On several occasions here in Oil & Energy Investor, I have discussed the emerging energy balance and how it is already providing you with some very nice investment plays.
That balance involves two related advances.
The first is an expansion in the number of reliable (and distinct) energy sources. The second addresses the extent to which these sources provide a genuine interchangeable network of availability from such sources.
The rise of renewable sources (solar, wind, biofuel, even geothermal) has been the most visible manifestation of the developing balance. But the crucial element to remember is the balance nature of it all.
As we have noted in the past, this is not an exercise in finding a “silver bullet” to wean the market from a dependence on any particular energy source – such as crude oil.
The rise of renewables may change the dynamics of the mix, but the absolute replacement of an energy source is not the target.
Energy Growth Outside the Mainstream
In fact, given the global nature of the energy market, dominant moves in one region are offset by contrary moves in others. Related: Heroes, Gods And Genghis Khan: Naming An Oilfield
For example, much has been written about the death of King Coal in North America. Yet, coal will continue as the primary energy source throughout Asia for much of the next decade and beyond.
Asia also remains the focus of international energy. While demand is slowing down (although not contracting) in the traditional markets of Western Europe and North America, it is intensifying throughout Asia and the Pacific Basin.
Every analytical report points toward this region driving energy needs and prices until at least 2035.
Then, early indications are telling us the next boom happens on a continent usually ignored when it comes to energy (among other things) – Africa.
The overall energy demand worldwide continues to increase, and at rates faster than the primary reporting agencies – the International Energy Agency (IEA) in Paris, the U.S. Energy Information Administration (EIA) in D.C., and even the OPEC Secretariat in Vienna – have anticipated. Once again, this remains centered on an upward curve moving forward quicker than expected, driven by Asian numbers. Related: Trump Proposes Most Aggressive Offshore Drilling Plan Ever
So, what we are looking at is increasing overall global energy consumption moving forward, as larger populations traditionally outside the mainstream transit into higher energy users. The mix, on the other hand, continues to change.
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This “mix” refers to the increasing use of alternative energy sources like solar, wind, natural gas, and nuclear, among others.
And targeting this mix rather than targeting just oil or one particular source of energy will be key to finding profits in the energy market this year.
By Kent Moors
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