Next week I will appear on a panel sponsored by the Cornell Institute for Public Affairs to discuss practical ways of moving forward with hydraulic fracturing. I am the investor voice on the panel.
So what am I going to say?
I will say that politicians and celebrities are way ahead of themselves in enthusiasm for energy that does not come from burning hydrocarbons.
Starting in the 1970s, during the painful inflation caused by the Arab oil embargoes, the world and its best scientists began trying to find substitutes for hydrocarbons. Yet, so far, the only substitute with the ability to scale across geographies and demand patterns is nuclear power. If you don’t believe me, look at the IEA’s chart of the World Total Primary Energy Supply.
Smart, technologically advanced countries, like France, Germany, the United States and Japan, built large fleets of nuclear power plants to diversify away from hydrocarbons. Yet, after the Fukushima Daiichi disaster, people in Japan and Germany insisted that the government shut down most of the plants.
Germany is also installing large scale solar and wind farms, but a political backlash is brewing around them, too. According to a recent article in ReCharge: The Global Source for Renewable Energy News, the renewable surcharge will spike nearly 50% next year. The average German consumer could see their power bill rise by as much as 11%. A renewable surcharge of the German magnitude here in the United States would essentially double most consumers’ electricity bills.
If nuclear is too controversial, and wind and solar are too expensive, what is left?
Investors, like me, are putting their money on hydrocarbons.
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