Pent-Up Energy

Just recently, the Obama administration rejected the application to build the Keystone XL pipeline, which would stretch 1,700 miles from Canada to the U.S. Gulf Coast. It’s been and looks to continue to be a hot issue, not just for the sake of oil production, but for American jobs as well.

While jobs remain the most significant economic albatross in this country, they probably shouldn’t be the foremost reason for building a cross-country pipeline. But it seems all interested parties have a different agenda. Environmentalists say tar-sands oil production creates more pollution than traditional oil production. Politicians are using the issue as an election-year lightning rod to advance a heated debate over jobs and the environment. The administration says they didn’t have enough time to get all the facts.

[CLICK HERE to read and/or listen to “Rejected Pipeline Becomes Hot-Button Election Issue;” www.npr.org, January 19, 2012.]

But the issue promises to continue, because the production of oil and energy is a mainstay challenge in this country – and all over the world, for that matter. Energy – particularly sustainable energy – is one of the most global issues of the day. After all, there are finite resources on our planet that must be shared by all of its inhabitants.

In recognition of the growing importance of energy resources, the United Nations has dubbed 2012 the “International Year of Sustainable Energy for All.” UN Secretary-General Ban Ki-moon observed at the recent World Future Energy Summit that, “energy is central to everything, from powering economies to combating climate change to underpinning global security.” Stated goals include doubling the rate of improvement in energy efficiency and doubling the share of renewable energy in the global energy mix by 2030.

Interestingly, Nicaragua is committed to reducing its dependence on foreign oil from 80% to 6% within a decade, and wants to become an international leader in renewable technologies by 2016.

[CLICK HERE to read “UN urges achieving sustainable energy for all as International Year kicks off” at un.org; January 16, 2012.]

[CLICK HERE to read “Nicaragua’s Renewable Energy Revolution Underway;” DigitalJournal.com, January 20, 2012.]

Investment Opportunities

When an issue this large focuses global attention, it generally means there’s an opportunity to make money. Not just for self-serving corporations and governments, but for investors as well. Fidelity recently published viewpoints on opportunities within the energy sector, noting that energy stocks tend to perform best at mid and late stages of an economic cycle. It cites three themes for energy prospects in the coming future: (1) the emergence of more productive new drilling techniques; (2) the growth of the liquid natural gas market; and (3) a renaissance in deepwater exploration.

The positive impact of energy innovation is far-reaching, encompassing a cross section of industries, sectors and countries. This smorgasbord of investment opportunities includes energy producers, manufacturers, transportation companies, engineering, construction, technology, Canada, Argentina, and Eastern Europe, among others.

[CLICK HERE to read “Big energy ideas for 2012;” Fidelity.com, December 12, 2011.]

In consideration of increasing global demand for energy commodities and services, let’s take a look at your portfolio to see if a pent-up energy allocation at this stage of the market cycle would align with your risk tolerance and investment goals for the future. Feel free to contact us to discuss further.

 

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*This information is not intended to provide actual investment advice. It is important that your unique situation, goals and objectives be evaluated before such advice can be offered. Please seek a professional specializing in these areas regarding the applicability of this information to your situation.