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Energy Crisis: The Best Way to Profit from Rising Costs

September 28, 2022 By admin Leave a Comment

(Russian) Winter Is Coming

During the summer, the European Union (EU) announced plans to ban seaborne imports of Russian crude oil from December 5. And it said it will impose a ban on petroleum product imports starting on February 5 next year.

If and when these bans are implemented, they will have a knock-on effect on all energy prices across the globe.

But there’s more…

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Recently, the leaders of the EU and other G7 nations decided to try to limit Russia’s oil revenues. They proposed a price cap of between $40 and $60 a barrel on Russian oil. This would also come into effect on December 5.

The Group of 7 – or G7 – comprises Canada, France, Italy, Germany, Japan, the United Kingdom, and the United States.

To say that Russia doesn’t like these proposals would be putting it mildly.

Russian President Vladimir Putin said he will make Europe freeze and turn off the gas valves to any country that imposes price caps.

It remains to be seen whether he makes good on his promise if a price cap is imposed. After all, Russia is no stranger to empty threats.

For example, about six months ago, it demanded that all payments for natural gas be made in its local currency, the ruble, or it would cut supplies. This was to prop up its then-falling currency.

The EU countries refused. This caused a spike in natural gas prices.

In the end, however, Russia backed down… silently. Why? Because it couldn’t afford to cut off the flow of those juicy gas dollars.

It’s very hard to predict how this will play out. If Russia’s war in Ukraine has shown us anything, it is that Putin can be unpredictable.

And the EU and G7 must tread a fine line between forcing Russia to abandon its “special operation” in Ukraine and keeping the lights on in Europe and around the world.

Heads of government from almost every country in the world have gathered in New York this week for the 77th United Nations General Assembly. The energy crisis and the situation in Ukraine are top of the agenda.

Unsurprisingly, Vladimir Putin is not in attendance, although he has sent his foreign minister to the event.

Energy Prices Will Continue to Rise This Winter

The way things currently stand, the rise in natural gas prices is unlikely to be fully resolved in the short term.

And it’s destined to build into a crisis here this winter.

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According to the U.S. Energy Information Administration, we generate 38% of our electricity from natural gas.

When the weather gets colder, demand for natural gas-fueled electricity will rise. And in general, colder weather increases demand for natural gas for heating. This is true in both the residential and commercial sectors. That puts upward pressure on prices.

And if the weather becomes unexpectedly cold or harsh, price spikes can intensify.

This means less natural gas would be available for storage. And this, in turn, would lead to higher prices as countries scramble to replenish their depleted natural gas reserves. It’s a vicious circle.

And I’m sure we all remember what happened in February 2021, when extreme weather conditions in Texas closed down U.S. oil refineries and plunged millions of Americans into darkness. Energy prices across the country soared as a result.

What This Means for You and Your Money

The good news is that the EU has already managed to fill 85% of its natural gas storage from alternative sources. As a result, natural gas prices there have pulled back somewhat from their recent peak.

But they still remain more than double where they were in January 2022, before Russia invaded Ukraine.

And the ongoing uncertainty means energy prices will likely stay elevated into 2023.

A good way to position yourself in the short term is with an energy-related exchange-traded fund (ETF).

The United States 12 Month Natural Gas Fund (UNL) tracks natural gas price movements.

Regards,

Nomi Prins
Editor, Inside Wall Street with Nomi Prins

P.S. As I said in my essay today and yesterday, the energy crisis on the other side of the Atlantic won’t stay on the other side of the Atlantic…

As the contagion spreads from Europe to America and from the energy markets to the financial system – a portion of your retirement could be at great risk.

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Big News for the Next Generation of Electric Vehicle Batteries

September 21, 2022 By admin Leave a Comment

It’s been a while since we had a look at the backlog of container ships waiting to unload their cargo at the Port of Los Angeles. The Pacific Ocean near Los Angeles, and San Francisco for that matter, looked like a parking lot during the pandemic… I saw it with my own eyes flying overhead to/from the West Coast.

I thought it might be interesting for us to check in and see what things are like today…

Not surprisingly, there has been a long decline in the queue of container ships since February of this year. The pandemic is clearly over, and logistics teams got back to work clearing out containers on the dock and returning to more normal operations.

August was still busy, with a queue of about 25 ships, but what happened in the last few weeks has been striking. At the start of this month, the queue had dropped to just eight ships, an all-time record low.

That might sound like a good thing. After all, the queue was a symptom of the lack of labor to both unload containers from ships, clear those containers through customs, and haul them out of the port via trucks to distribution centers. Finally, it appears that this backlog has cleared… which means that lead times for goods coming from Asia should quickly return back to pre-pandemic levels.

But the busy August masked what’s really going on. Container imports to the U.S. have collapsed 36% year-over-year. The rapid decline began in May, and it’s really starting to show in the numbers.

What does it mean? There’s an excess in inventories in consumer goods in the U.S., which make up more than 75% of all imports. With “real” inflation much higher than the consumer price index (CPI), discretionary spending has collapsed… and with it, demand.

Imports are suffering as a result. And it’s easy to see the weakening economy now that the Port of Los Angeles has cleared out its container backlog. There’s no hiding it now.

Sadly, even with excess inventories and rapidly declining freight costs, prices for goods and services will remain at elevated levels well into 2023. But on the bright side, the days of 6-month lead times, or not being able to find that PlayStation 5 or Xbox Series X, should be well behind us.

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A new player enters the fray to power EVs…

A very interesting company in Utah just came out of stealth mode – Ionic Mineral Technologies. This one caught my eye because it could be big news for the next generation of electric vehicle (EV) batteries.

Ionic Mineral Technologies mines halloysite – a mineral it uses to produce “nano-silicon.”

That’s possible because halloysite is an aluminum-silicate clay that naturally occurs with a nano-tubular structure. This quality makes it a great resource for producing high-quality nano-silicon as a material input for EV batteries.

We’ve written a lot in The Bleeding Edge about solid-state batteries. There is an extensive list of companies working on that technology. And most design their batteries with silicon anodes instead of graphite ones (the typical approach for lithium-ion batteries).

This is important for two big reasons…

First, compared to graphite, silicon anodes provide greater energy density (i.e., charge capacity).

This is key for solving a major issue holding back EV ownership – limited range. Silicon anodes enable people to travel further with these batteries before needing to recharge.

And second, a big EV owner complaint is the 30-45 minutes it takes for their cars to charge. The reality is that most EV owners don’t have access to a 240-volt charger at their home or apartment.

With silicon anode batteries, it’s possible to charge an EV to 80% capacity in about five minutes… a fraction of the time.

But these silicon anodes aren’t perfect. They suffer one major challenge. Silicon swells and contracts during the charge and discharge stages. And dendrites are formed during this process which can, in the worst case, lead to fires.

That’s where Ionic comes into play. It believes its nano-silicon will be a game changer with solid-state batteries. This nano-silicon material has the potential to address this swelling problem.

That’s why I’m going to be keeping an eye on Ionic. I’ll be watching in particular to see if any of the leading-edge EV battery companies begin to adopt the nano-silicon material.

Ionic is unique in that it owns the resource for producing nano-silicon. The company controls 2.4 million tons of halloysite resources in Utah. This is the world’s largest deposit of high-purity halloysite.

The company expects its Utah-based manufacturing plant will be up and running by the end of Q2 next year. Then it will have the capacity to produce tens of thousands of tons of nano-silicon a year that it can sell to battery makers.

And since Ionic is building its plant on U.S. soil, this will help domestic supply chains secure materials. It’s yet another piece in the Great Recalibration I’ve been writing about in these pages, and it’s potentially great news for domestic EV makers.

So this company could be revolutionary for solid-state EV batteries, especially if designs start incorporating its nano-silicon material.

[Breakthrough Tech: New Vehicle Shocks EV Market]

eVTOL technology continues gaining momentum…

We’ll continue with another frequent topic in these pages – electric vertical takeoff and landing vehicles (eVTOLs).

United Airlines just stepped up and made a firm commitment for purchasing more electric air taxis.

Last year, we covered its $1 billion order for eVTOLs from Archer Aviation. This August, United paid out $10 million of that payment for the first 100 eVTOLs from Archer Aviation.

Well, now United is upping the ante for its electric air taxi fleet. The airline just ordered another 200 taxis from Eve Air Mobility, with an option to buy 200 more.

This order came as United invested $15 million into Eve Air. So it clearly sees something it likes… and is hedging its bets.

Now, keep in mind that this is not a recommendation for Eve Air (EVEX). Currently, it has an enterprise value of $2.9 billion, yet it’s years away from any kind of material revenue. It’s currently trading at a valuation that reflects about 63 times forward 2025 annual revenue estimates. And it’s going to be bleeding cash until that time. It will most certainly require additional financing that will further dilute shareholders.

So while this isn’t an interesting investment opportunity right now, it is still a company to watch. Major airlines are pairing up with their eVTOL partners in preparation for what they believe is coming.

The future of transportation includes how air transportation is changing. It’s not just about supersonic aircraft like the kind of technology that Boom Supersonic is pursuing. It’s also about the kinds of short hops that eVTOLs can support.

These air taxis can carry three or four passengers about 150 miles. This could enable people to commute to work from a rural area into a city.

Or people could use them to travel from one part of a city to another. Los Angeles or New York City are perfect examples. They have so much traffic, it can be miserable and inefficient getting around.

So people could opt for eVTOLs for convenience in congested cities. We could take an eVTOL right to JFK airport, bypassing all the traffic.

And these electric vehicles are emission-free, which will make them attractive to some. Once we have clean energy generation to power them, these aircraft could be a “green” option for transportation.

Regardless, this is yet another example of the gaining momentum in eVTOL technology. We’ve come a long way in a few short years…

And it won’t be long until we could start seeing more of these aircraft in the skies where we live. I doubt we’ll have to wait much longer than 2025-2026 before there is widespread use of this technology.

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Starlink goes live in Antarctica…

A couple weeks ago, we had another look at Starlink – a division of SpaceX – partnering with T-Mobile in enabling remote cell phone coverage.

Now, Starlink has launched service availability in all seven continents.

That’s because its service just arrived at McMurdo Station on the coast of Antarctica, delivering high-speed broadband to the outpost.

That’s huge because McMurdo historically hasn’t had enough bandwidth to run all its scientific programs. Internet bandwidth has been rationed and in high demand at such a remote location.

What’s interesting about the deployment in Antarctica isn’t just Starlink’s availability. It’s actually how SpaceX is making it happen.

The issue at hand is that there aren’t any ground stations connected to fiber optic networks in Antarctica. So SpaceX is accomplishing this high speed broadband internet connection using space lasers. Cool, right? The lasers allow for high-speed connections between satellites.

So rather than beaming up from a ground station to a Starlink satellite and back down to Antarctica, Starlink uses space lasers to send data back and forth between other Starlink satellites until it is in range of a ground station (for example in Australia).

While the world sees Starlink has a satellite-based internet provider, I believe that the endgame is to create a space-based, interplanetary, body backhaul network. That’s the big play.

The backhaul network is only possible with a laser-enabled communication system from satellite to satellite. That way, Starlink will need fewer ground stations and be able to provide coverage to places where ground stations aren’t an option or simply don’t make any sense.

Is this the beginning of interstellar broadband infrastructure? Musk is crazy enough, and smart enough, to put something like that together.

This will be a vast improvement for people who live in rural areas and developing countries – as well as remote locations like Antarctica… or even the Moon. And needless to say, it will put Starlink and SpaceX in an enviable position.

Regards,

Jeff Brown
Editor, The Bleeding Edge.

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Read more from Jeff Brown at BrownstoneResearch.com

Massive Government Investment in Renewables on the Way…

May 16, 2022 By admin Leave a Comment

Governments Rushing Into Renewables

Last October, global governments met in Scotland for the COP26 United Nations Climate Change Conference. There, they agreed on several key climate change and carbon emissions goals.

Now, I know not everyone feels the same way about climate change. But no matter what your views are on environmental matters, what’s coming down the tracks brings with it a huge opportunity to profit…

See, global governments put a price tag of up to $150 trillion on their plans to reach COP26 goals.

More recently, the war in Ukraine has been a major catalyst in their push for renewable energy and related technologies…

In March, the U.S. banned Russian oil, liquefied natural gas, and coal imports.

At the time, the European Union (E.U.) treaded softly.

It outlined a plan to become independent from all Russian fossil fuels “well before 2030.” And it announced plans to triple its renewable energy capacity by 2030.

But last month, it stepped things up a gear. It banned Russian coal imports.

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And last week, it proposed phasing out Russian crude oil within the next six months.

That’s significant… Earlier this year, the E.U. accounted for 71% of Russian fossil fuel exports.

If this proposal gets voted into law, it will undoubtedly lead to fuel shortages and price hikes across the bloc.

So the E.U.’s 27 member countries must now find alternative ways to power their economies… fast.

But it’s not just in Europe where the effects of the energy crisis are being felt…

Here in the U.S., the latest Consumer Price Index (CPI) data shows that energy costs have risen by 30% in the last 12 months. Gasoline is up 43%. And fuel oil is up 80%.

And if the E.U. goes ahead with its Russian oil ban, we can expect further price increases here. That’s because any sanctions have global ramifications on oil and gas prices.

So the race to ramp up production from renewable energy sources is on, both here and across the pond…

The Cost of Our Carbon Footprint

That’s where our New Energy theme comes in. It covers everything from renewable energy to cleaner infrastructure.

Essentially, New Energy is about reducing our carbon footprint. There’s a big push to cut back on carbon dioxide emissions, and to replace them with less harmful alternatives.

Perhaps one of the main reasons governments and industry alike are paying attention is that there is now a cost associated with our carbon emissions and consumption.

The airline industry is a great example. If you’ve booked a flight on Google Flights recently, you’ve probably noticed this:

Google shows you how much carbon dioxide each flight will emit. And it compares it with average emissions. Airlines will be charged for these emissions.

To stay competitive, the world has to transition to new sources of energy that emit less carbon.

The world’s governments have accepted that climate change is real. And this is unleashing a massive new investment trend.

$750 billion was spent on clean energy technologies and efficiency worldwide in 2021.

And as we’ve been telling you, the White House has allocated $100 billion to clean energy projects under the Bipartisan Infrastructure Law.

We’ve already shown you several ways to profit from the increasing investment in this sector.

But it’s not just governments that are putting their money where their mouths are…

[Former Goldman Sachs Exec: “America’s problems explained in ONE chart”]

Private Money Following Public Investment

The search for alternative energy isn’t just a political battle cry. It’s something even the largest oil companies are embracing.

Traditional energy companies are rethinking their strategies.

For example, BP has committed to shrinking its oil and gas production by 40%. It plans to invest $5 billion per year in low-emission businesses. Recently, it spent $220 million on a pipeline of 9 gigawatts (GW) of solar projects in the United States.

And oil and gas company, Total, invested $2.5 billion in an Indian renewable energy company. It aims to have 35 GW of gross renewable energy generation capacity by 2025 (up from around 9 GW today).

So with massive government investment in renewables on the way, more of the big energy companies are likely to follow suit…

Traditional Energy Won’t Disappear Overnight

Now, traditional energy won’t just disappear overnight…

The chart below comes from the U.S. Energy Information Administration (EIA). It tracks the trend of energy consumption needs globally through 2050.

And it shows the growth in renewable energy (blue line at the top) as well as traditional energy.

As you can see, the projection is for a 50% growth in the New Energy space.

And we’re already seeing rising demand. 2021 was another record year for renewable energy, according to the International Energy Agency (IEA).

The world added a record 295 GW of new renewable power capacity in 2021. That was despite the pandemic and rising costs for raw materials globally.

Now, from the chart above, we can see that traditional energy consumption will remain more or less flat.

But even in traditional energy production, carbon-neutral technologies will play a bigger and bigger role.

Even minor adjustments to their processes and maintenance routines could help companies reduce their energy consumption.

Public and Private Investment Create Massive Opportunity

This transition to New Energy represents a windfall magnet for you. As I mentioned earlier, up to $150 trillion is about to flow into this sector.

As we’ve been showing you, global governments are backing the New Energy transition.

And even the traditional fossil-fuel giants are coming on board.

This does not mean that oil and gas will go away, or that I will ignore opportunities in the traditional energy space.

But as the energy crisis unfolds… and the E.U. and the rest of the world exerts more and more pressure on Russia… I will pay close attention to New Energy companies.

For now, I recommend keeping an eye on the best emerging energy sources. These include wind, solar, geothermal, next-generation nuclear, and carbon-capture coal.

And I’ll be sure to let you know how to invest as this trend develops. So stay tuned…

Regards,

Nomi Prins
Editor, Inside Wall Street with Nomi Prins

P.S. Millions of Americans are looking for ways to reduce their energy bills. And it’s no wonder… with energy costs up 30%, gasoline up 43%, and fuel oil up 80% in the last twelve months, according to the latest U.S. inflation figures.

The war in Ukraine is the latest catalyst in the energy crisis story… Global governments are quickly shifting gears to focus on alternative energy sources.

But there’s another huge event coming up that will put this trend into overdrive. In fact, it will shake the energy market to its core.

And the best part: If you know where to look, you could double… or even triple your money over the next twelve months.

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CPI

Energy Crisis: The Best Way to Profit from Rising Costs

In this Article

(Russian) Winter Is Coming

Energy Prices Will Continue to Rise This Winter

What This Means for You and Your Money

Big News for the Next Generation of Electric Vehicle Batteries

In this Article

A new player enters the fray to power EVs…

eVTOL technology continues gaining momentum…

Starlink goes live in Antarctica…

Massive Government Investment in Renewables on the Way…

In this Article

Governments Rushing Into Renewables

The Cost of Our Carbon Footprint

Private Money Following Public Investment

Traditional Energy Won’t Disappear Overnight

Public and Private Investment Create Massive Opportunity