America's Scorched Earth: Where Energy Goes to Die

By Dmitry Rukhlenko @ Shutterstock.com

You and I know ESG investing is all about EGO and more fees. Like anything, just follow the money, and the truth unfolds right before your very eyes.

You and I have been on top of this theme like no other. You understand the implications for your future will be enormous. It’s why I want you to be on the right side as history unfolds.

Take this winter’s disaster in Texas, for example, when temps dipped to arctic levels, and there was no wind but for the frozen exhalations of shivering residents huddled together in the darkness of their homes. It was a third-world country. And this was Texas, a state with oil reserves as big as the sun. Hey, stuff happens. But in America? This isn’t Russia—yet.

This is all about cap and trade as in, energy is capped and is being traded like a used car. There’s no “renew” in renewables if wind, sunlight, nuclear, oil, natural gas, hydrogen, and vegetable oil, to name a few, are restricted.

Big tech is no longer just selling tech—they’ve cornered that market. They’re coming for energy now that their monopolies are intact.

Big tech—big consumers of energy—are looking to corner the energy market, plain and simple, as they snatch up carbon credits to wash away their filthy footprints. And it’s a race absolutely worth your attention because the investment implications are massive.

Action Line: Your Survival Guy sees this evolving into a states’ rights issue where there will be winners and there will be losers. Don’t miss this boat.

P.S. Investors in tech companies may think CEOs are focused on inventing the “next big thing” that will turn out amazing profits. That used to be true. But now, many of the biggest tech companies are more focused on getting their stocks in ESG funds. Read more here.

P.P.S. Fire! Run for the exits! Another big bank has entered the carbon credit markets. I bet this is more about EGO than saving trees. It’s a perfect Wall Street creation: offer a way for the elite to offset their private jet wash by scrubbing it clean with carbon credits. Read more here.

P.P.P.S. Your Survival Guy’s on the pulp, I mean pulse. You know about the bubble that’s popped in lumber prices. That’s old news. It’s the same old story that goes like this: Government creates an incentive to grow trees on depleted farms in the south and boom, trees everywhere. The financial crisis hits, demand plummets, sawmills are shuttered. Then Covid, boom again, but not enough finished lumber. Prices go up, big owners of finished wood sell into the market, bubble deflates. Rinse and repeat. Read more here.

P.P.P.P.S. Can you guess what market is booming? Coal. Shortages of natural gas and rainfall have driven up prices and demand for coal worldwide. Ryan Dezember reports in The Wall Street Journal:

Natural-gas prices are starting the summer air-conditioning season nearly twice as high as they were a year ago.

Demand for the fuel is picking up as the world’s economies reopen and as Americans dial down their thermostats for what is expected to be a hot summer. Meanwhile, U.S. producers have stuck to the skimpy drilling plans they sketched out when prices were lower, eliminating the glut that was keeping them depressed.

Natural-gas futures ended Friday at $3.215 per million British thermal units, up 96% from a year ago and the highest price headed into summer since 2017. Futures traded even higher—and regional spot prices jumped—when triple-digit temperatures baked the Southwest earlier this month. Analysts expect prices to be even higher later in the year when it is time to fire up furnaces.

It isn’t just in the U.S. where gas is running high. Dutch gas futures, a barometer for prices in Western Europe, have more than doubled over the past year—including a sharp rise since February—to multiyear highs. In Asia, imported liquefied natural gas is fetching more than five times what it did last June, beckoning tankers full of chilled shale gas across the Pacific.

More expensive gas has stoked demand in international markets for coal, with which gas competes to fuel power plants. Futures prices for thermal coal loaded at a terminal in Newcastle, Australia, have more than doubled from a year ago. The benchmark price has added 27% over the past month and hasn’t been so high in nearly a decade.

If higher prices persist, Americans can expect bigger utility bills. The work-from-home class could feel a pinch. The pandemic shifted energy costs from employers to employees, who have heated and cooled home offices and run electronics when they would normally be away at work.

Besides being burned to generate electricity and for hot showers and cooking, natural gas is consumed in large volumes to make plastic, fertilizer, steel and cement. Monetary-policy makers don’t consider energy prices when gauging inflation because they are so volatile. Yet climbing gas prices are adding to the costs of producing manufactured goods at a time when investors are on edge about the potential for runaway inflation.

“These are the consequences of the underinvestment we’ve seen in natural gas,” said Colin Fenton, chairman of investment banking at Houston’s Tudor, Pickering, Holt & Co. “What’s notable is these prices are happening with industrial demand, more than a quarter of the market, so early in its recovery.”

U.S. natural-gas output peaked in December 2019. March marked the 11th straight month in which production in the contiguous 48 states declined, according to the U.S. Energy Information Administration. There are only five more rigs drilling for gas now than the 92 operating at the end of March, according to oil-field service firm Baker Hughes Co.

Appalachian energy producers, which control the country’s gas spigots, have taken a cautious approach to reopening the wells they shut last spring when the pandemic sank prices. Drillers in the Haynesville shale that straddles Texas and Louisiana have been slow to tap their reserve of wells that have been drilled but not yet fracked to start them flowing.

Gas producers had suffered for years from low prices caused by their own market-glutting gushers. Shareholders and analysts pressured producers to focus less on growing volume and more on profitability.

The reward has been climbing stock prices. Shares of gas producers Range Resources Corp. and Antero Resources Corp. have been some of the best performers in the rebounding energy sector, both up more than 40% over the past three months.