Energy is Life
Don’t take it for granted. Use it to backstop your investments.
Historically water, food, and shelter are the foundations of life. But that has changed over the last 150 or so years.
Sourcing, processing and delivering water to your home requires energy. Farming, processing and transporting food to the store requires energy. Getting it home requires more. Heating, cooling, lighting, cooking, and food storage in your home requires energy. So, unless you can or do live ‘off the grid’ energy is now life.
We may not like the fact that ‘dirty’ hydrocarbon energy sources - coal, oil and natural gas - remain over 81% of global consumption while nuclear and renewables increase over time. But we must acknowledge that we can’t live without these fossil fuels for the coming decades through this transition. With 10-20% of the world’s supply of oil and liquified natural gas impacted by the Iran war, just weeks from the wars’ outset, countries are beginning to encourage less energy consumption and planning for energy shortages should the war continue much longer.
We personally may be ok in Canada, bearing only higher fuel, food and flight prices, but with the Hormuz interruptions, portions of the world are close to abrupt shortage of life-giving energy. Do you think the citizens of Europe or Asia care about the source of energy when faced with a lack of energy? No. Blunt reality will reinforce energy is life.
So, what’s the point?
If energy is so fundamental to our existence, then it should also be a good investment.
In the previous blogs Fiat, Reset, Nothing Stops this Train and Debasement we reviewed various elements about how our fiat currencies are being devalued and will be reset in time. The direct impact of this process is the devaluation of bonds, which happen to be 40% of the typical person’s savings. For some decades bonds and the bond market were the safe haven relative to the more volatile stock market equities in a balanced portfolio.
I believe our energy transition away from hydrocarbons to nuclear and renewables will last more decades than the currency reset and related bond devaluation. For this reason, I believe energy, like other commodities, is a relatively better investment safe haven than bonds and bond markets. Since we practice what we preach, our investments include over 10% energy companies, including uranium, oil & natural gas producers. Be Prepared.