Promising Investments as the Race for BTUs Heats Up

Promising Investments as the Race for BTUs Heats Up

by Gregor Macdonald, contributing editor

Tuesday, April 3, 2012

Executive Summary

• Three attractive sectors to invest in early as we enter the post-oil economy
• The transition away from oil has already begun — which energy sectors are leading?
• The key trends over the next five years
• How scarcity — and inflation — will manifest in this next phase

Part I: The Race for BTUs

If you have not yet read Part I, available free to all readers, please click here to read it first.

Part II: Promising Investments as the Race for BTUs Heats Up

Hopefully readers will not be too shocked by my openhandedness towards a cyclical global expansion — restrained by oil for sure, but made possible by several years of continued reflationary monetary policy and the ability of humans to tactically access new sources of energy.

Let’s remember that a tremendous amount of pain, in industrial terms, has already been taken by the OECD over the past 7 years as it shed nearly 15% of its oil demand. Readers will also recall my previous essays, in which I warned that an export boom was continuing to unfold in the United States. And readers of my work over the past several years know I’ve been adamant that the 5 billion people in the developing world have plowed right through the 2008 financial crisis increasing their reliance on coal.

Thus, I identify three areas of investment as the world stumbles forward with poor growth in the OECD, restrained by oil but becoming increasingly desperate to find some — any — additional energy resources. These are not stock recommendations, nor am I making a timing call as to when to invest in these areas. Rather, these are indicative of three means by which an investor could participate in emerging, secular trends over the next 2 to 4 years.

I find it remarkable that the Van Eck coal ETF is so cheap.

While my ongoing work on coal is too lengthy and complex to fully explain here, let me just say that I have very good reason to agree with David Rutledge of CalTech.