America's Energy: Calumet Under Scrutiny

The energy sector, particularly oil, is the backbone of the global and American economy. The significance of this sector for the United States has dramatically changed in recent years. According to the U.S. Energy Information Administration, the year 2020 was historic for the American energy industry: for the first time since 1949, America became a net exporter of oil. In the same year, the USA imported 7.86 million barrels of oil per day, which was 640,000 barrels less than the daily exports of 8.50 million barrels. This growth continued, leading to a record surplus of 1.26 million barrels per day in 2022. At the center of this transformation is the U.S. energy industry, which produced 20.08 million barrels of oil daily in 2022, almost enough to cover the American consumption of 20.28 million barrels. However, America remains dependent on oil imports because U.S. shale, a sweet oil with low sulfur content, is chemically different from the sour oil imported from the Middle East and cannot be processed in the same quantity. This raises the question: Is loosening regulations and increasing drilling activity actually beneficial for the oil sector? In the short term, companies with high production capacity benefit from fewer regulations. However, in the long term, an oversupply of oil can drive prices down, which is not necessarily in the producers' interest. Here, the new goals of the Biden administration come into play, which aim to have at least half of all new cars on the road be electric vehicles by 2030. This goal is supported by initiatives such as the Inflation Reduction Act (IRA), which allocates $500 billion for clean energy technologies and other sectors. A look at energy stocks shows that their performance is heavily dependent on energy prices. During the Russian invasion of Ukraine, oil prices soared to $134 per barrel. This caused State Street’s energy ETF to rise by 54%. However, sentiment is less optimistic for 2024. Brent crude oil currently trades at around $78.5 per barrel and is estimated to trade at about $89 per barrel in the second half of the year. Added to this is the uncertainty of the Chinese economy, which could lead to a potential decline in global oil consumption. In this context, the question arises as to which American energy stocks are worthwhile according to analyst recommendations. By analyzing and weighting stocks based on their market capitalization and the number of shares acquired by hedge funds, we were able to identify the best energy stocks. An interesting player in this market is Calumet, a specialty company focused on renewable petroleum products and hydrogen. Despite significant investments of over $500 million in a renewable fuels refinery, Calumet's financial situation remains strained with $1.8 billion in debt and a tight current ratio of 0.99. Overall, Calumet ranks 6th on our list of the best American energy stocks. Nevertheless, we believe AI stocks offer greater potential for higher returns, and in a shorter time. For investors looking for promising AI stocks, our report on the most affordable AI stocks trading at less than five times their earnings might be of interest.