Baltimore, MD–By 2030, the world will still be grasping for fossil fuels to meet its power demands. And despite the recent clamor for the development of renewable resources, the three major fossil fuels–oil, coal and gas–will be vital to the world’s future energy needs.
Look to the future.
That’s all I hear nowadays. But for the sake of not going off on a tangent, let’s look at the future of energy.
Here’s what it really comes down to–we are going to get it from somewhere.
That’s the tricky part, my friends, is realizing where that "somewhere" is . . . then you can milk it for all it’s worth.
Just ask yourself this: Had you known in 2002 that oil prices were going to more than double in the next five years, you would’ve played a few of your investments differently, right?
Finding out where our next source of energy will come from is a bit daunting. We have the increasing interest in everything renewable. Also, technology and science are scrambling to discover new sources of energy. Let’s face it, people are desperately trying to take oil’s crown.
Inevitably, they will succeed. But predicting that successor might prove harder than you think. However, there’s no need to fret . . . not yet, at least.
The Holy Trinity of Energy
The Energy Information Agency (EIA) recently released its Annual Energy Outlook 2007. Want to take a guess on where our energy needs will be satisfied?
Here’s a hint: the word "renewable" is not in the answer.
According to the report, fossil fuels (oil, gas and coal) make up 87 percent of the total U.S. primary energy consumption. And as you can see in the EIA’s 2006 International Energy Outlook, fossil fuels are going to soar over the next two decades.
Granted, oil is the king. Our love for the bubbling crude is just too great to let it go. And my Wealth Daily and Energy and Capital readers know my bullish feelings on oil prices.
But today I want to skip past oil. Don’t worry, we’ll talk much more about it in the coming weeks. I also want to look past natural gas, which offers some extraordinary opportunities (we’ll definitely get to those in the near future).
Instead, I want to focus on coal. World consumption of coal is expected to double in the next twenty years! And annual consumption is also expected to rise an average of three percent per annum until 2015.
Can there be any other reason to be optimistic about coal’s outlook?
Absolutely.
The reason is in its future. Take oil and gas, for example. The majority of oil reserves are located in the Middle East–not the safest neighborhood these days. Prices are constantly manipulated by OPEC. The entire market is bracing itself for when production peaks. And when that point comes, you might want to head for the hills.
Natural gas doesn’t look so good, either. Leading gas exporters are surreptitiously trying to gain control over the gas market in an OPEC-like fashion. Peak gas is also becoming a reality–we only have to glance north to Canada.
The long-term future of coal, however, is rather bright for us. Global reserves are estimated at over one trillion tons. This is enough to satisfy our energy demands for nearly two centuries.
And here’s the good part . . .
Two thirds of the world’s recoverable coal is located in just four countries. And the U.S. holds the most, with over 270 billion tons of coal reserves (one quarter of global totals).
But will there be a demand for it?
Without a doubt.
Emerging countries like China are eating it up. And despite holding the third largest amount of coal reserves, China has announced it could be a net importer of the fuel within two years. Asian contract prices for coal used in power stations will most likely reach record levels by 2008. In 2006, China’s power generating capacity shot up twenty percent.
Listen closely, I want to stress this part . . .
The world must meet its future energy demand. This is a fact. Technology advances will assure we don’t fall back into the Stone Age. But the power has to come from somewhere.
What you need to realize is that renewable energy isn’t ready take over yet. Like it or not, the world is going to be consuming fossil fuels on a massive scale for the next two or three decades. Once you accept that fact, then you can move on to profiting from it. Stay tuned for the best ways to profit from these fossil plays.
Until next time,
Keith Kohl
