The End of Elastic Oil
Tom Konrad CFA The last ten years have brought a structural change to the world oil market, with changes in demand increasingly playing a role in maintaining the supply/demand balance. These changes will come at an increasingly onerous cost to our economy unless we take steps to make our demand for oil more flexible. We're not running out of oil. There's still plenty of oil still in the ground. Oil which was previously too expensive to exploit becomes economic with a rising oil price. To the uncritical observer, it might seem as if there is nothing to...
Oil & Alt Energy Redux
Charles Morand Last week, I conducted an analysis showing the lack of evidence supporting claims that oil and alt energy returns are strongly correlated (claims that sometimes come from outfits as reputable as Bank of America Merrill Lynch). I don't want to belabor this topic but I thought I would post the results of another, similar analysis I conducted following comments I received on how to improve the first one. In a nutshell, the comments suggested I do the following: 1) Look at daily correlations or even smaller periods, as "common knowledge" market...
The Best Peak Oil Investments, Part VIII: Alternative Fuel Report Card
Tom Konrad CFA There are two types of solution to the liquid fuels scarcity caused by stagnating (and eventually falling) oil supplies combined with growing demand in emerging economies. The most obvious is to find a substitute to replace oil. Each potential substitute has barriers to its use which stand in the way of it from becoming a complete substitute for petroleum based fuel. Understanding those barriers also leads us to the investment opportunities that arise from these substitutes. In the last two articles of this series, I looked at barriers to adoption for alternative...
The Best Peak Oil Investments: Peak Oil Stock Lists
Tom Konrad CFA Four new stock lists for different approaches to profit from peak oil. As I've researched and written this series on ways to invest in companies that will profit from peak oil, I've been greatly expanding the number of stocks in our old "Clean Transportation" stock list, at the same time I've been doing a lot of thinking about how these companies will fare. Because of this, I've decided to split Clean Transportation into four groups of similar companies, depending on how they are working to reduce our dependence on oil. The new stock categories...
The Best Peak Oil Investments: Why Invest for Peak Oil?
...and Why Not Invest in Oil Companies? Tom Konrad CFA The purpose of this series on peak oil investments has been to highlight companies outside the oil sector that are likely to benefit from increasing oil prices. This article explains why we should expect oil prices to rise. What is Peak Oil? There are many definitions for peak oil. In its most basic form, Peak Oil is the moment of highest production. World oil supplies are finite, and so we cannot continue to produce oil in increasing quantities forever. It's a mathematical certainty that at...
New York State Pension $ 22 Billion Poorer By Not Divesting 10 Years Ago
Research firm Corporate Knights revealed that the pension fund would be $22 billion richer had it divested from fossil fuel stocks in 2008. That's almost $20,000 for of each of the pension fund’s 1.1 million members & retirees.
A new in-depth analysis by the research firm Corporate Knights, shows that New York State pension fund would be $22 billion richer had it divested from fossil fuel stocks 10 years ago. That works out to almost $20,000 for of each of the pension fund’s 1.1 million members and retirees. To perform their analysis, Corporate Knights looked at the stock holdings of the pension fund in...
Shale Gas: Promises, Promises, Promises
Tom Konrad CFA Dr. Arthur Berman, of Labyrinth Consulting Services has taken a hard look at actual production data from Barnett Shale in 2007. What he found should worry anyone expecting this abundant, relatively clean, domestic energy resource to be cheap. It should especially worry investors in shale gas companies, such as CHK, DVN, and XTO. In a panel entitled "Natural Gas Game Changers?" at the 2009 International Peak Oil Conference, Dr. Breman presented some results from his research into the actual production from the nearly 2000 horizontal gas wells drilled in the Barnett Shale in 2007. The Oil...
Betting Against Shale Natural Gas Plays
Green Energy Investing For Experts, Part III Tom Konrad, CFA Controversy continues to grow about the economic viability of shale gas. Investors who doubt the companies' claims should consider buying puts. The Case for Gas From the perspective of a green energy investor, natural gas is the most benign fossil fuel. Natural gas emits less carbon than other fossil fuels (slightly more than half as much as coal, when used for electricity generation.) Natural gas turbines also can quickly compensate for fluctuating supply and demand from other sources of electricity. This quick response makes them a natural complement...
The Peak Coal Portfolio
Last week, we alerted you to a report from Germany's Energy Watch Group called “Coal: Resources and Future Production,��? which predicts peak coal by 2025. Readers of AltEnergyStocks are doubtless familiar with peak oil, the inevitable fact that as we consume a finite resource (oil reserves) at some point the rate of that consumption must peak, and taper off. Serious arguments about peak oil center around "when" oil production (and consumption) will peak, not "if." The same it true for other finite natural resources, such as natural gas, uranium, and even coal. The difference with coal is the received...
Do You Need To Invest In Oil To Benefit From Expensive Oil?
Two months ago, Tom told us how he'd dipped a toe into the black stuff (i.e. bought the OIL etf) on grounds that current supply destruction related to the depressed price of crude oil would eventually lead to the same kind of supply-demand crunch that led oil to spike during the 2004 to mid-2008 period. If you need evidence that the current price of crude is wreaking havoc in the world of oil & gas exploration, look no further than Alberta and its oil sands. The oil sands contain the second largest oil reserves in the world after...
Shale Gas: If this is such a good deal why are you selling it...
Jim Hansen That is the question many buyers of shale gas assets should have been asking themselves over the last few months. This week’s news that shale gas high roller Range Resource was selling its Barnett shale properties reinforced our view that there is major trouble brewing in the shale gas business. Upstreamonline reported that “…Range Resources Corporation said it will sell almost all of its Barnett shale properties to a private company for $900 million…” Then of course there is the number one shale gas play cheerleader of them all, Chesapeake Energy. Just last week they...
Life After Coal: It’s Sooner Than You Think
by Tom Konrad, Ph.D. A couple years ago, I began to see reports that coal supplies might not last the 200+ years we've all been lead to believe, so I wrote an article about what you could do to prepare your portfolio for Peak Coal. Now two years have passed, and Peak Coal is undeniably 2 years closer. (Did you ever wonder why people who have been saying that we have 200 years of coal for 20 years aren't now talking about 180 years of coal?) But more than being 2 years closer, the evidence continues to mount. Caltech...
LNG Exports Would Help the Environment
Tom Konrad CFA Photo: Robin Lucas, via Wikimedia Commo With friends like these, who needs enemies? The Sierra Club is fighting new Liquified Natural Gas (LNG) export terminals, because they believe LNG exports would reward and encourage producers of shale gas. Fighting shale gas has blinded them to the bigger picture. If LNG exports were to reward shale gas producers, they would have to be significant enough to raise the price of domestic natural gas. Such large exports would also lower...
The Best Peak Oil Investments: Index
Tom Konrad CFA Part Subject / Description Stocks mentioned I Biofuels Overview WM II Hydrogen Vehicles and Vehicle Electrification III Natural Gas Vehicles WPRT, CLNE, and one I missed: FSYS IV Synthetic fuels: Gas-to-Liquids, Coal-to-Liquids, and Biomass-to-Liquids SSL, SYNM, RTK V Biofuel from Algae GSPI.PK, OOIL.OB, PALG.OB, PSUD.PK VI Barriers to Alternative Fuels ...
Dipping a Toe in the Black Stuff
I was tempted by greed, and I succumbed. Last week, I bought the iPath S&P GSCI Crude Oil Total Return Index ETN (OIL), at $19.75 a share. The Temptation I made the trade as a simple speculation. I watch oil because the oil price is one of the key drivers of investor interest in alternative energy, although oil is only a true competitor for biofuel companies, not producers of wind turbines (at least until there are a significant number of plug-in electric vehicles.) With crude trading below $40/barrel, oil producers are cutting back on new drilling. This is...
Green swan, Black swan: No matter as long as it reduces stranded spending
by Prashant Vaze, The Climate bonds Initiative
In January, authors from several institutions under the aegis of BiS, published The Green Swan Central banking and financial stability in the age of climate change setting out their take on the epistemological foundations for, and obstacles against, central banks acting to mitigate climate change risk.
The book’s early chapters provide a cogent and up-to-date analysis of climate change’s profound and irreversible impacts on ecosystems and society. The authors are critical of overly simplistic solutions such as relying on just carbon taxes. They also recognize the all-too-evident deficits in global policy to respond to the threat.
In short, they accept the need for central banks to act.
The Two Arguments
The paper makes two powerful arguments setting out the challenges central banks face using their usual mode of working.
Firstly, climate change’s impact on financial systems is an unknowable unknown – a...
