Does Iran War Show Ford And GM Turned In The Wrong Direction?

The war in Iran could be over in a week or drag on for months. Old tankers may start to make their way through the Strait of Hormuz next week. Or, they could be bottled up indefinitely.

The International Energy Agency may release 400 million barrels of oil to ease the terrifying chance the global supply could be cippled. The US might follow with a release from its Strategic Petroleum Reserve. This might help supply temporarily, but will traders look at it as panic?

If the direction of any one of these turns wrong, crude could head back above $100. Some analysts have put the number at $150. It has even been forecast that the figure could be $200.

The Iran war shows that the traditional sources of crude oil may not be as steady as has been assumed. Iran has fired weapons at other people’s oil assets.

And, then, there is natural gas. The Al-Zour LNG terminal, operated by KIPIC, is Kuwait’s primary, permanent, and world-largest capacity onshore LNG import terminal. It is vulnerable as well.

This year, GM’s (NYSE: GM | GM Price Prediction) shares have fallen 8% while the market is flat. Most of the sell-off has been in the last several days. Ford (NYSE: F) is down 7%, with the drop coming very recently.

GM and Ford made the right decision, at the time, to basically walk away from EVs. Each took a brutal writeoff. The broad-based theory was that only Chinese EV companies could build the world’s best EV, economically, and eventually flood the world with them. For the US, at least, the gas-powered car business was the better business.

EV “fuel” costs much less than gas-powered car fuel. When gas moves to $5 or more, the deal is even better. But even the Department of Energy gave another reason. Describing EV benefits, the department said of EV use, “All of this strengthens national energy security by increasing flexibility during natural disasters and fuel supply disruptions.”

It is not the job of GM and Ford to help the US’s national security. But, all of a sudden, maybe exiting the EV sector almost completely may not have been the best play for their own futures.