Interesting Finds from 'ASPO: Peak Oil Conference'
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I spent yesterday at the Association of the Study of Peak Oil (ASPO) conference in Washington D.C. As you may know, Energy World Profits economist Gregor Macdonald was speaking as part of a panel on how to invest in the peak oil age.

Gregor’s talk was about the renewed adoption of coal as the primary energy source for the global economy. Oil first surpassed coal in 1965. And now, 45 years later, coal use is about to move ahead of oil again.  

The reasons are pretty clear. As Gregor states, you can’t fund growth with an energy source that’s not increasing. Oil supplies are not increasing. (Sure there are new discoveries, but none large enough to replace depleted supply at declining oil fields.)

In other words, oil is expensive. Coal is cheap, and plentiful. China is currently moving to exploit new coal reserves in Indonesia and Mongolia.

*****Coal use hasn’t risen above oil use yet, but Gregor’s research shows that it will do so in the next couple of years.

Gregor told the conference attendees that the ascension of coal is an environmental disaster. His contacts in China say that the Chinese government is very worried about its aging population, and even more worried about its aging population that could have health problems due to environmental pollution.

Of course, that’s not enough to slow the growth in coal use. Instead, China is turning to clean coal technology that it hopes can mitigate the effects of burning coal. So keep your eye out for clean coal technology.

*****I don’t know how well Gregor’s research on coal is playing to mainstream investors. I suspect no one would be pleased to hear that coal use is increasing at an alarming rate.

But from an investment perspective, coal stocks should do well, especially ones with exposure to China’s massive coal demands. I think we have a pretty good one in the Energy World Profits portfolio.


*****Another presenter made the astute observation that not many oil companies can actually increase their oil reserves. At present, the number is perhaps around 30% of oil companies. In 5 years, it could be as low as 15% of oil companies that can actually increase their reserves.

Clearly, we have a distinct advantage over most investors if we accept the fact that there is not enough new oil being discovered to replace declining reserves at existing fields.

There can be no doubt that oil prices will rise steadily. And it is critical for investors to identify the areas of the world where there is potential for increased supply, and where there are companies we can invest in.

The Canadian oil sands is one such region. And so is the Bakken oil pool.

I have been positioning the Energy World Profits portfolio to profit from the top companies in these regions. To learn more, please, click HERE.

Have a great weekend,  

Ian Wyatt

Posted 10-08-2010 12:06 PM by Ian Wyatt
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