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Luke Sweeney

Demand for LNG Skyrockets Amid Europe Energy Crisis

November 23, 2022 By admin Leave a Comment

In this Article:

  • Fuel Shifts to Europe
  • It’s a Free-for-All — as Long as You Pay Cash
  • There’s Good News and Bad News…
  • No Single Company Could Pull This Off

Europe’s ravenous appetite for energy will plunge some of its struggling peers into darkness this winter. 

Fall was mercifully mild for most of the continent. France even saw temperatures soar above 95℉. 

Those days are over. A harsh, cold winter is bearing down on a few dangerously unprepared economies.

Wealthier European countries like Germany, France, and the U.K. are vacuuming up every ounce of natural gas they can find, edging other buyers out of the spot market. 

This data from BloombergNEF paints a dismal picture. European buyers can afford to pay irresistibly high prices, prompting producers to abandon their morals and chase the highest bidder.

source: energyandcapital.com

But will all that even be enough to keep on the lights — and, more importantly, the heat — this winter? 

The U.S. is already pushing the upper boundary of its LNG export capacity. It’s expected to take years before it or any other country can increase production to meet surging demand. 

American producers can’t single-handedly supply the entire planet, though they've been doing a hell of a job trying. 

This energy crunch is going to be far, far worse than expected. Pricing for LNG is not yet reflecting the absurdly tight spot market. 

In many cases, LNG has actually become priceless. 

[Alexander Green: The New King of LNG]

And by that, I mean it doesn't really matter what it costs — because you can’t buy any. 

It’s a Free-for-All — as Long as You Pay Cash

Exports of LNG at this level are typically contracted for multi-year deals, often with penalties in place for breaching the terms. 

But during markets like this, all the rules go out the window. 

With demand reaching a point of desperation for many, nations with more disposable income can afford to poach LNG supplies that were promised to another buyer. The surge in spot pricing more than makes up the difference.

source: energyandcapital.com

It’s a cutthroat business, but these producers aren't interested in geopolitics. They follow the almighty dollar. 

And that dollar is leading them straight to the richest corners of Europe. Meanwhile, other countries like Pakistan, Bangladesh, and India are left scrambling for other sources. 

Pakistan’s most recent attempt to field bids for a six-year supply deal garnered zero responses. Not a single producer is willing to cut a deal until 2026, when major supply upgrades finally come online. 

European nations have bought themselves some slightly better footing, but not by much. Their energy gluttony will only sustain them for so long. 

According to official reports, Europe has built up enough of a stockpile to stay comfortable during the winter. Prices are high, but the citizenry won’t freeze to death. 

But as I mentioned before, it will be at least 2026 before global production capacity increases. That means plenty more winters of ever-increasing demand. 

The world needs a solution, not a stopgap.

There’s Good News and Bad News…

There appear to be two obvious solutions here: find more LNG or find a different fuel. 

Unless Russia has a change of heart and decides to open the Nord Stream pipeline again (or at the very least stops blowing it up), we’re not getting more LNG on the market until 2026 or later. 

That only leaves one short-term option, and it’s a dangerous one. 

Pakistan and India have already expressed interest in shoring up their reserves with oil and even coal from Russia. 

[Alert: Putin Just Screwed Up Royally… Even For Him]

The environmentalists might pitch a fit, but there’s not really any alternative. Energy isn't something that can be boycotted on a whim, and self-righteousness doesn't heat homes. 

Every dollar that goes through Gazprom is then converted into shoddy Soviet-era weaponry and launched at Ukraine. But again, citizens facing blackouts in Pakistan have their own worries. 

Pakistan’s ambassador to Russia said it best himself: “If the rich countries take away all the LNG, what is going to happen to us?”

Nations with robust renewables have fared better than others, but only slightly. Brazil has a massive hydropower system, second only to China in scale. About 75% of the country’s power comes from hydroelectric turbines. 

Yet Brazil still nearly doubled its LNG imports this year. A delayed pipeline project could prompt even more purchases down the line. 

A huge portion of the world is begging for a solution. I’m not confident it’s a perfect solution, but there might only be one way to solve this global crisis. 

No Single Company Could Pull This Off

LNG distribution went global at an astounding rate. The shifting sands of the energy economy have pulled more buyers than ever into the market. 

As such, it suddenly became incredibly profitable to ship LNG across the globe in huge quantities. However, the sprawling process is complex and expensive. 

No single player controls every leg of the journey. Monopolies are few and far between in this market. 

While that can make it difficult to narrow down a stock pick, it also means these smaller companies have the potential to post outsized gains in very short time frames. 

And in this case, they have the potential to rescue the planet from a very cold winter. 

Producing, shipping, and regasification are each just as important as the other. The industry wouldn't exist without all three. 

If there is any chance at exporting enough gas to keep desperate nations out of Russia’s hands, it’s coming from the U.S. No other country has the potential to rise to the occasion. 

And like I said, it’s going to take a village. Our team of analysts is currently compiling a presentation that highlights three star players from each segment of this critical industry. 

To your wealth,

Luke Sweeney

[Whitney Tilson: Gold 2.0 Tap Into the Most Lucrative Vein of the SWaB Revolution]

Read more from Luke Sweeney at EnergyandCapital.com

Filed Under: Oil and Gas Tagged With: Bangladesh, Energy Crisis, Europe, Gazprom, India, International, LNG, Luke Sweeney, Nord Stream, oil and gas, Pakistan, Russia, Supply Chain

Electric Vehicle Sales Predicted to Increase Nearly 800%

October 28, 2022 By admin Leave a Comment

In this Article

  • New wave of EV designs
  • The reasoning behind this is simple
  • Changing habits and behavior
  • Sales in the U.S. almost doubled
  • The real winner is the army of materials suppliers

Remember back in the simpler days of the 2010s when electric vehicles (EVs) were almost nonexistent? Back then, driving past a Tesla merited a call home. 

I think it’s safe to say those days are over. 

Every major automaker has either released a solid competitor to Tesla or has one in the works. I've started playing a little game called “EV Bingo” every time I spot a new one in the wild.

This week's new sighting looks and acts like a regular truck, but the missing tailpipe and suspiciously futuristic taillights are a dead giveaway.

The Ford F-150 Lightning has officially been on the road since January, but it's the first time I've spotted it outside of dealership lots — or perhaps the first time I've noticed it wasn't just a regular F-150.

Aside from the crisp LED light bar and dead-silent motor, the Lightning resembles any other new truck on the road. There are no wheel covers, excessive aerodynamics, or other futuristic adornments to speak of. 

That’s the most interesting factor of this new wave of EV designs. They're no longer modeled after TRON-style spaceships with smooth curves and quirky add-ons, like BMW’s adorable yet slightly goofy i3.

Instead, they now blend seamlessly with their respective company’s signature style. The Volkswagen ID.5, for example, has almost the same design as its gas-powered cousins — plus a few more curves.

Or take the Honda Prologue, the long-awaited EV crossover from one of the world’s top consumer car brands. Its admittedly sterile design almost resembles a stretched-out version of the CR-V.

As someone who personally had a soft spot for the sci-fi designs of yesteryear, I can't help but think one thing: These new EVs are BORING!

Of Course, I Mean That in the Best of Ways

The reasoning behind this is simple: Regular people are buying EVs, not just avid environmentalists or EV enthusiasts. And your average driver isn’t looking for something out of Speed Racer. 

[MAJOR BUY ALERT: EVs/Wall Street/Gains]

Back when the BMW i3 was one of the few EVs on the road, its range was only around 80 miles on a good day. Public charging was practically nonexistent, so the average driver was hardly likely to switch over to electric. 

And who could blame them? Running out of juice on the roadside means an automatic call to a tow truck rather than a quick hitchhike to the nearest gas station. 

Repairs and maintenance are another factor. If the battery pack goes up in flames, who can replace it? Tesla owners have recently hit the news with horror stories about absurd repair and replacement costs.

Today, the average EV range is well above 200 miles, charging stations are cheaper and more abundant, and batteries are getting cheaper every day. Yet millions of drivers are still anxious about giving up the convenience of their gas vehicles. 

I’ll admit I underestimate how attached some drivers are to their cars, but it goes deeper than just the car itself.

It’s the Gas Devil You Know Versus the Electric Devil You Don’t 

Changing to a new type of vehicle comes with changed habits and behavior. Some drivers out there have potentially been filling up the same car at the same gas station for decades. 

Entrenched behavior like that doesn't go away overnight. For some, a new EV will need to drive itself, pour drinks, and assemble sandwiches before the diehards will ditch their internal combustion engines (ICEs). 

But for many others, the differences between EVs and ICEs are becoming more tolerable. 

Sales in the U.S. almost doubled between 2021 and 2022, and experts forecast a nearly 800% increase by the end of the decade. 

Source: energyandcapital.com

The total market is currently valued at $380 billion. By the end of the decade, that could swell into the trillions. 

[Exculsive: New Vehicle Shocks EV Market]

Source: energyandcapital.com

The tide is turning, and the standard boringness of the most recent EV models is a telltale sign. Automakers are preparing to shift their target demographic to everyone. 

It’s going to be a beast of a transition, but the real winner is the army of suppliers needed to overhaul one of the biggest supply chains on Earth. 

Some components are the same regardless of the car — aluminum, steel, plastic, etc. are still needed in about the same quantities. But other materials are entirely unique to EVs. 

Lithium is the obvious example. ICEs usually have a few small batteries here and there but nowhere near the amount needed for an EV battery. 

EV makers have been focusing so hard on securing a lithium supply that they neglected some equally important materials. 

In many ways, the “lithium rush” pales in comparison to the “Imperial Metals” rush.

These elements aren't used in batteries. Instead, they power the other half of the equation: the motor. 

Without these “Imperial Metals,” not a single electric motor on the planet would turn. That kills not only EVs but just about every power generation turbine, which is nothing but an electric motor in reverse. 

Think about that — EVs would be off the table, and we wouldn't have a way to generate electricity to power them anyway. 

We’re tracking a company that thinks it has solved the problem in a bizarrely creative way. It’s a unique solution to the next great metals crisis that doesn’t involve China, the current leader in “Imperial Metals.”

This transition is coming. Make sure your investments are squared away before these stocks go through the roof.

[Nomi Prins: 10x Gains on a Small Firm Disrupting a Critical American Industry]

To your wealth,

Luke Sweeney
Contributor, Energy and Capital

Read more from Luke Sweeney at EnergyAndCapital.com

Filed Under: Electric Vehicles Tagged With: Batteries, BMW, Charging Stations, China, Ford, Honda, International, lithium, Luke Sweeney, Materials, Metals, Supply Chain, tesla, volkswagen

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