- Oil & Gas provides 97% of the energy used by the Transportation Industry
- Transportation Industry uses 16% of the applications created from Oil & Gas
Putting those two headline facts together, tells me we are not going to stop using oil and gas any time soon. Supply constraints from USA regulations, a war that is sucking energy and limiting global supply, combined with last week’s OPEC reducing production because the USA foreign policy blunder in favoring Iran over Saudi Arabia, tells me oil and gas pricing is cheap at its current level. Industrial production curtailments of steel, aluminum smelters, and Petrochemical (BASF) production curtailments in Germany is creating more bottlenecks and shortages.
Aluminum is one bottleneck to consider . Oil and gas production and pipeline companies are another. Look for value, low debt and nice dividends as we likely to have a volatile market.
Video to consider: “Investing During an Energy Crisis: Uranium, Oil, Gas, and More”
Interview with Brian Gett, business development at Oklo. 1.03 hours at Resource Talks. Put on speed watch.
The interview above reinforces the theme we hold about value investing, dividend and commodity focused investing in this time period. If you can fine all three in one company that’s even better. The interview is long but goes well beyond what I’m sharing with you. I will lean into making statements. Brian (interview) will also make statements but goes deeper into how we got into the current global energy crisis, how long it will last and what are potential solutions.
Some General Facts:
- On average, it takes 16 years to bring a copper nickel mine on stream in the United States.
- The period from 2012 to 2022 saw below average investment in fossil abased energy and Minerals.
- Quality and Grades of minerals found are not what was found in the past.
- Wind, solar and hydro does not have the density or resource availability to solve the current or future energy needs and certainly not function as base load energy.
- Oil & Gas provides 97% of the energy used by the Transportation Industry
- Transportation Industry uses 16% of the use application created from Oil & Gas
In the next one to three years fossil fuels are still the demand energy source and the fastest to bring new supplies to market. Nuclear is the long-term solution for base load energy.
Oil production that has easy logistics and lower restrictions on access or production.
For the EU and Americas, offshore production from the west coast of Africa and offshore the east coast of South America seem attractive. Africa Oil (AOIFF)* and Apache (APA) are two such production companies.
Judge prohibits oil and gas lease sales in the Gulf of Mexico for environmental reasons. This would further restrict USA access to nearby energy. I’m not saying anything about the reason for canceling. I mention this to share as an example of the restrictions on supply which will drive energy prices higher. For those producing energy through oil and gas, higher prices after the exploration and development cost are spent will see higher profit margins. Vermilion Energy (VET)* has production in the North Sea and in eastern Europe that will benefit from the EU’s high cost of energy with short logistic routes.
Africa Oil and Vermilion Energy are in the LOTM Ten Under $10 for the Double. The complete listing and updates on Ten Under $10 holdings will be reserved for LOTM members.
KNOWLEDGE FROM ONE OF THE GREATS – LARRY WILLIAMS:
This interview with Larry Williams at Palisades gold Radio is about two weeks old – September 22, 2022. Lots of current market insight and knowledge shared in a 53 minute interview. Gold & silver covered with insights on current timing. Gold is gaining commercial ownership, but silver is looking better and poised to move higher. Inflation is peaking but that not necessarily good for the broad market. Larry no longer sells a newsletter but does share comments through a page on StockCharts.com. Larry’s 80 years old and still changing up his workout routines with half mile intermittent running, sprints and high jumping. Larry holds the one-year record performance record in an official one-year trading contest for turning 10,000 dollars into 1.1 million dollars.
Larry’s tip for industry to buy in a recession: Alcohol – really statistically correct.
Remember, Caffeine from coffee or tea is not a drug, it’s an Vitamin & Antioxidant!
Written October 8, 2022, by Tom Linzmeier for Tom’s LOTM Blog at https://lotm.substack.com/
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