Energy Constrained, Carbon Constrained – "That’s just the way it is"


Investors should familiarize themselves with 2 concepts - an energy constrained environment, and a carbon constrained environment. This will certainly be THE big business story over the next decade (I use the singular form for the 2 as they are 2 sides of the same coin).

Those of you who have been reading my reports are familiar with my view of the challenges future energy supplies, or lack thereof, present. Previously, I have made no mention of what I believe will be substantial government regulation by various foreign and domestic governing bodies of the amount of greenhouse gases, particularly Carbon dominated compounds, which are released into the atmosphere as a result of the combustion of hydrocarbons (notice the ‘carbon” in hydrocarbon) for industry, transportation, heating & cooling, etc…

There are many intelligent, and some not so intelligent, proposals for using market mechanisms to reduce the rate of carbon released into the atmosphere. I will not bore you with the list here (but I will in a future post). Suffice it to say, they are coming, they will be politicized, they will make a lot of people unhappy, and they will affect us all - profoundly. I believe that some other non-market mechanisms, like rationing carbon emissions, are extremely likely.

My firm considers issues for Real Estate investors (our subsidiary SEC registered Broker/Dealer does the same for financial market participants. Federal securities regulations prohibit me, as I hold a securities license, from making specific recommendations in individual securities or other strategies in this forum. I am permitted to comment in general on markets, industries, economic conditions, currencies, etc…), and I believe that these issues are coming at us like a freight train with its lights off and its whistle broken. So pay attention. Educate yourself. Consider the possibilities and probabilities that these eventualities will come to pass at a time that will affect your current holdings.

You might perform an online search for MIT’s Energy initiative. Here is an interesting, and short, article from MIT’s Technology Review:

http://www.technologyreview.com/read_article.aspx?id=17561&ch=energy&sc=&pg=1

Don’t listen to the media. Hit the search engines and Amazon. With the wondrous web you can educate yourself with data from the source, not filtered through some cerebrally numbed talking head (I sit up at night thinking of new descriptions for these “journalists”).

Speaking of cerebrally numbed… a recent Gallop Poll said 42% of Americans believe that the Bush Administration manipulated the Oil markets in an effort to lower the pump price of gasoline prior to the mid-term elections next month. George Will said the following regarding the idiotic claims that The President was not “handling” the price of oil earlier this year. “Does anybody over the age of 7 really believe that a President can “handle” the price of oil in the world market?” I could not have said it better, myself. Still it begs the question: Is 42% of the U.S. age 7 or under? GET REAL, PEOPLE!

I have a better question. When the U.S. Department of Energy was created in 1977, the United States imported approximately 15% of the oil it consumed; was it the department’s intention that the United States would depend on imported oil for roughly 60% of its consumption today? Projections of as high as 80% dependence on foreign oil by 2020 have been reported. Does anybody over the age of 7 think that this is a good idea?


Mentatt (at) Yahoo (dot) com