The International Energy Agency (IEA) has finally confirmed what the rest of us already knew…
Our world is in the midst of a global energy crisis.
What matters now is how long it lasts and how we solve it. Because as is always the case when it comes to energy solutions, opinions are heavily divided.
IEA Executive Director Fatih Birol sees two major trends, for instance.
He states that oil demand is set to only increase in 2023 and that it will be nearly impossible to meet without Russian oil supply. On the other hand, he also sees this crisis driving investment and development of renewables to unprecedented levels.
In the long term, the transition toward sustainable and reliable renewable energy is still very much a priority. And while they still have a long way to come, these technologies will likely one day become a cornerstone of energy abundance.
The problem is that in the short term, there is still no replacement for oil and gas. No consumer or investor can afford to ignore the fact that the West has largely ignored new exploration for these key resources.
And that is why energy is and will continue to be a key theme for the months ahead…
The worst is yet to come
What many people need to realise is that the worst of this energy crisis is likely yet to come.
We’re only seeing the start of oil and gas price pain. Because while energy companies are profiting nicely, they’re not reinvesting in new production.
As oilprice.com reports:
‘Many energy companies are still reluctant to go back to their trigger-happy exploration and drilling days despite high oil and gas prices and record profits, and have mainly been falling back on their dwindling stocks of drilled but uncompleted wells (DUCs) to keep going.
‘Norwegian energy intelligence firm Rystad Energy has revealed that a mere 44 oil and gas lease rounds will take place globally this year, the fewest since the year 2000 and a far cry from a record 105 rounds in 2019.
‘According to the Norwegian energy punter, only two new blocks had been licensed for drilling in the U.S. as of the end of August this year with no new offers for oil and gas leases originating with the Biden administration itself. Indeed, the handful of auctions that have gone ahead under Biden or bled into his presidency were decided upon during the presidency of Donald Trump.’
In other words, we’re falling way behind in shoring up global supply.
And there is no quick fix to save us all if we fall too far behind. After all, finding and extracting oil from new wells takes time and money.
You need to be prepared for the worst…and you can start by better positioning your capital.
The good news is that you don’t need to be blindsided by this oil shortfall.
As our very own Editorial Director Greg Canavan has been telling his readers: there are ways to protect yourself and protect your wealth.
In fact, he’s put together a comprehensive overview of the entire situation and a few possible solutions in his ‘Crude Awakening’ report. In it he takes a deep dive into the past, present, and possible future of humanity’s energy dilemma and why this time is different.
If you haven’t already checked it out, then you need to do yourself a favour and read it as soon as you can. You can find Greg’s report right here.
After all, in the wake of our federal government’s latest budget, don’t be surprised if the politicians complicate things further as well. They have a knack for turning a bad situation into a full-blown disaster.
Because as I explained in an article last week, the Victorian Labor party is already hoping to drag us headfirst into renewable dependence. It wouldn’t shock me if the feds follow Dan Andrews’ lead and do the same.
Again, that’s fine for the long term when the technology is ready.
Right now, though, it is anything but, and you can’t afford to be caught out by others’ ignorance.
Editor, Money Morning
Ryan is also co-editor of Exponential Stock Investor, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.