Oil & Alt Energy Redux

Charles Morand Last week, I conducted an analysis showing the lack of evidence supporting claims that oil and alt energy returns are strongly correlated (claims that sometimes come from outfits as reputable as Bank of America Merrill Lynch).     I don't want to belabor this topic but I thought I would post the results of another, similar analysis I conducted following comments I received on how to improve the first one. In a nutshell, the comments suggested I do the following: 1) Look at daily correlations or even smaller periods, as "common knowledge" market...
green swan

Green swan, Black swan: No matter as long as it reduces stranded spending

by Prashant Vaze, The Climate bonds Initiative In January, authors from several institutions under the aegis of BiS, published The Green Swan Central banking and financial stability in the age of climate change setting out their take on the epistemological foundations for, and obstacles against, central banks acting to mitigate climate change risk. The book’s early chapters provide a cogent and up-to-date analysis of climate change’s profound and irreversible impacts on ecosystems and society. The authors are critical of overly simplistic solutions such as relying on just carbon taxes. They also recognize the all-too-evident deficits in global policy to respond to the threat. In short, they accept the need for central banks to act. The Two Arguments  The paper makes two powerful arguments setting out the challenges central banks face using their usual mode of working. Firstly, climate change’s impact on financial systems is an unknowable unknown – a...

Peak Oil Risk in Muni Bonds

Tom Konrad CFA Bargain hunters looking for opportunities in muni bonds should be mindful of peak oil. Meredith Whitney predicts a wave of defaults in municipal (muni) bonds, followed by indiscriminate selling and potential buying opportunities for some.  She's been widely criticized for the prediction of defaults, but I'm a lot more interested in the prediction of the market's reaction.  With tax-free, AAA-rated munis currently yielding more than comparable taxable Treasury bonds, they seem at least a relative bargain already.  I would not call it outright panic, but I'd expect there are be some bargains...
The cost of Fossil Fuels to pensions

New York State Pension $ 22 Billion Poorer By Not Divesting 10 Years Ago

Research firm Corporate Knights revealed that the pension fund would be $22 billion richer had it divested from fossil fuel stocks in 2008. That's almost $20,000 for of each of the pension fund’s 1.1 million members & retirees. A new in-depth analysis by the research firm Corporate Knights, shows that New York State pension fund would be $22 billion richer had it divested from fossil fuel stocks 10 years ago. That works out to almost $20,000 for of each of the pension fund’s 1.1 million members and retirees. To perform their analysis, Corporate Knights looked at the stock holdings of the pension fund in...

Jim Rogers: What Peak Oil Will Do for Cotton

The most recent issue of Fortune has an excellent interview with Jim Rogers, of Investment Biker and Adventure Capitalist fame, as well as an excerpt from is new book, A Bull in China.  Jim saw the start of the current commodities supercycle early (peak oil is just one driving force for this cycle), but it still has a long way to run, in my opinion, as well as Jim's.   Almost everything has some dependence on energy prices, because of either the embodied energy, or because if the embodied energy of substitutes.   As Jim says in the interview, ...

What the L.A. Methane Leak Tells Us About Investing

by Garvin Jabusch Sempra Energy’s leaking gas field in Porter Ranch, CA, near Los Angeles, has been making national headlines recently, as it now enters its third month of being the largest methane leak in U.S. history. How big is that? The LA Times says that, “by early January, state air quality regulators estimate, the leak had released more than 77 million kilograms of methane, the environmental equivalent of putting 1.9 million metric tons of carbon dioxide in the air.” 1.9 million metric tons of carbon dioxide and counting. In addition, methane isn’t only a powerful greenhouse gas, it can...
To Renewable Diesel

Conversions To Renewable Diesel

by Helena Tavares Kennedy The seasons are changing in many parts of the world right now, but what really is changing this autumn is how the world is looking at renewable diesel. Phillips 66 and REG’s announcement about a new renewable diesel plant on the U.S. West Coast planned for 2021 comes after a notable increase in refineries that are being converted and changed over to renewable diesel. Change is good, especially in this case. As Bob Dylan sang, “For the loser now, Will be later to win, For the times they are a-changin’.” And who knew he was singing about the RFS...

Should Coal Company Investors Breathe Easy After Copenhagen?

Green Energy Investing For Experts, Part V Tom Konrad, CFA A global climate deal in Copenhagen would have been bad for coal miners, and coal companies have been rallying as the economy recovers, but it may not be clear skies for the black rock. In the battle to reduce greenhouse gas emissions, coal is enemy number one.  The global disarray in Copenhagen can only be good for coal mining companies, and they duly rallied when the climate talks ended with little to show for it.  Yet carbon emissions are not the only black mark on the coal...

Shale Gas: If this is such a good deal why are you selling it...

Jim Hansen That is the question many buyers of shale gas assets should have been asking themselves over the last few months. This week’s news that shale gas high roller Range Resource was selling its Barnett shale properties reinforced our view that there is major trouble brewing in the shale gas business. Upstreamonline reported that “…Range Resources Corporation said it will sell almost all of its Barnett shale properties to a private company for $900 million…” Then of course there is the number one shale gas play cheerleader of them all, Chesapeake Energy. Just last week they...

The Best Peak Oil Investments, Part VI: Barriers to Substitution

Tom Konrad CFA There are two types of solution to the liquid fuels scarcity caused by stagnating (and eventually falling) oil supplies combined with growing demand in emerging economies.  The most obvious is to find a substitute to replace oil.  These substitute have barriers to their use as a replacment petroleum based fuel.  Understanding those barriers also leads us to the investment opportunities that arise from these substitutes.  As I wrote the first five parts of this series, looking into potential substitutes for gasoline and diesel, it was clear that many potential substitutes would need...

Shorting Mexico’s Peak Oil Economy

Green Energy Investing for Experts, Part II Tom Konrad, CFA The next Tequila Crisis will be a peak oil crisis.  Mexico's government is dependant on revenues from declining oil fields.  The prospects for replacing these revenues look slim.  Shorting Mexico Country ETFs looks like a good way to hedge market exposure. In Green Energy Investing For Experts, Part I, I discussed why it makes sense to use companies and sectors that may be hurt by peak oil or climate change as a hedge against the market exposure in a green portfolio.  In Mexico, peak oil is already a reality. ...

The Four Best Peak Oil Investments

Tom Konrad CFA The best four stocks I've found in my six month quest to find the best peak oil investments. I apologize for being a tease.  Since March, I've been writing this series I've called "The Best Peak Oil Investments," but in many cases what I've actually done is to warn readers to stay away from particular sectors.  This bait-and-switch was compounded for my syndicated readers at Seeking Alpha when their editors decided to re-title the early articles in this series "Peak Oil Investments I'm Putting My Money On."  If you've stuck...

Life After Coal: It’s Sooner Than You Think

by Tom Konrad, Ph.D.   A couple years ago, I began to see reports that coal supplies might not last the 200+ years we've all been lead to believe, so I wrote an article about what you could do to prepare your portfolio for Peak Coal. Now two years have passed, and Peak Coal is undeniably 2 years closer.  (Did you ever wonder why people who have been saying that we have 200 years of coal for 20 years aren't now talking about 180 years of coal?)  But more than being 2 years closer, the evidence continues to mount.  Caltech...

Dipping a Toe in the Black Stuff

I was tempted by greed, and I succumbed. Last week, I bought the iPath S&P GSCI Crude Oil Total Return Index ETN (OIL), at $19.75 a share.   The Temptation I made the trade as a simple speculation.  I watch oil because the oil price is one of the key drivers of investor interest in alternative energy, although oil is only a true competitor for biofuel companies, not producers of wind turbines (at least until there are a significant number of plug-in electric vehicles.) With crude trading below $40/barrel, oil producers are cutting back on new drilling.  This is...

The Peak Coal Portfolio

Last week, we alerted you to a report from Germany's Energy Watch Group called “Coal: Resources and Future Production,��? which predicts peak coal by 2025.  Readers of AltEnergyStocks are doubtless familiar with peak oil, the inevitable fact that as we consume a finite resource (oil reserves) at some point the rate of that consumption must peak, and taper off.  Serious arguments about peak oil center around "when" oil production (and consumption) will peak, not "if."   The same it true for other finite natural resources, such as natural gas, uranium, and even coal.  The difference with coal is the received...

The Clean Fossil Fuel? Natural Gas Under Fire

By Christopher Mims According to some of the most complete calculations available, when we use natural gas to generate electricity in an average power plant, it results in 40 percent less warming than if we generate the same electricity with coal. If we fully utilized the natural gas-fired power plants that already exist in this country, we could significantly reduce the amount of coal we’re burning practically overnight. What’s more, primarily because of access to new natural gas reserves, proved reserves of natural gas recently shot up to 284 trillion cubic feet – more than we’ve...
Close Bitnami banner
Bitnami