Senior Managing Editor’s Note: This week, we’re sending you some of the best content we’ve published since the beginning of the year. We hope you enjoy this special series. We’ll be back Monday, July 18, with brand-new research.
Did Elon Musk say what I thought he said?
“Hate to say it, but we need to increase oil and gas output immediately. Extraordinary times demand extraordinary measures,” Musk tweeted on Friday.
When the CEO of Tesla and world’s greatest innovator is calling for more oil and gas production, you know there’s an energy crisis.
Oil hit $130 per barrel on Sunday, its highest price since 2008.
As it turns out, I picked the wrong day to do my fiancée a favor and fill up her gas tank.
I’ve been monitoring the global energy crisis for a while.
My view has been that tight supply is here to stay, and energy prices will continue to remain high.
I wrote about it back in November, when oil was trading at $75 per barrel.
The Russia conflict will continue to tighten the global energy supply, so things could get worse in the near term.
But, at this point, I wouldn’t put on an oil and gas trade.
You’re late to the party. Fossil fuel consumption peaked in developed countries 20 years ago.
Without an increase in demand, the supply-and-demand imbalance will work itself out.
When this happens, many momentum traders will be left holding the bag.
We saw this happen in 2008, when oil spiked to $140 per barrel then fell back to $40 within six months.
The better trade lies in clean energy.
Solar Makes Sense
Clean energy is better for the environment, sure. But I’m looking purely at where the money is going.
We’re seeing countries band together to make a full transition to clean energy.
The U.N. has pledged to be net-zero by 2050.
For this to pan out, there will need to be $4 trillion invested in clean energy annually by the end of the decade.
That’s more than triple the current level.
A large chunk of this investment will be used to build out global solar capacity.
BloombergNEF expects global solar capacity to more than quadruple by the end of the decade.
From a cost standpoint, solar makes sense.
Solar panels are 90% cheaper than a decade ago. This has made solar cheaper than oil and gas plants in two-thirds of the world.
From a geopolitical standpoint, solar also makes sense.
Do you think we should depend on oil cartels for energy?
With what’s going on in Russia, many are waking up to this problem.
With solar, there’s no cartel controlling the supply of the sun.
Here’s an Easy Way to Trade the Solar Boom
To invest in solar stocks, you can buy the Invesco Solar ETF (NYSE: TAN).
Solar stocks peaked after the 2020 election and have pulled back 30% since.
(Source: Bloomberg.)
The market got ahead of itself when it was clear the new administration would be solar friendly.
When the frenzy wore off, solar stocks pulled back.
This gives you an opportunity to get in now at a lower entry price.
Regards,
Research Analyst, Strategic Fortunes