Why the move in energy stocks is just getting started

16th Sep, 22

Greg Canavan

Fat Tail Investment Research

Politics and energy are inextricably linked.

Always have been, always will be.

Energy is the cost base of an economy. Cheap energy allows an economy to thrive (and politicians to look good). Expensive energy will send it into a recession. Just look at Europe.

What makes things more interesting now is that politicians are completely incompetent and bordering on corrupt.

This energy crisis we’re facing is all our own doing. There is plenty of cheap energy in the world. But our political leaders are engineering a high-cost energy future due to their relentless focus on renewables.

This mad rush to net zero would be fine if it were achievable without lowering living standards. But it’s not. It’s going to cause significant pain in the years ahead.

According to a recent Spectator Australia article, following the closure of Victoria’s Hazelwood power station in 2017, the Australian Energy Regulator noted that average electricity spot prices increased by 85% and 32% across the eastern states.

Are you looking forward to the closure of the Liddell power station in NSW next year, when 2,000 megawatts of reliable supply will disappear from the system?

And why did Snowy Hydro Chief Executive Paul Broad recently resign? He warned Energy Minister Chris Bowen that the use of hydrogen for energy is ‘many, many years away from being commercial’. Yet the government wants the new gas-fired peaking plant currently under construction in NSW (which will be run by Snowy Hydro) to be partly fuelled by green hydrogen.

Broad also told the government that thanks to the closure of Liddell, ‘many’ replacement gas plants would be required, not just one.

Bowen obviously didn’t agree, so Broad resigned.

Make no mistake, our politicians are leading us over the edge. Europe is our future.

And don’t believe for a second the green agenda’s claims that it’s because we didn’t do enough on the renewable energy front. Incompetence and ideology have seen us divert much-needed capital from low-cost reliable sources of energy to high-cost, unreliable renewable energy.

Sadly, there’s not much you can do about the current path we’re on. Both parties are captured by the climate zealots, and we’re years away from another election.

The one thing you can do to protect you and your family from the pain that’s coming is to ensure you have an overweight portfolio exposure to energy.

What does ‘overweight’ mean?

Well, the ASX 200 Energy Index is about 7% of the broader ASX 200. So an overweight position would be greater than that.

A 10% allocation would be reasonable. Or, if you’re bullish and willing to take on more risk and volatility, you could go to a 15% weighting.

Why the move in energy stocks is just getting started

16th Sep, 22

Greg Canavan

Fat Tail Investment Research

Always have been, always will be.

Energy is the cost base of an economy. Cheap energy allows an economy to thrive (and politicians to look good). Expensive energy will send it into a recession. Just look at Europe.

What makes things more interesting now is that politicians are completely incompetent and bordering on corrupt.

This energy crisis we’re facing is all our own doing. There is plenty of cheap energy in the world. But our political leaders are engineering a high-cost energy future due to their relentless focus on renewables.

This mad rush to net zero would be fine if it were achievable without lowering living standards. But it’s not. It’s going to cause significant pain in the years ahead.

According to a recent Spectator Australia article, following the closure of Victoria’s Hazelwood power station in 2017, the Australian Energy Regulator noted that average electricity spot prices increased by 85% and 32% across the eastern states.

Are you looking forward to the closure of the Liddell power station in NSW next year, when 2,000 megawatts of reliable supply will disappear from the system?

And why did Snowy Hydro Chief Executive Paul Broad recently resign? He warned Energy Minister Chris Bowen that the use of hydrogen for energy is ‘many, many years away from being commercial’. Yet the government wants the new gas-fired peaking plant currently under construction in NSW (which will be run by Snowy Hydro) to be partly fuelled by green hydrogen.

Broad also told the government that thanks to the closure of Liddell, ‘many’ replacement gas plants would be required, not just one.

Bowen obviously didn’t agree, so Broad resigned.

Make no mistake, our politicians are leading us over the edge. Europe is our future.

And don’t believe for a second the green agenda’s claims that it’s because we didn’t do enough on the renewable energy front. Incompetence and ideology have seen us divert much-needed capital from low-cost reliable sources of energy to high-cost, unreliable renewable energy.

Sadly, there’s not much you can do about the current path we’re on. Both parties are captured by the climate zealots, and we’re years away from another election.

The one thing you can do to protect you and your family from the pain that’s coming is to ensure you have an overweight portfolio exposure to energy.

What does ‘overweight’ mean?

Well, the ASX 200 Energy Index is about 7% of the broader ASX 200. So an overweight position would be greater than that.

A 10% allocation would be reasonable. Or, if you’re bullish and willing to take on more risk and volatility, you could go to a 15% weighting.

Why the move in energy stocks is just getting started

16th Sep, 22

Greg Canavan

Fat Tail Investment Research

Politics and energy are inextricably linked.

Always have been, always will be.

Energy is the cost base of an economy. Cheap energy allows an economy to thrive (and politicians to look good). Expensive energy will send it into a recession. Just look at Europe.

What makes things more interesting now is that politicians are completely incompetent and bordering on corrupt.

This energy crisis we’re facing is all our own doing. There is plenty of cheap energy in the world. But our political leaders are engineering a high-cost energy future due to their relentless focus on renewables.

This mad rush to net zero would be fine if it were achievable without lowering living standards. But it’s not. It’s going to cause significant pain in the years ahead.

According to a recent Spectator Australia article, following the closure of Victoria’s Hazelwood power station in 2017, the Australian Energy Regulator noted that average electricity spot prices increased by 85% and 32% across the eastern states.

Are you looking forward to the closure of the Liddell power station in NSW next year, when 2,000 megawatts of reliable supply will disappear from the system?

And why did Snowy Hydro Chief Executive Paul Broad recently resign? He warned Energy Minister Chris Bowen that the use of hydrogen for energy is ‘many, many years away from being commercial’. Yet the government wants the new gas-fired peaking plant currently under construction in NSW (which will be run by Snowy Hydro) to be partly fuelled by green hydrogen.

Broad also told the government that thanks to the closure of Liddell, ‘many’ replacement gas plants would be required, not just one.

Bowen obviously didn’t agree, so Broad resigned.

Make no mistake, our politicians are leading us over the edge. Europe is our future.

And don’t believe for a second the green agenda’s claims that it’s because we didn’t do enough on the renewable energy front. Incompetence and ideology have seen us divert much-needed capital from low-cost reliable sources of energy to high-cost, unreliable renewable energy.

Sadly, there’s not much you can do about the current path we’re on. Both parties are captured by the climate zealots, and we’re years away from another election.

The one thing you can do to protect you and your family from the pain that’s coming is to ensure you have an overweight portfolio exposure to energy.

What does ‘overweight’ mean?

Well, the ASX 200 Energy Index is about 7% of the broader ASX 200. So an overweight position would be greater than that.

A 10% allocation would be reasonable. Or, if you’re bullish and willing to take on more risk and volatility, you could go to a 15% weighting.