Welcome to the Energy and Capital Weekend Edition — our insights from the week in investing and links to our most-read Energy and Capital and sister publication articles.
There are always hot themes in the market. And we try to get ahead of them for you.
Some of these themes — peak oil, for example — are larger and more sustained. Others, like seasonal commodity cycles, are shorter… But they all make early investors money.
This week, four news items in particular caught my eye — not because they were earth-shattering announcements; but because they validated trends Energy & Capital editors have been harping on for months.
So when I see headlines like the ones below, I know readers are profiting if they’ve followed our advice.
1. GE to Buy 25,000 Electric Vehicles
We’ve only been saying the future of transportation is electric for a half decade. And on Thursday, GE (NYSE: GE) said it would be so.
The largest conglomerate in the United States with a market cap of $174 billion is replacing half its fleet with EVs in a move it hopes “will speed acceptance of electric cars by getting more of them on the road more quickly and prompting investment in the equipment that users will need to charge them.”
GE has already partnered with Better Place, has a stake in A123 (NASDAQ: AONE), and says it can generate half a billion dollars in EV-related revenue in the next three years.
By announcing the largest purchase yet by any buyer of EVs, GE’s Jeff Immelt says his company “will accelerate the adoption curve, drive scale and move electric vehicles from anticipation to action.”
He’ll be buying GM’s (IPO on the 17th) Volt and Nissan’s (NSANY.PK) Leaf, among others.
Our coverage of Evs and batteries can be found here, here, here and here.
2. Neo Material to Pass on Rare Earth Price Hike
Ian Cooper’s been spouting off about rare earths to anyone who will listen.
In a nutshell, China controls about 95% of the global supply of these crucial minerals, but recently cut export quotas by 70% — sending rare earth-dependent industries, countries, and prices of the resources themselves into a panic-stricken state.
Rare earth refiner Neo Materials (TORONTO: NEM) announced this week it will be passing the higher costs onto its customers.
Company CFO Michael Doolan said it’s been experiencing “significant raw material cost increase, with input cost now exceeding the previous peaks of 2008.” And he says prices won’t stop until they reach all-time highs.
To get an idea of how crucial these minerals are, Neo’s products go into everything from wind mills to cameras to defense systems, and it counts Samsung, Canon, Hitachi, and Philips as clients.
Neo’s shares were at an all-time high this week. But even bigger gains will come from new sources of rare earths outside of China, as the Middle Kingdom’s export cuts are forcing rare earth refiners to look for new supply.
3. Chevron to Acquire Atlas Energy for $3.2 Billion
Keith Kohl has been saying new natural gas finds like the Marcellus will make investors rich for years. And he got some big validation this week.
Chevron (NYSE: CVX) said it would buy Atlas Energy (NASDAQ: ATLS) for $3.2 billion, making the latter’s shareholder’s instantly a third richer.
According to the Wall Street Journal, “low gas prices [currently] present an opportunity to buy assets cheaply and hope that prices rebound as the economy recovers.”
And Chevron Vice Chairman George Kirkland believes the Atlas acquisition gives his company access to “one of the premier acreage positions in the prolific Marcellus.”
Keith will have other ways for you to profit from this nat gas boom in the next few weeks.
4. International Energy Agency Say “Peak Oil” Has Hit
This one’s my favorite, because it’s the very concept on which Energy & Capital has been built…
In it’s most recent World Energy Outlook, the IEA says peak conventional oil hit in 2006, and the emerging supply-demand gap will have to “be made up from rising production of natural gas liquids and unconventional oil, notably Canadian oil sands.”
The conclusions led IEA Chief Economist Fatih Birol to declare, “The age of cheap oil is over… Governments and consumers should be prepared to pay higher oil prices.”
The IEA model shows if governments continue current consumption rates, the price of oil will hit $240 per barrel by 2035 as demand rises to 107 million barrels per day.
Ideas about how to profit from these themes below.
Call it like you see it,
Nick
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Kiss My Vindication: Peak Oil Goes Mainstream
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What’s All the Buzz about Rare Earths?: 3 Reasons Rare Earths are the New Oil
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Sunless Solar: Profit from the Fuel of the Future
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Effects of Quantitative Easing: 900 Billion More Reasons to Own Gold and Silver
Analyst Greg McCoach reveals the truth behind quantitative easing, and gives investors a clear picture of the effects of debt monetization.
This is a World Beater: How to Play the EV Revolution Starting in December
Editor Christian DeHaemer tells readers why he thinks the Nissan LEAF is all that, and how to play the EV revolution starting next month.
