When Good Intentions Go Horribly Wrong…
In the spring of 1984, when I was preparing to graduate from high school in south Louisiana, I was excited to tell my dad about my “great plan” for the future.
Turns out, it wasn’t a “great plan”… as my dad was about to tell me.
My plan: I was going to apply to the University of Tennessee Chattanooga to study astrophysics. Why? Because my high school friend, Stan Nix, was going to play football there.
My dad quickly informed me that UT Chattanooga only had some classes in astrophysics, not a degree program, and that I wasn’t the world’s biggest fan of physics anyway. “Try again,” he told me.
He was right, of course. I was living in a fantasy world filled with pixies and sprites and such… the kind of place where you can get a degree, in a subject you’re not particularly good at, from a university that doesn’t offer that degree in the first place.
Which is my way of leading into the fantastical world we’re living in today.
It’s not filled with pixies and sprites and whatnot. It’s filled with Scandinavian teenagers who—without a lick of economic or industrial knowledge—run around the world spouting off about fossil fuels destroying the planet and how governmental leaders need to move to 100% green energy as of last Tuesday.
It’s fantastical thinking. Idiotic. Ignorant. Uninformed.
But here’s the thing… These teenagers have won the argument. Dad hasn’t set them straight. Instead, they’ve convinced Dad (or in this case, the U.S. and all Western governments).
And that means we’re barreling toward an unprecedented economic disaster that I predict poses a greater threat to our wealth, our lifestyles, and our retirement than anything we’ve seen in our entire lifetimes… including the global financial crisis.
Now, to be clear, I’m all for green energy. I own exposure to green energy in my investment portfolio, and I see huge opportunities for green energy to lead us into a better future. But that’s a future for our grandchildren and great-grandchildren.
Here in the real world of the 2020s, it’s a complete fantasy to believe we can turn off the oil and gas taps and call upon the gods of wind and sun to power the world with electricity by the end of the decade.
Yet, that’s exactly what Western governments are attempting.
Bullied by the green-energy lobby, the West is shutting down fossil fuels production… even though renewables are in no way ready to pick up the slack.
We’re now facing “the worst global energy crisis in history.”
Not my words, by the way. The words of the Paris-based International Energy Agency.
In 2019, before COVID was even a thing, the world’s oil and gas exploration and production (E&P) companies had 836 rigs in operation around the world. Those rigs were feeding global demand for 100.3 million barrels of oil per day.
Today, the world has 722 rigs in production trying to feed daily demand now approaching 102 million barrels per day.
Fewer rigs. Rising demand.
Why are there fewer rigs if there’s ever-rising demand?
Because energy companies are unwilling to spend tens of millions of dollars on hunting for new reserves when governments are constantly putting up fresh environmental roadblocks and telling them that the era of fossil fuels is coming to an end.
Consider what’s been happening…
President Biden canceled the Keystone Pipeline and has allowed less drilling on federal land than Obama, Trump, and every other U.S. president since Truman.
Pennsylvania, New Jersey, Delaware, and New York have all banned hydraulic fracking… even though they sit upon a shale formation with hundreds of trillions of cubic feet in natural gas (enough gas to power the entire U.S. for years).
California, too, plans to ban all new natural gas projects…
These restrictions have proven so effective that we have all but stopped bringing new oil and gas supply to the surface.
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The last time new oil discoveries were this low was back in 1946. Most Americans still didn’t even own cars back then. The U.S. economy today is 10 TIMES larger now than it was in 1946.
The result is that the world’s existing oil reserves are depleting by the minute, and there’s not enough drilling going on to open new wells to replace the ones running dry… even as global oil demand is racing to a new record high.
How does that math work?
The answer is… it doesn’t.
And again, I want to stress that it’s not that we don’t have oil and gas.
The U.S. has the largest discoverable oil reserves in the world… more than Saudi Arabia. But you can’t turn oil supply back on like a light switch.
Finding a new well… estimating its reserves… getting government approval and licensing… extracting the oil or gas… and then refining it…
That process takes years… even a decade or more for complex operations like offshore fields.
This only ends one way: At some point soon, we’re going to find that we don’t have enough energy to power this country.
We’re about to confront an energy super shock.
That will mean a massive spike in gasoline and diesel prices (I predict prices above $10 per gallon at the pump and maybe as high as $15).
This, in turn, will bring us super-heated inflation even as the economy spins lower… all of which will slam the U.S. stock market, robbing working-class Americans of jobs and their retirement savings—again.
And that’s not even the most worrying part…
Here’s what most people don’t understand. Natural gas is the key component in nitrogen fertilizer… which is what allows us to grow so much food on so little land.
So, as energy prices rise, fertilizer prices will rise, too… impacting food production.
This energy super shock will lead to bare shelves at the grocery store and a host of other issues that will seriously affect our day-to-day lives.
That’s why I’ve padded our Global Intelligence Portfolio with energy and fertilizer stocks… so we’re prepared for what lies ahead, by owning the assets that will surge higher.
Thinking I wanted to be an astrophysicist was fantastical thinking. But my fantastical thinking didn’t hurt anyone.
Thinking the world can quickly transition to green energy from fossil fuels is even more fantastical.
And it will seriously impact our economy, our wealth, our food supply… virtually every aspect of our day-to-day lives.
We need to start preparing for it now…