Issue #66, Volume #3Exactly How Buffett Was Wrong About OilBy Porter Stansberry • Wednesday 29, April 2026View in browser

Inside today’s Daily Journal…

• Essay: Exactly How Buffett Was Wrong About Oil
• Tech high concentration of the market
• High-valued tech companies report earnings tonight
• Trump digs in… oil price rises
• Chart Of The Day… Nvidia
• Today’s Mailbag

The Dumbest Thing Warren Ever Did With Berkshire’s Money

Editor’s note: On May 16, 2025, Porter released The Better Than Berkshire Index, designed to show Complete Investor subscribers that they can outperform Warren Buffett’s Berkshire Hathaway. Starting with Monday’s Daily Journal and over the next two weeks, using the insights he has learned from Buffett himself over the decades, Porter will explain exactly what’s gone wrong with Berkshire and how investors can build a portfolio that can do better…

The Berkshire Hathaway annual shareholders meeting is this weekend.

And since no one at the meeting is going to ask any intelligent questions (everyone is there to slurp Warren Buffett in public), I thought I’d offer you more insight into what journalists and shareholders should be asking The Chairman.

On Monday, I shared some insights into how badly Berkshire’s core insurance business (GEICO) was performing compared to its peers (Progressive). But today (and tomorrow) I want to discuss a much bigger problem, a problem that could easily lead to total capital losses in excess of $100 billion – losses that, even for Berkshire, would threaten the financial stability of the entire enterprise.

The media never tells the truth about Buffett or the late Berkshire vice chair Charlie Munger. They are the only two people in finance who have a better reputation than squirrels. (Squirrels are just rats with good PR.) And here’s something every investor in Berkshire ought to know: Warren Buffett and Charlie Munger believed in Peak Oil.

In the early 2000s, the two main heads of Berkshire Hathaway believed that global crude oil production had peaked, or was about to peak, and that the long-run trajectory of oil prices was up and to the right indefinitely. They said so, on the record, in interviews and at shareholder meetings for at least a decade. Their largest oil-equity investment of the period – the $7 billion ConocoPhillips (COP) position acquired in 2008 – was made on this thesis, at the all-time-high oil price, and was disclosed by Buffett himself, the following February, as a major mistake.

Their Peak Oil conclusion was not a passing impression. It was their operating worldview, and it animated Berkshire Hathaway’s energy strategy from approximately 2000 through the middle of the following decade. In June 2008, with West Texas Intermediate crude trading near $140 per barrel, Buffett appeared on CNBC and was asked why oil prices were running so hot.

He answered:

We have been sticking straws in the ground now since Titusville in 1850 or something… We have found a lot of the oil that’s going to be found… And if we’re going to use 85 million barrels per day now… and the rest of the world is going to increase its demand… we’re going to have a tough time maintaining production that satisfies that demand at this price… Oil is finite… If you look at our production versus 30 years ago, it’s way down. Most fields are depleting at a pretty good rate… Who knows what the equilibrium price will be?

That is the Peak Oil thesis stated in plain English. The world has found most of the oil it is ever going to find. Demand is climbing. Supply will not keep pace. Prices have to go up. Or so the theory goes.

Buffett bought ConocoPhillips on this thesis in the summer and fall of 2008. The peak position, disclosed in the 2008 annual letter, was 84.9 million shares acquired at a cost of approximately $7.0 billion – an average cost basis of around $80 per share. By the close of 2008, COP traded near $52, and the position was carried at $4.4 billion. The paper loss at the snapshot was $2.6 billion. The eventual realized loss, after Berkshire began unwinding the position in early 2009 to harvest tax-loss offsets against capital gains elsewhere in the portfolio, totaled at least $1.5 billion of cash money, plus the opportunity cost of the rest of the position never reaching its cost basis.

Buffett explained it in his 2008 letter:

I told you in an earlier part of this report that last year I made a major mistake of commission (and maybe more; this one sticks out). Without urging from Charlie or anyone else, I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak. I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year. I still believe the odds are good that oil sells far higher in the future than the current $40–$50 price. But so far I have been dead wrong. Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars.

Munger held the same views about Peak Oil and stated them even more bluntly.

At the 2009 Wesco Financial annual meeting – the small holding company that he ran inside the Berkshire family – he was asked about energy and the oil market and replied:

Whether the peak is five years from now or last year I don’t know, but we are somewhere near peak oil production. Oil, I think, will get more and more expensive.

A few years later, at a conference of the Committee of 100, the U.S.-China relations forum, Munger delivered the speech that became the definitive Peak Oil document of his career. The audio was transcribed by Shane Parrish at Farnam Street and published in July 2013.

The relevant passages from Munger’s remarks:

Oil and gas are absolutely certain to become incredibly short and very high priced. And of course the United States has a problem and China has a worse problem… Imported oil is not your enemy. It’s your friend. Every barrel that you use up that comes from somebody else is a barrel of your precious oil which you’re going to need to feed your people and maintain your civilization… Running out of hydrocarbons is like running out of civilization. All this trade, all these drugs, fertilizers, fungicides… they all come from hydrocarbons. And it is not at all clear that there is any substitute. When the hydrocarbons are gone, I don’t think the chemists will be able to simply mix up a vat and there will be more hydrocarbons.

By the time Munger gave that speech, American crude oil production had already begun the most dramatic expansion in 70 years.

The hydraulic-fracturing revolution in the Bakken, Eagle Ford, and Permian basins had been adding nearly 1 million barrels per day (b/d) of new supply every 12 months for several years running. The very phenomenon Munger said was certain not to occur – the appearance of substantial new hydrocarbon supply from a previously inaccessible source – was occurring – in real time, in his country, in volumes that were already visible in U.S. Energy Information Administration monthly statistics he or any analyst at Berkshire could have pulled in five minutes.

Munger didn’t care about these facts. His beliefs about Peak Oil were a crusade.

Four years after his Committee of 100 speech, at the February 2017 Daily Journal (DJC) annual meeting, after the Permian had already passed 5 million b/d, after the first U.S. liquefied natural gas (“LNG”) cargo had already left Sabine Pass, after the United States was about to become the largest crude-oil producer in the world for the first time since 1973, a shareholder asked him whether American natural-gas exploration and production was a good business.

He replied, on camera:

I have a different feeling about the energy business than practically anybody else in America. I wish we weren’t producing all this natural gas. I would be delighted to have the condensate that’s coming out of our shale deposits and natural gas just lie there untapped for decades in the future and pay extra a bunch of Arabs to use up their oil… I regard our oil and gas reserves just as chemical feedstocks, they’re essential in civilization – leave aside their energy content. I’d be delighted to use them up more slowly. By the way, I’m sure I’m right and the other 99% of the people are wrong.

“I’m sure I’m right and the other 99% of the people are wrong.” That is, in 15 words, what was about to be Berkshire shareholders’ largest loss in the company’s history.

In 2008, the year Buffett bought ConocoPhillips at the top, the United States produced an annual average of 5 million barrels of crude oil per day. That was the lowest annual production figure since 1946.

The production trend line in the U.S. had been negative, on a multi-decade smoothed basis, for 36 years. Every government and private analyst then forecasting U.S. production assumed continued decline. Buffett’s comment about “sticking straws in the ground now since Titusville” was, on the data set he was looking at, defensible.

In 2025, the United States produced an annual average of 13.60 million barrels of crude oil per day. That is a new all-time annual record, set 17 years after the trough, representing growth of 172% from the level Buffett observed when he bought shares of ConocoPhillips.

Including natural-gas liquids, the U.S. total-liquids figure for 2025 approaches 20 million b/d. The country that was “running out of oil” in 2008 is, in 2026, the largest hydrocarbon producer in human history.

The single largest contributor to that turnaround is the Permian Basin in West Texas and southeastern New Mexico, an oil province that had been considered mature and substantially depleted as recently as 2010. Permian crude production, which was roughly 0.8 million b/d in 2010, was 6.6 million b/d in 2025. The Permian Basin alone now accounts for 48% of all U.S. crude oil production, and it accounted for 80% of the entire U.S. production growth in 2025.

The technology that unlocked the Permian was not, despite the popular framing, a single innovation. It was a sustained 20-year compounding of three engineering disciplines.

• The first was horizontal drilling, perfected for tight-formation reservoirs by Mitchell Energy in the Barnett Shale of north Texas in the late 1990s
• The second was multi-stage hydraulic fracturing, the controlled high-pressure injection of fluid and proppant to fracture the source rock and create flow paths to the wellbore
• The third was three-dimensional seismic imaging powerful enough to map the geology of an unconventional reservoir at the resolution required to land a horizontal well in a target zone two miles below the surface

The combination of the three reduced the marginal cost of producing a barrel from a Permian tight-oil well from roughly $90 in 2010 to $61 in 2025.

Munger’s position was particularly confusing to me. I couldn’t understand why he’d believe things that were patently false and that had been proven false for years.

Meanwhile, Berkshire Hathaway Energy is the only Berkshire subsidiary whose capital-allocation strategy was explicitly premised on the worldview that the United States was running out of cheap, accessible hydrocarbons. The investment only makes sense if the country must fund, at utility-rate-based expense, a multi-decade build-out of wind, solar, and high-voltage transmission infrastructure to replace cheap, abundant, hydrocarbon energy.

I am virtually certain that there’s not a single Berkshire Hathaway shareholder who realizes how much Berkshire has at risk in these investments… Buffett has never made money in energy. And its track record is about to become meaningfully and materially worse.

In tomorrow’s Journal, I will detail Berkshire Hathaway’s energy investments and explain the extent of the potential damage to Berkshire and its shareholders.

Tell me what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

Porter Stansberry
Stevenson, Maryland

A Message From Shannon Stansberry

Here’s why Porter and I flew 3,300 miles to investigate this financial story for you

Click here to hear Shannon’s message

3 Things To Know Before We Go…

1. Big tech earnings on deck. Alphabet (GOOG), Amazon (AMZN), Meta (META), and Microsoft (MSFT) all report earnings after today’s market close, followed by Apple (AAPL) tomorrow. Each company, along with others like Nvidia (NVDA) and Micron (MU), are part of the basket of artificial intelligence (“AI”) stocks that now represent 41% of the S&P 500 index. The market has rarely been this concentrated on a single investment theme – as shown in the chart above.

2. The $3.4 trillion time bomb in the Treasury market. Hedge fund repo borrowing (short-term borrowing of shares) has hit a record $3.4 trillion – tripling since 2019 and up 154% since 2022. Total hedge fund leverage now stands at over $7 trillion – the highest in history, now owning 8% of the entire $31 trillion U.S. Treasury market. Any spike in repo rates, jump in yields, or geopolitical shock could force a cascading unwind.

3. Oil approaches a post-war high as Trump digs in. Brent crude oil traded above $116 per barrel this morning – less than $4 below its March 9 peak of $120 – after the Wall Street Journal reported that President Trump has instructed aides to prepare for a prolonged blockade of Iranian ports. Trump himself posted at 4 am ET, telling Iran to “get smart soon,” above an image of himself holding a rifle in front of bombs exploding, captioned “NO MORE MR. NICE GUY!”

Chart Of The Day… Nvidia: Bigger Than The Third-Largest Stock Market

Complete Investor recommendationNvidia (NVDA) has reached a historic milestone – accounting for 4.96% of the MSCI All Country World Index, a weight that now officially eclipses the nation of Japan’s 4.94% share of the same index. Now, nearly five cents of every dollar entering global passive index funds is automatically allocated to Nvidia. Its valuation exceeds the annual GDP of several G7 nations. Shares are up 48% since we recommended them in June 2025.

Mailbag

“UAE To Leave OPEC In Blow To Oil Group”

Bill K. writes:

I saw this headline and didn’t consider what impact this would have on OPEC, but rather, immediately noted another major blow to the petrodollar and continued shift away from U.S. dominance.

BTW, currently reading2029: The End Of America. It’s all coming together with a variety of your Daily Journal material.

Thanks for all you do.

“Coming T-Bill Collapse”

Wayne Y. writes:

I appreciate Marty Fridson’s clear and concise description of what is happening in the T-bill market. Would it be possible for him to do a follow-up article on how we as investors can prepare for this?

“The Coming T-Bill Collapse”

Ricky W. writes:

Enjoyed Marty’s article on the exposed U.S. Treasury funding. Seems as though there’s another verse or two to come?

Many thanks.

“Shannon’s Recent Article”

Daniel G. writes:

I very much enjoyed Shannon’s recent article on dual careers in marriage. And I really do agree with so much that she says based on my life experience. The one item I dispute though is her claim of cost savings because the couple does not require a second vehicle, because the spouse does not work outside the home. Who takes the kids to school, who takes them to extracurricular activities, who does the grocery shopping? At least in most parts of this country, I can’t imagine how the non-working spouse accomplishes what it takes to run an efficient household without a vehicle.

The second item is more subjective. We are about to celebrate our 50^thanniversary. My wife is beautiful, strong, independent, smart, and accomplished. She has worked outside our home at times, she has stayed at home at times with our kids, and she stayed home for a time to care for her elderly parents. We have been truly blessed to allow her to do all this. However, I don’t know how other men think about this, but I have felt truly blessed because I know she does not need me. I have the freedom and joy to know we are about to celebrate our 50^thbecause we love and want each other. Not that we need each other. Why is it that accomplished women with careers have a higher divorce rate? Because they can!

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Porter & Co. Market Snapshot

PriceYesterday’s ReturnYear-to-Date ReturnS&P 500 Index$7,138.80-0.49%4.7%Gold per ounce$4,596.75-1.89%5.4%Bitcoin$76,465.00-0.65%-11.9%Oil (West Texas Intermediate) per barrel$99.933.37%80.9%Berkshire Hathaway (BRK)$717,550.001.26%-4.9%Porter’s Permanent Portfolio–0.12%-0.9%The Better Than Berkshire Index–0.16%1.5%Total ReturnAnnual ReturnPorter & Co’s Top Ranked*32.0%14.2%YieldYesterday’s ChangeChange
Year-to-DateU.S Treasury 30 – Year Yield4.94%-1 bps9 bps

Prices as of 4:00 pm ET April 28, 2026

bps = basis points (or 0.01%)

*A Complete Investor risk rating of 1 is defined as a “low risk, high allocation” security, while positions rated closer to a 5 are higher risk. Porter & Co.’s top-ranked positions include those rated either 1 or 2 in Complete Investor.

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