Econ Addicts

Energy, foundationally, is the core driver of modern economies. It fuels every plane, powers every server, and keeps every home alight. Without it, nothing else functions. Yet on the stock market, the firms that sell us streaming subscriptions, branded clothing, or host our shopping habits in the cloud, are often worth far more than those that keep the lights on. It is one of capitalism’s quiet contradictions: the indispensable are rarely the most admired.

The reason lies in the market’s peculiar sense of value. Investors do not price companies by necessity but by possibility. Market capitalization measures faith, not physics. An oil major can generate vast profits, but its future is largely known. The next barrel is much like the last. Retailers and technology firms, by contrast, trade in reinvention. Their business models evolve at a pace that energy producers cannot match. Amazon and Walmart promise scalability without end. Oilfields cannot.

Capital intensity is another part of the story. Energy firms must spend heavily simply to stand still. Exploration, extraction, and regulation consume billions before a single dollar of profit is realized. Retailers, especially those born online, expand with less friction. A new customer costs little to acquire compared with the cost of drilling a new well. In a market that prizes efficiency over effort, the returns on capital favor the merchants, not commodity-based businesses.

Predictability matters too. Energy prices swing with geopolitics and the weather. Retail demand does not. People continue to eat, wear, and click their way through recessions and booms alike. Stable earnings attract higher valuations than volatile ones. Investors, like all humans, prefer calm seas to rough waters.

Then there is the question of story. Oil is a commodity, invisible and indistinguishable once refined. There is no brand loyalty in a barrel of crude. Retailers, on the other hand, sell meaning as much as merchandise. Apple trades in identity. Nike trades in ambition. Amazon trades in convenience. These are emotional monopolies, and the market rewards their grip on human behavior.

Politics plays its part. Energy firms face scrutiny from regulators and activists alike, their future clouded by climate policy and social pressure. Tech and retail companies, though hardly saints, are still viewed as innovators and problem-solvers. The narrative of progress belongs to them. Even when their practices are questioned, they are rarely seen as relics.

The irony is that the more fundamental an industry becomes, the less the market seems to value it. Energy, transport, and water form the base of the economic pyramid, but it is the companies perched on top — those that sell aspirations and experiences — that command the highest prices. Investors may know that the world cannot run without energy. They also know that it cannot dream without stories.

Markets, in the end, are mirrors of belief. They reflect what people hope for, not what they owe to reality. Energy powers everything, but retail and technology power imagination. And in the stock market, imagination is the stronger current.