Sticker
shock
Global dependence upon
low-priced fossil fuels has become something akin to an economic
"given", one, unfortunately, that doesn't draw enough attention from
market watchers and professional analysts.
The world's appetite
for fuel at some point is going to exceed our ability to produce it. Major discoveries in alternative sources are
a long way from being implemented. These
facts make the world less stable and susceptible to political deal making for
expediency sake. While the globe's
consumption of fuel is revving at an extremely unsustainable rate, renewable
industries' motors are stuck in the slow lane.
In fact, the energy infrastructure isn’t sufficiently mature enough to keep
up with our appetite for product or to transition smoothly to alternatives.
Curiously,
globalization and commercial trade in the last 50 years has, for the most part,
alleviated some of the stresses placed on the fuel industries, despite risky
political outcomes, by turning nation-states into indispensable partners. Today, however, the drumbeat influences of
nationalism and isolationism are changing our balances of trade and hastening a
decline in cooperation and research and development when it is needed the
most. As in prior economic cycles, the
allure of alternative sources....and putting them online expeditiously....is
being quelled by cheaper fossil fuels at present.
While there has been meaningful
conversation about migrating toward alternative technologies, the switch is in
the distant future. Finding and
implementing these alternative sources will only ramp up demand for energy
consumption when we really need to apply the brakes to runaway wasteful usage.
Over the next
generation populous nations, such as China and India, will exponentially suck
up increasing amounts of global energy product.
That demand will surge even more thereafter. Together with similar trends across all the
globe's emerging populations and you are now talking about a compounding of a
problem that only peripherally has a solution today. Such amplification of demand forebodes higher
prices for energy in the immediate future.
Adding to the
uncertainty in this discussion is a greater instability in political speech and
inflammatory rhetoric between nations.
We are witnessing an increasingly harsh retreat from decades-long cooperation
and "globalism" which is creating a hoarding of territorial resources
and shortages in regions that are not natural producers. Radical governments are exerting
greater/tighter controls over their supply chains and bringing fewer resources
to the marketplace. Time, and arrogance,
are the enemy of less expensive fuel.
One can only imagine the extreme situation...a major supply disruption
occurring out of spite.
Losing
"energy"
The reason that all
this matters, whether the topic is energy or technology, healthcare, food,
water, etc, is because financial markets currently have become too territorial,
too proprietary, in a world that, like it or not, has become more
interconnected, more dependent upon the cooperation of science, government, and
the general public. At the end of the
day, there is no S&P market, no Dow Jones market, nor a DAX market or a CAC
market.
Instead, there is a single
globe, spinning around on its axis, with limited resources to go around for
everybody....rich or poor.
The art of investing is
to seek out circumstance for an investment
market that crosses all borders, all
political convention, all time zones, all nations, and directs those resources
towards, yes, making money.... while still solving the important issues of our
time and beyond. Sometimes, being able
to see the forest for the trees removes the distortions that can occur when we
intensify raw emotion and minutiae that cloud our longer term perspective. Having a framework from which to parse the
finer points from the big picture is much more effective than spinning one's
wheels constantly...and accomplishing nothing.
Hunger doesn't stop at
4pm, Eastern. Poverty doesn't discontinue
at 4pm, Eastern. Bridge and road
infrastructure doesn't improve at 4pm.
Cancer and other severe illnesses don't recede at 4pm.
Investing....really
investing for the welfare of our future....also isn't an activity that should
cease merely at the stroke of the 4pm closing bell.
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