energy-war-oil-renewable-stocks

As I write, the world’s superpowers are waging an all-out war for control of a key strategic asset: energy.

Like all wars, we’ve been dragged into this Energy War whether we like it or not. But, unlike any war, it presents nothing but positive outcomes for those who can see it for what it is.

I’m talking about the Energy War – which is quickly shaping up to be the biggest profit opportunity I’ve seen in my life.

On one side stands the old guard, fossil fuels. Titans of the global supply chain and an indispensable part of our daily life.

On the other stands the small, but growing and newly emboldened renewable energy. While its solutions so far account for a small fraction of the world’s energy output, it is growing and now has a major tailwind at its back in the form of government funding.

Who will win? Trick question. At least for the next several decades… the answer is both.

Anyone picking sides and choosing to invest in just one side of this war is missing the big picture. Untold billions of dollars are pouring into both industries simultaneously. At the same time, the demand for any energy, no matter its source, is accelerating.

I believe by 2030, we’ll look back on buying the best companies in both industries as like buying the best tech companies in March 2009.

Today I’ll share why I’m not picking sides in this war, and am instead going “war-profiteering” by investing in both the best fossil fuel AND renewable energy stocks at once.

And finally, I’ll show you a dead-simple way you can position yourself today.

Understanding the Divide

The first step to profiting from the Energy War is an honest look at the global energy picture.

The prevailing narrative is that the world is quickly transitioning from fossil fuels to renewable energy. Solar panels, windmills, geothermal, and hydroelectric power are the future, and the future is now.

I won’t deny that’s an admirable goal. Who doesn’t want a world without all the environmental damage that comes with fossil fuels?

But that’s exactly the thing. Right now, this is a goal that’s being discussed as if we’ve already achieved it. The reality is, we’re quite far off.

Just take this chart from Our World in Data, which shows that from 2000 to 2021, the energy consumption of oil, coal, and natural gas have been on a steady rise.

Meanwhile, hydropower, wind, solar, and other renewables haven’t even come close to catching up.

That’s despite trillions of dollars spent on renewable energy technologies over the same timeframe.

This tells me it will take MUCH longer to unwind our dependence on fossil fuel than most anticipate.

The current stated goal of the United States is to be carbon neutral by 2050. That’s 27 years from now. Looking at the meager progress renewables have made since 2001, something doesn’t quite add up here.

However, that hasn’t stopped the U.S. from making a strong commitment to renewable energy.

Last year, Joe Biden invoked the Defense Production Act to devote hundreds of billions of dollars to “accelerate domestic production of clean energy technologies, including solar panel parts.”

The government is getting behind renewable energy in such a big way, Biden used a presidential power typically reserved for emergencies.

Renewable energy stocks got a big boost from this, breaking away from the bear market and managing to hold onto their post-pandemic gains.

Renewables have a long, uphill battle to fight in the Energy War if they’re going to unseat the entrenched king that is fossil fuels.

The fact that fossil fuels power a vast majority of the global economy is already a strong position to be in.

But if we take a step back even further, and just look at how intertwined with fossil fuels humanity has become, it becomes clear just how exaggerated the death of this energy source really is.

Let’s think about infrastructure. Right now, the world is built around fossil fuels, full stop. Pipelines cross the continents and oceans, gas stations are on every corner, and the vast majority of all vehicles – land, sea, and air – all require fossil fuels to operate. Electric cars are poised to change that, but again, not anytime soon.

A rapid displacement of this infrastructure alone would be a reckoning not just for fossil fuel companies, but everyone that participates in modern civilization.

Even assuming we move to a fully renewable energy economy, we’ll still need oil for things like plastics, solvents, polyurethane, and yes, even to build solar panels and wind turbines.

That means, even in a fully renewable future, fossil fuels and oil in particular will be a part of the world economy.

Regardless, I don’t assume we’ll see that day anytime in the next several decades.

Instead, I’m following the money. And the money right now is pointing to the best-in-class fossil fuel AND renewable energy stocks in the market.

This dynamic is where we need to focus our attention. It doesn’t matter if we’re in a genuine rapid renewable energy transition or not. What matters is the sector is growing and attracting capital at a rapid pace. And so long as that continues, there will be bountiful opportunities in that sector.

And at the same time, as fossil fuels continue to play a big part in the global energy picture, we can invest in that space too and benefit from their dominant position.

Fossil Fuels Are Still King of the Hill