Dave Gilbert here, Editor of Smart Money.
Like him or not, Elon Musk is one of the top visionaries of our time.
That has no doubt helped him become the richest person in the world, according to Forbes, which lists his current net worth at $269 billion. (That’s more than a billion dollars for every adult U.S. citizen!)
He is most famous as the CEO of Tesla Inc. (TSLA), which most people know for its electric vehicles. That makes sense as the company sells more EVs than anyone else, and it is the most valuable automaker on the planet with a current market capitalization of $935 billion.
But Tesla is more than EVs. It is also deeply invested in batteries and energy storage, not just for cars but for entire homes. Tesla is also into solar energy as the owner of Solar City. Some analysts like Tesla as much for its battery potential as for its EVs.
The common denominator there is electric power, which is clearly the power of the future.
That’s why it was so interesting to read recent comments from Musk. At an energy conference last week in Norway, he talked about the importance of traditional fuels like oil and gas…
At this time, we actually need more oil and gas, not less.
Realistically I think we need to use oil and gas in the short term, because otherwise civilization will crumble…
One of the biggest challenges the world has ever faced is the transition to sustainable energy and to a sustainable economy. That will take some decades to complete.
The richest man in the world, much of whose fortune was built on moving away from traditional fuel sources, says we need more oil and gas or “civilization will crumble.”
On the one hand, yikes.
On the other hand, this is exactly why Eric Fry sees opportunities here. The transition from fossil fuels to electric and renewables promises to be one of the biggest economic shifts ever.
And investors can make money in both the old and the new as it plays out…
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Looking for Energy Everywhere
Energy is one of the world’s top priorities right now. There just isn’t enough of it.
Supply was having trouble keeping up with growing demand even before Russia invaded Ukraine, but the web of disruptions created by the war and resulting political fallout have increased urgency around the world.
So, let’s start with the old – oil and gas.
In the United States last year, 79% of energy used came from petroleum, natural gas, and coal sources. That’s down from 86% at the beginning of the century. You can see that the transition is happening, but slowly. That’s why Musk says it will take decades to complete.
Eric saw opportunity in oil and gas even before Russia’s invasion of Ukraine, and that war only reinforced his outlook. In the brand-new issue of Fry’s Investment Report, he shares his latest analysis with his readers. I can share some (but only a little) with you here…
Lots of folks believe the oil price bounce to $130 a barrel was just a “Ukraine thing” – a fluke. Accordingly, most investors seem to think the oil price will trend back down toward $60 a barrel, “where it belongs.”
I do not share that outlook.
Although the $60-oil scenario is certainly a comforting one, it is probably off-target.
As I have stated several times previously, the crude market has probably entered a “new normal” in which triple-digit prices become more common than double-digit ones.
Although the oil price did pop above $100 a few times in the past; it never sustained that level for long. New crude supplies would appear and snuff out those rallies.
But today, global crude supplies are not as elastic as they once were. Rising demand will not conjure up new supplies as automatically and easily as they did on the past.
Then there are newer alternative energy sources. The list is much longer: wind, solar, hydropower, geothermal, nuclear, hydrogen, tidal energy, and even more. Most if not all appear set to have some role in powering our future.
Eric is particularly bullish on the potential of hydrogen. Here’s what he has to say in the new Investment Report issue.
Hydrogen is an ideal green fuel. When combusted, it does not release any of the toxic compounds that fossil fuels do. It releases harmless water vapor. Similarly, hydrogen produces zero harmful emissions when used electrochemically in a fuel cell.
Conceptually, therefore, green hydrogen is the ultimate carbon-free fuel. It combines a limitless supply of water with renewable energy to create a zero-emission fuel, which can then combine with other fuels to reduce their overall carbon footprint.
Most fascinating of all may be Eric’s latest energy stock recommendation. It’s an interesting company that is, he says, a “one-stop shopping play” on this transition from old energy to new. It operates in every major facet of the energy industry, from oil and gas to renewables like solar, wind, and green hydrogen. (Click here if you would like to learn more and receive instant access to the brand-new Investment Report issue.)
Finally, we can’t forget about what needs to be done once this energy is produced. A greater need arises to store this energy so it can be used by devices, cars, and everything else…
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More Opportunities
In other words… we need more batteries. And that requires more of certain metals, another opportunity Eric identified nearly two years ago. In the January 2021 issue of Fry’s Investment Report, he wrote about what he called the Second Electric Revolution…
I’m talking about the massive worldwide transition from combustion-based modes of power generation to renewable modes that feed an array of electric- and battery-based technologies.
Early in this trend’s development, we capitalized by targeting various solar energy stocks. As a group, these stocks performed brilliantly, and as they soared, we booked profits and established new positions to profit from a different facet of the Second Electric Revolution: energy storage.
But rather than investing directly in energy storage companies, I recommended investing in the mining companies that are providing the metals essential to batteries and other energy storage technologies.
We saw evidence of this trend again just Friday from our friend Elon Musk. Word came out that Tesla is considering building a facility in Texas that would develop battery-grade lithium hydroxide. It would be the first such facility in North America, according to Tesla. This follows comments from Musk earlier this year in which he said the company might look to get into lithium refining because prices of the metal were “insane.”
Scientists define energy as the capacity for doing work. We might call it “power” in this day and age. It’s clear that the world needs more of it and that there are a growing number of ways to provide it.
This will create several major “echo booms” in various markets, leading to opportunities in both the old and the new for some time to come.
Regards,
Dave
P.S. It may seem odd that one of the world’s biggest renewable energy companies is an oil company, but that is precisely why Eric Fry sees “huge potential” in his latest energy recommendation. He calls it a “fashion-forward, energy-transition company,” as it operates in both the old and the new. To find out more, you can click here to join Fry’s Investment Report now and get all of the details on this unique company.
On the date of publication, Eric Fry did not have (either directly or indirectly) any positions in the securities mentioned in this article.
