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It may seem like it should be the opposite, but due to the ongoing global economic debacle and uncertainty right now, opportunities for investment in the energy markets are everywhere, especially in alternative energy. And the drop in prices has created some great buying opportunities for you to consider.
As an investor, you have to examine the big picture of what’s being set in motion right now. Weak economies and investments, combined with a pullback in oil prices, have put a big damper on the exploration and development of alternative power sources, as well as drilling for more fossil fuels.
Therefore, in the near future we’ll have yet another major spike in energy costs and little to no real energy plan or alternatives to handle the growing demand. However, the end of the age of oil will not be a disaster … if you’re prepared for it.
The question is, will you be?
An Unquenchable Thirst
Aside from water, the world’s biggest thirst is for oil. Since the last major oil crisis in the 1980s, there’s been tremendous population growth, with no less than one-third of that population beginning to industrialize their economies. Look at China, home to 1.3 billion people, and India, with more than another billion. And both are growing like crazy! Each of these economies simply must have more and more energy.
And if you toss in our own oil addiction, the problem grows even bigger. After all in the U.S. we have an insatiable desire for bigger and better — whether it’s cars, boats, houses, amusement parks, shopping malls, or all the other things in our society that demand huge amounts of energy. That’s unlikely to change anytime soon.
Combine this ongoing and growing global demand with dwindling worldwide supplies of easy to get to, easy to refine crude oil and other energy sources, and you have an equation for higher prices, much higher.
Keeping the Lights
on for the 21st Century
At this moment the United States doesn’t have an energy source that would be as easy to produce and transport as oil. And alternatives, such as corn-based ethanol, are of little help. But while we are all acutely aware of high gas prices every time we fill up our tank, we often don’t even notice how much we depend on another source of energy.
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| How much will it cost to bring the needed power to billions of more people? |
Electricity!
Most of us take for granted that electricity will always be there. We flip on a switch and our “stuff” simply works. But when more and more people, in more and more countries, start making that assumption, you have a serious situation. Right now, one in every three people on the planet doesn’t even have electricity. Even so, our electrical grids are overtaxed, and electricity demand is higher than it’s ever been.
So what happens when the rest of China and India hop onto the power grid?
In China alone, electricity demand is 150 percent higher right now than it was when China first started to boom, back in 1980. Worldwide electricity demand is expected to explode by another 85 percent before the year 2020, faster than demand for any other kind of energy. What happens when the world population hits 7 billion? How about 8 billion? Or 9 billion, as the United Nations is predicting?
The results could be catastrophic!
Imagine: Air traffic control grids that shut down, grocery stores without refrigerators; shopping malls, office towers, and major cities gone dark. Printers and fax machines that don’t spit out documents anymore. Subways that don’t run, cell phones that don’t ring, computers that don’t tell you that you have new e-mail … because there is no e-mail!
Oh and by the way, there is no Internet either.
And where the electrical grid is still functioning, it’s plagued with dead zones that have made the whole network completely unreliable.
It’s a bleak, yet realistic picture of what could happen if long-term investment in our energy future is not made. Billions of dollars desperately need to be invested in new electricity resources right now; otherwise frequent brownouts, blackouts, and shutdowns, on a scale 10 times greater than anything we’re seeing today, are likely to be commonplace.
Electrifying Your Portfolio
There are many ways you can take advantage of the diminishing supply and surging demand for electricity. Everything from, nuclear and solar to natural gas and wind turbines offer opportunities to profit in this sector.
Here are two ETFs you might consider:
The first is the PowerShares Global Clean Energy Portfolio (PBD), which holds companies that focus on greener and generally renewable sources of energy and technologies facilitating cleaner energy.
Second is Van Eck’s Global Alternative Energy ETF (GEX). This fund owns 30 stocks with the highest average trading volume and market capitalization that are “principally engaged” in the business of alternative energy.
These are just two of many ways to tap into the growing long-term demand for solutions to our ever-shrinking supply of fossil fuels, and global insatiable demand for more power. But for even bigger potential gains in oil and other dwindling resources, click here to see what I’m doing for my Master Trader members.
Regards,
Kevin Kerr
{ 5 comments }
Hi Kevin,
I am interested in hearing your thoughts on when these investments will turn up. From other reports that I’m reading on Money and Markets, I hear that a dramatic global economic downturn is coming, including China. My thinking is that we will see a corresponding reduction in energy consumption as we saw after the 2008-2009 event and decrease in the value of these investments. Also, I’m wondering if the U.S. does not continue the renewable investments, then what will support healthy growth for renewable energy tech companies. We’ve seen Germany end its feed-in tariff and subsequent the slowing of solar installation in Germany.
These events and forecasts have me thinking that investments in energy might best be played after the next crash in financial markets to buy near the bottom – hence question on timing for the energy investments mentioned in your article.
I look forward to learning your thoughts.
Don
AS much as we dont like to think about these things gasoline, natural gas, electricity we definately take them for granted everyone thinks they will always be around MOST PEOPLE IN THE U.S. ARE NUMB OR SHOULD I SAY DUMB ABOUT WORLD ENERGY RESOURCES EVERYTHING THEY TAKE FOR GRANTED EVERYTHING……. that it will be there for them and their children FOREVER but we know that thats just not the case. The U.S. has a 250 yr supply of coal at its present usage , natural gas also not a problem in the near future , but those old days of putting a pipe in the ground and sucking out easily refineable crude will be short lived… even china is saying they will deplete all of their oil reserves in less than a decade, the u.s. on the other hand is sitting on the largest oil fields in all of history …. but the oil sands they are hard to get out of the ground and harder yet to extract the oil from them and most people dont want to see how this oil is produced hardly anyone realizes this form of oil extraction involves strip mining the land its a lot uglyier than putting a pipe in the ground and alot more expensive
Don above is thinking straight. We are in a GLUT of energy. Have been for some time. It is the power of Wall St. owned media that has promoted the big run up in prices (of everything not just oil) Not demand. Get back to me when crude is under 20 and heading lower. It is truly sad that so many are taken in by the media propaganda. Even if I proved right here we had enough supply for the next 200 years no one would believe it since they’ve been media washed. Get off the media repeat button and prove it for yourselves.
goodc article
There is no energy glut. Energy production in comparison to global GDP peaked back in the late 1970s, and global oil production has been in plateau since 2006. The latest BP report has revealed that global demand has been above oil produced since then, with the deficit made up using biofuels and non-conventional sources of energy. The main driver is BRIC and emerging markets.
The IEA maintains that just to meet current global economic growth, we will need the equivalent of one Saudi Arabia every seven years. The supply of coal and other resources globally will not meet that demand.
And then there is demand for phosphates, petrochemicals, fresh water, etc. These points were raised in the article as well.