The United States is facing its most severe energy crisis in almost five decades.
I talked about that in my piece yesterday. I also explored how the transition to renewable energy has impacted energy prices.
No matter how you feel about renewable energy, one thing remains true. There just isn’t enough of it to meet our rising energy demands.
Meanwhile, we still need fossil fuels to supply our growing population…
This situation is so urgent, I’m doing something a little different today. In the essay below, I’ll show you how despite soaring prices, there’s one way you can profit from the ongoing energy crisis.
Don’t worry – I’ll still send you our usual Friday mailbag. Look for that at 5 p.m. ET this evening. But first, let’s look at what’s happening to fossil fuels…
Losing Reliable Power
Solar and wind projects can’t provide reliable baseload power. We all know that the wind doesn’t always blow, and the sun doesn’t always shine.
Whether it’s coal, natural gas, or oil, baseload power is there when you need it. Day or night. Rain or shine. Windy or calm. Regardless of the weather, it’s always ready to perform.
But there’s one problem…
Over the next 25 years, 132 coal power plants are set to come offline in the U.S. And coal is a major source of baseload power. This trend is happening as I write this, and it’s putting significant pressure on our energy infrastructure.
Take the Midwest as a case in point…
The regional grid operator, Midcontinent Independent System Operator (MISO), has been fighting an uphill battle trying to replace coal and gas-fired power plants with wind and solar farms.
On top of that, MISO is frequently cranking up all available generators to meet the power demand. It’s a real test of its system’s endurance.
The operator has a plan in place to construct high-voltage power lines to balance supplies. But these projects won’t be wrapped until 2030.
For utility companies like MISO, higher gas prices present a double whammy.
On the one hand, they have to put up with increased costs for generating or buying electricity. On the other hand, they must allocate significant funds to revamp outdated infrastructure and stay ahead of growing energy demands.
And these problems aren’t limited to the Midwest… They’re becoming more common across the nation.
Let’s examine California. Historically, the state imported power from neighboring states during peak demand periods. But the closure of “fossil” plants in those states has put a cap on their capacity to offer extra power.
Losing that reliable power without replacing it with another source of reliable power is a massive issue. That’s especially true when you consider the continued increase in electricity demand.
And shale oil is not coming to the rescue…
The Shale Revolution Is Over
The shale revolution unlocked vast oil and gas reserves through fracking. And until 2020, it seemed to make this crisis inconceivable.
Fracking, which is the fracturing of underground shale rocks to extract oil and gas, revolutionized domestic energy supplies.
Between 2010 and 2019, consumer prices went up by 19%, but energy prices only rose by 11%.
In fact, when you factor in inflation, the real price of energy dropped by about 7%. That was quite a contrast compared to the previous decade, when energy prices shot up by 41%.
In 2016, natural gas overtook coal as the primary source of power generation.
This was great news.
For one, natural gas produces significantly less greenhouse gas emissions than coal.
In fact, the U.S. Energy Information Administration says it emits between 45% and 55% lower greenhouse gas emissions than coal when used to generate electricity.
But these days, the U.S. Shale Revolution seems all but over. Here’s why…
Many companies are focused on drilling without sufficient regard for profitability.
As a result, the industry lost a staggering $300 billion more in cash than it generated between 2010 and 2020. This undermined investors’ confidence, leading to higher borrowing costs and tighter budgets for oil companies.
Fast-forward to today, and most shale companies are still operating with budgets below pre-pandemic levels.
In other words, they aren’t producing enough energy to keep up with rising demand. That’s despite reaping substantial profits from high commodity prices.
Instead of spending on new projects and developments, these companies are using their capital to lift stock prices via stock buybacks.
ExxonMobil and Chevron are prime examples of companies guilty of this practice. They are choosing to prioritize stock repurchases over strategic investments.
And when some of the largest shale oil producers in the U.S. spend their cash on stocks rather than investments in new projects, that sets the tone for the entire industry.
What This Means for Your Money
Now, this situation won’t change overnight. But the bottom line is, shale is not the solution to America’s energy challenges, at least not in the present circumstances.
And right now, renewables aren’t ready to take the reins of worldwide energy demand.
Plus, a complete energy transition from fossil fuels to cleaner energy sources will take years. Decades even.
Meanwhile, we still rely on fossil fuels for most of our energy supply.
But, despite higher energy prices and power plants being scheduled to shut down…
There’s good news on the horizon.
The government is finally enacting laws that will help bring about energy security… And cement the U.S. as the king of energy for decades to come.
In fact, we’re about to see billions of dollars flood into certain energy stocks, thanks to what I call Biden’s Stealth Plan.
A staggering $4.9 trillion is up for grabs… along with over $400 billion just in the months ahead.
And tomorrow – Saturday, July 15 – at 10 a.m. ET, I’m going on camera to reveal what’s behind Biden’s plan… and how you can profit from the massive energy shift that’s coming.
RSVP with one click right here.
Regards,
Nomi Prins
Editor, Inside Wall Street with Nomi Prins
P.S. While most Americans have been distracted by the latest scandals, bank failures, and a panicked stock market…
One energy sector has already delivered gains as high as 223%… 401%… 640%… and even 1,166% or more…
And it all has to do with “Biden’s Stealth Plan for America 2024.”
That’s why tomorrow at 10 a.m. ET, I’m going on camera to reveal what’s behind Biden’s plan for 2024… why the media is barely reporting on it… and why it’s set to unleash a staggering $4.9 trillion windfall for people who are prepared for it.
I’ll also give away the name and ticker symbol of my best pick at the center of this massive opportunity – for free. Simply RSVP with one click here.