent the views of Fortem Financial or any of their respective affiliates. Past performance may not be indicative of future results and there can be no assurance that any views, outlooks, projections or forward-looking statements will come to pass. Investing involves risk, including the potential loss of principal, and the profitability of any particular investment strategy or product cannot be guaranteed.

Any rating referenced herein may not be representative of any one client's experience. Further, the Firm's receipt of any rating is not indicative of the Firm's future performance. The Charles E. Merrill Circle of Excellence award is granted by Merrill Lynch for outstanding client service and satisfaction. The award is granted based on annual criteria established by Merrill Lynch for its top decile advisors. The Barron's Top 1,200 Financial Advisors rating of the top financial advisors in the United States is based on data provided by participating firms. The following factors are included in the rankings: assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. Investment performance is not an explicit component. The Five Star Professional award is granted by Five Star Professional and recognizes service professionals who provide quality services to their clients based on data provided by participating firms. The award is granted based on the following ten objective eligibility and evaluation criteria: credentialed as an investment advisory representative (IAR) or a registered investment advisor; actively employed as a credentialed professional in the financial services industry for a minimum of five years; favorable regulatory and complaint history review; fulfilled their firm review based on internal firm standards; accepting new clients; one-year client retention rate; five-year client retention rate; non-institutionalized discretionary and/or non-discretionary client assets administered; number of client households served; and educational and professional designations. Feedback from consumer surveys will augment a regulatory history review. Firms have the option to provide input on award candidates from their firm, regardless of the nomination source. The Palm Springs Life's "40 Under 40" Rising Young Professionals to Watch in the Coachella Valley is based upon nominations from the local business community and selected by the staff of Palm Springs Life.

For information pertaining to the registration status of Fortem Financial, please refer to the Investment Adviser Public Disclosure website, operated by the U.S. Securities and Exchange Commission, at, which contains the most recent versions of the Firm's Form ADV disclosure documents.