Amid coal bankruptcies, increasingly cost-efficient oil and gas companies, and a trade war underway, the energy sector has dropped to its lowest share of the S & P 500 in a long time. S & P 500 is an index of major companies that represent the U.S. stock market.
Energy's value has dropped steadily since the recession in 2008, with brief peaks around fracking, then drops again. Today, it's weighted below 5 percent of overall share within the market index. The technology and health care industries win out with 21.8 percent and 13.8 percent respectively.
The lower value does not mean the U.S. is consuming less energy or that it's somehow disappearing. Last year, the nation recorded its highest energy consumption ever. The decline does mean investment into traditional energy sources has decreased substantially. There are a few other factors too.
Carl Larry, Market Development Manager at Refinitiv, a financial services company, said oil and gas is just less attractive to investors these days. It used to be more volatile with huge ups and downs. Now, it's stabilized.
"I look at that oil company... I can invest in it today and make $5 [in] five to ten years from now." Compared to $50 or $100 dollars with the same buy-in several years ago, Larry said that's a "big difference and that's where we kind of see some them dropping off here."
Investment into renewables and energy efficiency have also had a hand in lower valuations for the largest, public energy companies. Investment into energy efficiency has steadily increased over the past decade, with little growth last year.
Larry said the current trade war with China isn't helping the energy sector in the short-term since that's where a lot of energy demand comes from.
"We see that there's an issue with getting that product out to Asia. And we can obviously see that, longer term, that's affected while these trade wars continue," Larry said.
Investment into the energy sector stabilized last year after several years of declines in coal and oil and gas investment. Wyoming is the eighth largest producer of natural gas and crude oil. It's also among seven states in the country set to double their wind capacity in the near-term.
