Elon Musk Calls Oil “Small-Time” — But Is It?

In a recent podcast, Elon Musk sparked headlines by calling oil “small-time” when compared to the potential of solar energy. While his comment aligns with his long-standing advocacy for renewables, it has raised eyebrows given the economic, geopolitical, and technological weight oil and gas still carry in the global energy market—particularly in the U.S.

So is oil really “small-time”? Or is the reality more complex?

Energy Reality Check: The U.S. Leads in Oil and Gas Production

Despite growing momentum for renewable energy, the United States remains the world’s largest producer and net exporter of oil and natural gas. As of 2024:

• The U.S. produces over 12 million barrels of crude oil per day, according to the EIA.
• Natural gas production hit record highs in 2023, driven by demand from power generation and export markets.
• LNG (liquefied natural gas) exports surged due to European demand following geopolitical instability.

Meanwhile, fossil fuels still account for approximately 79% of total U.S. energy consumption. That includes electricity generation, industrial inputs, heating, and transportation.

AI Data Centers and Grid Demand

The rise of AI-powered data centers has further increased U.S. electricity demand—by as much as 15-20% in some regions—driving new investment in both renewable and dispatchable (fossil fuel-based) energy infrastructure. Oil may not directly power most data centers, but natural gas plays a critical role in supporting the base load.

Musk’s Vision: Why He Calls Solar the Future

Musk’s remark that oil is “small-time” came in the context of a discussion on global solar energy growth, particularly in China, which is rapidly outpacing the U.S. in deployment:

• China installed 216 GW of new solar capacity in 2023 alone, nearly 5x the U.S. total that year.
• Musk pointed out that by 2030, China’s solar output could rival the entire U.S. electricity grid, a benchmark that reflects scalability rather than current dominance.

His argument is based on exponential growth curves: solar is cheaper, faster to deploy, and—when paired with battery storage—can replace significant chunks of traditional baseload power over time. But that doesn’t make oil obsolete; it makes solar the likely growth leader over the next 20–30 years.

Policy Friction: Clean Energy Tax Credits vs. Oil & Gas Incentives

Musk’s statement also comes amid a heated policy debate in Washington over tax credits and subsidies:

✅ Oil & Gas Tax Incentives Remain Intact

Oil and gas investors continue to benefit from:

• Intangible Drilling Cost (IDC) deductions, often allowing up to 100% first-year write-offs.
• Percentage depletion allowances and passive loss treatment for accredited investors.
• Accelerated depreciation on energy infrastructure.

These benefits are embedded in the U.S. tax code and have bipartisan support due to their economic impact—supporting over 10 million jobs and generating billions in tax revenue.

❌ Solar and EV Tax Credits Face Political Headwinds

While the 30% Investment Tax Credit (ITC) for solar remains in place for 2025, recent legislation has attempted to:

• Sunset renewable energy credits more rapidly
• Require construction start dates within 60 days of bill passage
• Impose earlier completion deadlines (e.g. 2028)

This has introduced uncertainty for developers and homeowners alike.

Musk criticized the House bill for “abruptly ending the energy tax credits” and called for a “sensible wind-down” instead.

Oil vs. Solar: A Comparison of Scale and Trajectory

Musk’s phrase “small-time” refers to growth opportunity, not current dominance. Solar is expanding rapidly, especially outside the U.S. But oil and gas remain foundational in energy security and economic policy.

What This Means for Taxpayers and Investors

Whether you’re an individual taxpayer, a high-income professional, or a project-level investor, these distinctions matter:

• Oil & gas investments continue to offer unmatched tax deductions (e.g. up to 90–100% of investment in year one through IDCs).
• Solar still qualifies for a 30% federal tax credit, but project eligibility windows are tightening.
• W2 earners seeking tax reduction strategies increasingly look to direct energy partnerships in oil & gas due to more stable, legal tax treatment.

Bottom Line: It’s Not Either Or

Elon Musk isn’t saying oil has no role—he’s signaling that solar is where exponential growth is happening. But the reality is:

• Oil and gas will remain essential for grid reliability, industrial inputs, and global trade through 2040+.
• Solar and battery storage are expanding, especially in regions with favorable policy and land availability.
• Energy investors and policymakers must balance near-term reliability with long-term decarbonization.

The term “small-time” may be provocative, but the real conversation is about scale, speed, and incentives.

Want to Offset Taxes While Investing in U.S. Energy?

At Fieldvest, we help accredited investors access vetted oil and gas projects with built-in tax advantages. Many of our investors use these deductions to reduce W2 and K-1 taxable income while supporting U.S.-based energy independence.