The Russia-Ukraine situation is dominating headlines. (We’re guilty, too.) Will Putin invade Ukraine? Is he bluffing? Is this a bargaining chip in his demands from the West?
We’ll see. My colleagues Matt Clark and Charles Sizemore riffed on the Russia situation earlier this week. They think U.S. investors have plenty of other issues — like the Federal Reserve’s monetary tightening and inflation — to worry about.
Regardless, the standoff between Russia and Ukraine is a reminder that global politics can still throw the occasional wrench in your investment plans. And it also ties back to one of my favorite investment themes for the next decade: the rise of renewable energy.
A Different Way to Think About Green Energy
Most of the excitement surrounding green energy focuses on its environmental impact and attempts to slow down global warming. I share that enthusiasm, of course. Why wouldn’t we want to live on a cleaner planet with less air pollution?
But there are other angles at play.
Back to Russia and Ukraine…
Most European capitals are wary of Russia. They remember the Cold War, and a militant Russia on their borders makes them uncomfortable. That’s understandable.
Yet you might‘ve also noticed that most European leaders have been reluctant to push back all that hard because Russia supplies them with something they can’t live without: natural gas.
Europe needs Russian gas… and they know it.
The U.S. Wants to Rely Less on Foreign Oil
Let’s think beyond Russia.
The U.S. has pulled most of its presence out of the Middle East. But think about the amount of money and manpower we’ve spent over the decades:
- The Iran-Contra affair in the 1980s…
- The Gulf War of 1991…
- The second Iraq War of 2003…
The U.S. still relies on foreign oil — but green energy will change that.
It was one thing after another. And while each case was a little different, it’s fair to say that oil played a role in our decision to get involved. We desperately needed Middle Eastern oil, and that forced us to focus on that part of the world a lot more than we would have otherwise.
Even with our involvement, the sheer volume of energy we import has meant that a good share of our capital has gone to regimes that are downright hostile to us. Now, our energy dependence isn’t anything near as extreme as it used to be.
In 2020, the U.S. was a net exporter of crude oil. We sent more overseas than we brought in. Part of this was due to the lack of demand during the pandemic, and we’ve since become a net importer again. While we produce a ton of energy at home, we still need foreign sources.
U.S. Green Energy Will Change the Picture
Now, think about how valuable renewable energy is in this context. The more energy we produce at home, the less we need to import.
We won’t eliminate fossil fuels any time soon, and in fact, I’ve recommended good, old-fashioned oil-and-gas plays in my premium stock research service Green Zone Fortunes. I still believe there’s plenty of money to be made in more traditional sources. But each barrel of oil replaced by renewable energy is a barrel that won’t need to be imported from overseas.
Reducing energy imports will also take a bite out of the trade deficit. Energy imports have contributed hundreds of billions of dollars to the trade deficit over the decades. That weakens the dollar and contributes to inflation at home.
But the bottom line is price. For the better part of two centuries, you couldn’t beat oil and gas in terms of bang for the buck. That’s no longer the case. New renewable projects are cheaper than most oil and gas projects, and they don’t deplete. They are renewable.
We’re not trying to save the world in Green Zone Fortunes. We’re looking to make solid, long-term investing profits. But if we can do well and do good at the same time… why wouldn’t we?
That’s why my team and I are putting the final touches on an exciting new opportunity in Green Zone Fortunes. It involves a tiny Silicon Valley company using its AI software — known as the “Infinite Energy” platform — to unleash the largest untapped energy source in the world. Stay tuned.
To good profits,
Adam O’Dell
Chief Investment Strategist