In September, I flew to the U.K. for boots-on-the-ground research.
While I was there, Britain got a new prime minister… and Queen Elizabeth, the longest-sitting monarch, passed away. And they just got another new prime minister last month.
But something else was also brewing below the surface, which has implications for your money today.
I’m talking about the looming energy crisis.
Everywhere I went in the U.K., there was talk about energy price caps. And businesses and homes were hunkering down for what may be a difficult winter.
But here’s what I also found: Energy crisis and energy transformation are happening at the same time.
I saw this firsthand in the Fulham neighborhood of Southwest London. It’s near where I used to live when I worked as a Senior Managing Director at Bear Stearns in the 1990s.
Besides nostalgia, something struck me in Fulham that was totally new. It was a Shell station. But not your average gas station. Instead, it was one foreshadowing the future.
See, in January, Shell converted one of its regular gas stations into a charging hub station for electric vehicles (EVs). That was the first time Shell converted any of its existing gas stations into an EV-only charging hub.
Shell’s new EV charging hub in Fulham, England, used to be a gas station
Shell lays out its plan for the energy transition
This sort of transition isn’t happening just because it’s good for the environment or because it promotes national security. Although it does that, too.
It’s because demand for new EVs is far outpacing the current charging ecosystem. And that’s especially true with the high prices of gasoline.
That said, traditional energy isn’t going away. This energy crisis shows an urgent need for oil and natural gas. But it also shows that the transition to new forms of energy is necessary for the future, too.
The Future of Energy
Since I left Wall Street in 2002, it has been my mission to do one thing: Follow the money from Wall Street to Washington and back again… and help regular folks profit from that flow.
This mission is more important to me now than ever before. That’s because The Great Distortion – the disconnect between the markets and the real economy – has become permanent.
Thanks to the Federal Reserve’s rampant money creation since the financial crisis of 2008… and during the Covid pandemic… the real economy and the financial markets will never converge again. At least, not in my lifetime.
But every distortion creates opportunity – especially during periods of market uncertainty. And some of the biggest opportunities right now are in the energy markets.
See, Shell’s EV charging hub isn’t the only sign of the future of energy in London. The city’s government is introducing measures to reduce emissions and support the EV sector.
Take the congestion zone around London’s central area. It now costs £15 ($17) a day to drive through.
The city government also introduced something called an Ultra Low Emission Zone (ULEZ). It tacks on another £12.50 ($14.20) for “high emission” vehicles, which is most gas cars.
That means drivers who don’t have an EV or low-emission hybrid will pay about $31 a day to drive around central London.
This is one of the U.K. government’s most overt policies to reduce emissions and improve public health. That also means it is not going to be reversed any time soon.
With this policy, the government is basically pushing consumers to buy electric vehicles. And because air quality has improved, it plans to expand the ULEZ.
Other cities are now also introducing these low-emission zones. That includes Oxford, Manchester, Aberdeen, Liverpool, and Sheffield. That’s also part of the U.K.’s ambition to wean itself off imported oil and gas.
It comes down to the basic economic principles of supply and demand – and profit.
In the U.K. alone, 190,000 new EVs were registered just last year. Those figures are set to rise as gasoline prices skyrocket. Yet, there are only 29,000 EV charging points in the country.
That means there’s a growing demand not just for vehicles, but for charging stations, too. For energy infrastructure in general.
What This Means for Your Money
Of course, this isn’t just happening in the U.K. It’s happening in the U.S. and around the world.
And with the Federal Reserve set to enter what I consider Stage 1 of its three-stage pivot as soon as at its next meeting… and Congress likely to swing Republican at tomorrow’s midterm elections… the entire energy and energy infrastructure sector will see a fresh round of interest from Wall Street.
See, I just got back from a trip to Washington. While I was there, the main thing I heard was that, regardless of who wins the House and Senate, the focus on physical infrastructure will remain. That means support for both traditional energy and New Energy.
For example, I had a meeting with a senior staffer of the Republican Congressmen who signed last year’s Bipartisan Infrastructure Act. And they want to get things done even if there’s a “lame duck” period coming for Congress.
In my Distortion Report advisory, we have seven New Energy names in our model portfolio that stand to profit. That includes a new name I recommended in our October issue (paid-up subscribers can catch up here).
Out of respect for my paid-up subscribers, I can’t give away the names of these open recommendations. But, if you’re not paid-up yet, you can still get broad exposure to the New Energy trend through an exchange-traded fund (ETF).
The iShares Global Clean Energy ETF (ICLN) is a great place to start.
It holds close to 100 stocks in various New Energy sectors – from wind to solar to geothermal power. These sectors present excellent investment opportunities for the long haul.
Editor, Inside Wall Street with Nomi Prins
P.S. As I mentioned, buying an ETF is a great way to get broad exposure to some of the New Energy sectors that will thrive in the years ahead. But if you want even more upside potential, there’s no better way to invest than to buy individual names.
At my Distortion Report advisory, I look for the best-in-class companies across our five distortion profit sectors. And right now, I’ve got my eye firmly on the New Energy sector. That’s why, in our October issue, I recommended a company that’s already a traditional energy giant… and is now positioning itself to become a New Energy leader, too.
It’s already up 7% since I added it to our model portfolio – with plenty more upside potential left. To find out how to access it – along with the six other New Energy names in our model portfolio – watch this video presentation I put together.