Position Your Portfolio For An Energy Crisis

One of the trends I am forecasting is an upcoming energy crisis.

We are already seeing this emerging in Europe.

European power prices have spiraled to multi-year highs on a variety of factors in recent weeks, ranging from extremely strong commodity and carbon prices to low wind output.

What’s more, the record run in energy prices is not expected to end any time soon, with energy analysts warning market nervousness is likely to persist throughout winter.

The October gas price at the Dutch TTF hub, a European benchmark, was seen to climb to a record high of 79 euros ($93.31) a megawatt-hour on Wednesday. The contract has risen more than 250% since January, according to Reuters, while benchmark power contracts in France and Germany have both doubled.

In fact, industry in the UK is already shutting down.

Record energy prices have forced two fertilizer plants in the north of England to shut down and brought steel plants to a halt, in some of the clearest signs that the energy crunch engulfing Europe could deal a blow to the UK’s economic recovery.

Why is this happening?

The world uses 32 billion barrels of oil per year. Oil and natural gas are depleting assets. Continuous and large amounts of money must be recycled back into finding and producing new reserves. It isn’t happening due to the low prices we have seen in the past few years.

Adding to this is the new ESG mandates that are being invoked by banks, and now even central banks.

The ECB has said recently that they will be looking at banks investments and loan books to ensure the banks are meeting “climate risks”.

We have seen the progressives in the US call for the US Federal Reserve to regulate banks to not make loans to fossil fuel companies.

This will not lead to more supply of energy in my view.

Not much the average person can do to change this non-sense. The one thing that a person can do is to invest in companies that produce these vital fuels. I suspect that when prices for oil make new highs many producers will be rolling in cash.

Expect higher energy prices in the relatively near term. Position your portfolio accordingly.

 

Follow me on Twitter: @JohnPolomny

Interested in knowing how I translate the information in these emails into investment ideas?

Consider a subscription to my paid newsletter “Actionable Intelligence Alert”. You can check it out by going to:

actionableintelligencealert.com/subscribe

I have started up a Patreon account for those that wish to help support my work. Check it out here:

https://www.patreon.com/JohnPolomny

If you pledge at least $5.00 I will send you the current month’s stock pick. This way you can sample the “Actionable Intelligence Alert” newsletter and see if it is for you.

Whenever I am interviewed, I am inevitably asked what books I would recommend. Below is a list of my favorite investment books or books related to investing and business. I also like to read about old-school guys who built large business empires. In full disclosure, if you click on any link below it will take you to Amazon. If you buy one of the books, I will receive a small commission.

https://actionableintelligencealert.com/john-polomnys-investment-book-reading-list/

 

Sign up for my weekly free emails that have tons of great information on profitable investing ideas. If you sign up I will send you a copy of my free e-book “Ten Rules For Investment Success” https://www.subscribepage.com/l7g1a8