“People and progress drive energy demand.”
William M. Colton, an executive at ExxonMobil, said this at a presentation earlier this week. And if you think about this simple statement, you’ll understand how profound it is.
Progress and population are directly tied to energy. This is visible all throughout history…
Without the development of coal to generate steam and steel, the Industrial Revolution never would’ve taken place.
The people of the world wouldn’t have seen progress on several important fronts like poverty, health care, transportation, and fresh food and water.
But since the development of this energy and the boom times of the 1800s and 1900s, we have seen even more amazing advancements.
Back then, the world’s population was at about 1 billion. Today, it’s exploding over 7 billion.
In his presentation for Exxon, Colton said this population growth would continue for decades and cause energy demand to rise.
10 Billion People on Earth
Population is a huge driver of energy demand…
Think about it: More people means more demand for lighting, heating, and all of the other conveniences of the 21st century.
According to the Brookings Institute, the world population will be nearly 10 billion by 2030.
What’s even more shocking is that, according to the research firm, about half of those people will be in the middle class.
If you’re keeping count, that means 5 billion middle-class consumers by 2030 — an increase of 3 billion in just 20 years.
So it almost goes without saying that energy demand will skyrocket past its current levels. The only question remaining at this point is which type of energy will fill in the gap for all of this new demand?
Many pundits muse about this question every day… and if you see anyone choose one over the other, they’re probably wrong.
Fossil Fuels Going Away?
With such tremendous population growth on the way, it’s inevitable that demand for all types of energy will increase out of necessity…
Everything from alternative energy like solar, wind, and geothermal to traditional forms like coal and natural gas.
Don’t be surprised to see uranium, thorium, and hydrogen make technological strides as well.
With so many people ready to compete for resources and a better life, you could safely bet that pretty much all forms of energy will be in short supply.
According to Exxon’s energy outlook for 2015, there will be a 35% increase in global demand for energy by 2040 because of population and the human desire for progress.
I mean, there are still people in the world without running water, access to hospitals, or even indoor toilets… but you can be sure they all crave these things.
And they still will a few decades from now, but it will be much harder to obtain these comforts unless we grow our sources of safe and reliable energy.
That’s why Exxon, although a little biased, also predicts that the primary demand growth is going to be directed at two sources…
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Oil and Natural Gas
The number one energy source through 2040 and beyond will be oil. Demand for it will grow 30%.
And it will be followed closely by natural gas, which will ultimately take over for coal in terms of power generation. Gas demand is going to increase 65% by 2040.
Although most of this information comes from Exxon, the biggest energy producer in terms of natural gas and oil, we can still rely on it as a measure of long-term trends.
A lot of people believe our recent bear market for oil prices could cripple development in North America, or that Russian geopolitics could crush demand in Europe. The truth is, neither of these scenarios — nor any other like them — matters.
What matters is that one thing will not change: demand.
No matter what prices do, who’s in charge of what country, or where it comes from, the world will demand energy. And the most reliable sources are oil and gas.
Although these trends are based on very long-term figures, as investors, we simply cannot ignore where the market is headed.
Our current economic environment may inform our short-term choices, but the best investments will reflect what’s happening now and what is going to happen in the future.
That’s why we at Energy and Capital are looking at one investment that has bullish potential for the short and long term…
Buy Conventional Oil
Since oil will still be the number one energy source for decades to come, we look for investments in the sector that will be the most profitable.
Right now, most of the world’s supply growth in oil comes from right here in the U.S. by way of hydraulic fracturing and horizontal drilling, an unconventional (and expensive) method.
But with prices as low as they are, this oil will not be as profitable as conventional oil obtained through old-school vertical drilling.
That’s why we look for conventional players with the best upside.
Right now, one of my colleagues has found such an opportunity. It’s a small conglomerate sitting on and producing oil from a field containing 13.7 billion barrels.
Most of this oil is conventional, which means it’s much cheaper to produce — and that’s absolutely essential in today’s environment. Beyond that, as development and demand grow, so too will the share price of this play.
I urge you to have a look for yourself and position yourself to profit off of these inevitable trends.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
