The Capitalist Investor - Episode 111

Mark is joined in this week’s special episode by Daniel Turner, founder and director of Power the Future, a non-profit advocacy organization that delivers truth and research to the energy conversation. We like to call him “Dan the Energy Man,” because he sure does know how to spark a discussion and keep the momentum flowing. What do markets and the energy industry have in common? To the eye they look simple, but the deeper they go, the more complex they get. The issues we cover in every episode, one way or another, influence the market –– but they also have an effect on the energy industry that runs our world. In Episode #111 of “The Capitalist Investor,” Mark and Daniel explore the correlations between the economy and its markets, fossil fuel energy and politics to discuss what all our futures may have in store.

Outline of this Episode:

  • [1:00] Where energy and the markets overlap
  • [6:10] The issue with being fueled by politics
  • [14:00] Future conflicts will be driven by energy and the economics of it
  • [26:10] What will power our future?

Just like the markets, the energy industry is a complex system

We love how complex and competitive the market is and the energy industry is the same way. Everything we talk about or see in the media: different policies, national security, domestic issues –– almost every issue that arises, is arguably one that has some sort of energy foundation or effect on energy outcomes.

When Omicron’s discovery surfaced in November, people panicked and started to pull back their spending and traveling and the market reacted to that. The oil industry did too. Oil is currently $85 a barrel and is expected to rise to at least $100 a barrel. Rising fuel prices will continue to hurt the average American family, and an abated economy by complicating costs of production in many different sectors.

Similar to the stock market, the energy industry and producers of it work best and to the highest standards under free market capitalism, where there are less government sanctions and regulations in the way. When people in the free market can do what they do best, more is produced for less, for the greatest number of people.

Biden’s administration has ultimately scared off oil and gas investments

We know many of you listeners listen to learn about investing and how to improve as an investor. So, why are we talking about oil, gas and energy? The simple answer: the oil and gas industries are few of the most market intensive, labor intensive, and capital intensive industries there is to be involved in. But there are just too many people and different forces attacking it. People are more hesitant than ever to invest in this energy sector.

We’re not surprised to see that some of the largest banks appear hesitant of this industry –– especially after the Biden administration stepped in early last year. Environmental pressures, political agendas and policy rumors have intimidated both banks and investors.

Since day one, the Biden administration has been pushing for “The Green New Deal,” mandates based on climate change and a transition into renewable energies like wind and solar power. Oil and gas companies are trembling over the possibility that all funding will eventually be cut off… and the Fed can do that.

The economics of energy and those who wield its power

Fears over a Russian invasion on Ukraine have sparked concern over oil supplies and the energy markets all over the world. Russia is currently one of the largest exporters of oil and natural gas supply. Throughout history, energy has been its main source of income and economic stability, but what exactly is happening now?

Russia’s President, Vladimir Putin has been known to have aggressive policies towards former members of the Soviet Union that broke away –– it’s no surprise that political tensions are rising once again. Putin is simply flushed with the capital that stems from a large oil and gas industry that’s rapidly getting more expensive. Countries with energy dependent economies have the ability to wield global intimidation when they supply much of the resources that others finance them for.

Large exporting nations understand that geology is geology, we can’t control where we find our resources and much of the world depends on others to supply them.

Energy economics is one of the most aggressive drivers of global conflict and being an energy independent nation helps ensure stability. Being energy independent is great for the economy, national security and it also weakens international opponents. But currently, the Biden administration’s preemptive efforts to transition energy production towards wind and solar sources would mean foregoing American oil and gas and once again, financing other opposing sources –– weakening our global stability.

The electric vehicle industry is fascinating, but what problems will it stir in the future?

Tesla never ceases to captivate us; it’s constant reimaginings of the future are enticing. Although the electric vehicle market is still fresh, new, and exciting, there’s still too much we don’t know about it.

Where does the sourcing from their technology come from? What do EV supply chains look like? If we ever transition to a country that relies solely on electric vehicle transportation, how much of the sourcing will require America to depend on other countries? We can barely keep up with our own demand for combustion engine vehicles, much less lithium battery powered vehicles.

Advocates for renewable energy: wind, solar and electric vehicles insist that they are taking off with promising results and will be the future. There’s no doubt that someday they will be. But currently, we are not in the place to depend on these sources or even readily prepared to decrease our use of them.

According to the U.S. Energy Information Administration, in 2020 over 70 percent of the American energy consumption was sourced from coal, natural gas and oil, while renewable energy only accounted for roughly 12 percent. Someday we may be able to transition into renewable sources but it will be an extremely long process –– 70 percent is a high consumption rate to transition from in a short amount of time. We have to find a balance with how we use different sources first.

Those who have the capability of changing our future into something that can successfully rely on renewable energies are most likely working in an environment that still utilizes conventional energy.

If we push traditional sources of energy away all at once, we’re punishing our future and taking risks on a movement that hasn’t been perfected yet.

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Keep Listening to The Capitalist Investor:
Episode 15:
Spending Strategies in a Bear Market, Ep #15
Episode 31:
Handicapping the 2020 Election, Ep #31
Episode 47:
11 Investments in Your Home That Pay Off, Ep #47
Episode 63:
Jeff Bezos and Amazon: Past, Present, and Future Ep #63
Episode 79:
7 Ways Biden Plans to Tax American Families (Part II), Ep #79
Episode 95:
5 Beaten Down Stocks to Buy on the Dip, Ep #95
Episode 127:
Retail Earnings Tank & What The Heck is Greenflation? Ep. #127