1. Energy, writ large is a capital intensive, commodity business. One companies oil, gas, electricity is indistinguishable from another. But all have to invest massive amounts of capital to create it. That makes it chronically prone to low margins and low returns on capital.

2. The one exception is on the upstream side. If you have drilling rights to a given oil/gas/coal play your costs are set by geology but your revenue is set by commodity markets. If you can produce for $20, you make a lot of money when the market is paying $60.

3. e.g., its the only part of the value chain where you don't get squeezed by commodity price pressure on both ends. But everything downstream of that is a crappy investment. No one earns a big return on refineries, pipelines or gas stations (other than the markup on beef jerky, that is).

4. That's no knock on the O&G players. They have enormous technical skills throughout the value chain. They just haven't had to figure out how to monetize those skills bc the upstream side covers the rest of the business.

5. And by the way - the pure clean energy players have the same challenge. The only relative advantage they have is that without the upstream end to cover up, they've had to be scrappier and more nimble as commodity markets bounce in and out of favor.

6. But that's created it's own challenges as clean energy businesses that survive morph their business models all the time. Sometimes they're developers, sometimes their pureplay operators, some times they are the occasional side hustle of a regulated monopoly, etc.

7. To be clear, these are good problems. As I say all the time, clean energy is cheap energy. It is the cheapness that poses a threat to dirty energy. But it also makes it hard to sustain consistent capital, and consistent strategy.

8. Great fortunes will be made by the first business that figures out how to crack that nut. And for us legislators and regulators, our task is to figure out how to design markets that consistently reward people who produce cheap commodities while still ensuring savings pass through to consumers.

9. But I think it is safe to predict, after 20+ years of false starts (remember "Beyond Petroleum"?) that the O&G majors, despite all their technical know how are the least likely to be that business. They're trapped in the Innovators Dilemma and have no way out. /fin