Keith Kohl - Angel Publishing

Elon Musk's Lithium Revolution

Lately, we've been closely following one particular story with imminent growth in today's market: lithium.

Lithium is already necessary for efficient nuclear power, space travel, and every rechargeable item we own. Now it's going a step further and creating a lucrative ground-floor opportunity for individual investors like us.

Here's why...

Through both Tesla (NASDAQ: TSLA) and its sister company SolarCity (NASDAQ: SCTY), Elon Musk is bringing off-grid solar-powered batteries to businesses and homes.

In fact, we already know he has 38,000 pre-orders for these batteries, and some are going to Australia to support its move to solar power.

Needless to say, this story is going to get even bigger going forward...

Elon Musk's Lithium Revolution

Tesla's electric cars are already popular in Europe and China, and the company is partnered with Japan's Panasonic, the world's largest battery manufacturer.

Does it sound like I'm just throwing a list of major deals at you? I admit it; I am.

But you need to realize this: Tesla is only 12 years old, and it already has a massive worldwide reach. The demand for its products is sky-high.

Of course, the biggest question that's floating around the market today is, “Who's going to supply Elon Musk and his friends with all this lithium?"

It's a good question... yet we can already hint at the answer.

Follow the Clues

Our first clue lies within the location of Tesla's Gigafactory. It's no coincidence that Musk decided to place his Gigafactory right on top of the United States' only lithium hub — a potentially great source for his supply issue, or at least a portion of it.

Make no mistake; that factory is going to need 15,000 tons of lithium carbonate per year just to start.

And at last count, the U.S. only has 38,000 metric tonnes in proved reserves. The 500,000 lithium car batteries that Musk wants the Gigafactory to produce per year will eat that up.

The supply situation looks even tighter when you consider the fact that we still have to include demand from the home and business batteries that Tesla — and now SolarCity — will be offering.

Yet that single hub cannot be Tesla's only source of lithium.

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Driving a Global Lithium Revolution

Understand that we can't just focus on Elon Musk. After all, lithium is a globally mined and globally used metal.

Lithium use in batteries has risen 78% in four years, with batteries accounting for 30% of lithium demand by 2014.

Moreover, global lithium consumption is expected to grow to 35,000 tonnes per year by 2020, according to the United States Geological Survey. The USGS also estimates that global lithium reserves amount to about 13.5 million tonnes.

To put it bluntly: The world is not short on lithium.

However, it is short on producers that can efficiently extract and refine it.

Tesla has already announced that it will put U.S. companies first when it comes to finding its supply, which gives potential lithium producers in the United States a leg up against competing producers.

I'd also like to note that smaller lithium players here in the U.S. are taking notice and preparing for the surge in demand.

For example, just look at the recent merger between Western Lithium U.S.A. Corp. (TSX: WLC) and Lithium Americas Corp. (TSX: LAC), which gives the combined company assets in both the U.S. and Argentina — a country that holds the world's fourth-largest proved reserves of lithium.

So again, we have to consider the question of where companies like Tesla will turn for their lithium supply.

Let's take a more detailed look into the world's lithium reserves:

When it comes to lithium extraction, there are two methods — but only one is catching our attention.

The “silicate ore” circles indicate lithium in rocks. Although this kind of mining extraction is costlier and more difficult, it's still a main source of lithium for companies in places like Australia and Africa.

As you know, lithium is abundant on Earth, but it has very low concentrations in rock, which must be mined and crushed, then separated and ground down further. That mixture is submerged in liquid to separate the lithium particles from the rest of the minerals. It is then filtered and dried back into a solid.

Now take another look at the image above, and you might notice something else that's peculiar: Brine-based reserves, held in mineral-rich aquifers, account for roughly 66% of the world's lithium resources.

Thing is, brine extraction is by far the cheaper, more economic method.

The concentrations of lithium are much higher in brines because natural movement of the water and heat from the Earth have already released the lithium from rocks and sediment, separated it from many other minerals, and brought it closer to the surface. From there, it's just a matter of filtering.

But even this is still developing. Traditionally, the brine-based product is slowly air-dried. But there are already some methods by which the lithium can be dried through mechanical or chemical means.

That, dear reader, is where the real opportunity is in the ongoing lithium revolution.

Until next time,

Keith Kohl

@KeithKohl1 on Twitter

A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.

What the Iran Nuclear Deal Means for Oil

Crude oil prices had a knee-jerk reaction today when a deal was struck to remove the sanctions on Iranian trade in return for a curb of their nuclear projects.

Brent crude dropped nearly 2% early in the day, lowering to $56.67 per barrel, but landed closer to a 1.3% drop at $57.11. Analysts say the small bounce was due to the realization that it will take time for Iranian oil to impact the global market.

While Iran plans to rise back to 42-43% of their pre-sanction market share, they do not have a massive amount of oil in reserve to flood the market. Tehran has nearly 25 million barrels in storage, but most of this is ultra-light condensate.

Iran will also have to spend some time and money improving and expanding upon their infrastructure, building up investments, and reintroducing themselves as a supplier. London Energy Aspects chief oil analyst Amrita Sen estimates that it will not have a major impact until the second half of 2016.

However, there is a general consensus that oil prices will be staying low for a while. Today's drop was not a dramatic one, but going into next year the price could slip back below $50 per barrel.

Even Saudi Arabia's recent assertions that 2016 will bring a more balanced market could be threatened by Iran's oil, an outcome that Iran and its partners would not be opposed to according to their political agendas.

While the lifting of Iranian sanctions won't send oil prices into another nosedive right away, be on the lookout for future slips as the country gets back into the swing of the market.

To continue reading...

Click here to read the Yahoo! Finance article.

Click here to read the Reuters article.

Russia is the Real Winner in the Iranian Nuclear Deal

Today, a deal was finally struck to lift billions of dollars worth of sanctions on Iranian oil in exchange for a cut of Iran's nuclear program for the next 10 years.

But Iran isn't the only country relieved by this news: Russia is excited to see Iran returning to power as well.

Both countries are supporters of the Syrian Bashar al-Assad regime, and both are against several Saudi Arabian initiatives. The return of Iran's power will benefit both countries' political agendas in the Middle East.

But wait, there's more: “In the next five years deliveries of arms to Iran will be possible,” says Russian foreign minister Sergei Lavrov according to the Moscow Times.

Not only will the two countries be combining political forces, but their military forces will be trading too. Iran's military will be able to acquire more modern arms that Western countries are wary of selling to them. Trades on nuclear fuel will be open as well, so long as they fall within the regulations set by the U.S.

Putin takes some of the credit for this plan, and the Russian Foreign Ministry lets him have it.

Russia and Iran as political and military partners will be glad in December when the sanctions are fully lifted — should Iran prove that their nuclear program is halted by then.

To continue reading...

Click here to read the Busiesss Insider article.

ExxonMobil (NYSE: XOM) and PetroVietnam Combine Oil and Gas Assets

Vietnam's national oil company PetroVietnam is joining forces with a couple of American oil companies to make the best of a great situation.

The Southeast Asian producer recently acquired two Chevron Corp (NYSE: CVX) offshore production sharing contracts and one gas development project.

The latter was already explored and found to have natural gas resources by Chevron. PetroVietnam holds a 28.7% non-operating interest in this asset, but it is the company's current most important project. It includes the use and expansion of the Chevron Southwest Vietnam Pipeline Co. and its infrastructure.

These large, proved assets make PetroVietnam worth a look, with both Murphy Oil Co. and ExxonMobil interested.

PetroVietnam's agreements with Murphy Oil are based on cooperation on petroleum production, and the company believes Murphy's expertise in exploring and exploiting deep sea oil and gas resources will be helpful when it comes to its offshore assets.

ExxonMobil's interest is purely in PetroVietnam's offshore natural gas assets. The two companies signed an agreement in 2013 to work together in developing the Ca Voi Xanh gas project. Two of the three test wells hit gas, and there are now plans in the works to build a gas field for production by 2021.

PetroVietnam Chairman Nguyen Xuan Son has urged ExxonMobil to use its best technologies to make this project a low-cost, high-efficiency one. Meanwhile, both companies will have a say in the gas price and consumption rates once the field is in production.

This project will also encourage PetroVietnam's new plan to build natural gas power plants in the central areas of the country, which would bring more business opportunities for other such builders and energy companies.

To continue reading...

Click here to read the Rigzone article.

Tesla (NASDAQ: TSLA) Leading the Energy Storage Movement

Let's be honest here... we already knew Tesla was the front-runner in this industry.

Yet, the company isn't alone in its innovations; many car companies have had electric vehicles on their dockets and off-grid batteries in the works for years.

But check out these numbers quoted by Tesla's optimistic chief technology officer, JB Straubel: the 60,000 or so cars Tesla already has worldwide provide about 5 gigawatt-hours of energy storage.

That could grow to 70 gigawatt-hours just in electric vehicles in just a few years!

But cars aren't the only market Tesla's technology is changing.

Tesla's business and home-sized Powerpack and Powerwall batteries are already in use, and are advertised as back-up batteries that can store solar energy to use at night, in emergencies, or just when grid electricity becomes expensive during the day.

Straubel spoke at Intersolar's opening ceremony about the possibility of making solar and wind power available on demand for times such as these.

Another possibility coming to fruition is the use of such large batteries to store non-renewable energy for use by utilities who could use them to meet new energy regulations or simply run their grid systems more reliably.

One Greentech Media Research report noted that $128 million worth of energy storage was installed in the U.S. last year, amounting to 61.9 megawatts of power—which they're expecting to potentially quadruple by year-end to approximately 220.3 megawatts (obviously bolstered by Tesla's popular demand.)

The key to keeping that demand is to bring efficient, affordable energy storage to consumers. Straubel says, “we are within grasping distance of that goal.”

To continue reading...

Click here to read the Forbes article.

Texas Senators Argue For and Against U.S. Oil Ban

The fight to allow crude oil exports continues in the heart of the United States shale boom: Texas.

Republican Representative Joe Barton and Democratic Representative Gene Greene were the main contenders this week, pressing legislation in lifting and keeping the long-standing ban respectively.

Rep. Barton points out that most of the policy surrounding the original ban has been dissolved over time, and that it's time to remove the ban altogether.

He claims that lifting the ban would create more jobs, lower gas prices, and be a boon to the American economy. Selling the surplus oil from our shale resources would create opportunities for foreign buyers, bringing more money into the country.

Foreign trades could also provide better relations with Eastern Europe and more negotiation room with Russia.

Greene went on to list reasons for keeping the ban in place, suggesting that removing the ban would raise gas prices, hurt American economy, and threaten national security.

“Exports may help oil companies, but will they really benefit consumers?” asks Democratic Representative Frank Pallone.

Greene's main arguments stem from the major growth in refinery capacity and structure. Texas has the largest crude oil refinery capacity in the country, and has recently upgraded some refineries to be able to process light sweet crude, the kind that is most often found in the U.S.

So it's not very surprising to hear that Greene would rather have us invest more in refinery upgrades, rather than exports.

That said, Greene is not entirely against exports, and the Democratic Rep. allows that some applications for exporting to specific countries could be an acceptable way to sell U.S. oil without making the country overly-vulnerable to the volatile market conditions.

To continue reading...

Click here to read the Texas Tribune article.

Cornell Building Energy-Efficient Campus Dorms

Cornell University's applied sciences program, Cornell Tech, is building a dorm that could change the way buildings all over the country are put together.

They are planning a 250-foot high-rise to be built on Roosevelt Island in New York to house students moving to live on the newly built campus. It will house 520 people, cost $115 million, and be complete in 2017.

But the building's real claim to fame is its energy efficient set up.

The design team is planning an air-tight building, complete with mid-sized windows to remove extra padding needed for the edges. Fresh air will be vented inside instead, which will reduce both heating and cooling costs in the extremes of winter and summer.

This building will use between 60% and 70% less energy than similar high-rises. And its low energy use will keep up to 882 tons of CO2 per year out of the air. While this is a very small amount compared to many more emissions-heavy industries, the potential for the design to spread is huge.

Take for instance the introduction of the Leadership in Energy and Environmental Design (LEED) standards. In the early 2000's, these building standards were not widely accepted in the construction industry. Now their Silver level certification is required for all new buildings in New York city, and their certifications are accepted practices all over the world.

Cornell Tech hopes that their energy-saving, eco-friendly design will catch on and spread as the clean energy movement continues.

To continue reading...

Click here to read the Business Insider article.

Natural Gas for National Security

Our dependency on foreign oil, and especially that of OPEC producers, is putting the U.S. at risk, and the imports we bring in cost more to protect than they do to actually purchase — about $5 trillion since 2003.

T. Boone Pickens thinks enough is enough, especially after the shale boom has significantly boosted the United States' crude reserves.

Yet, we can't ignore the fact that we're still relying heavily on OPEC for oil imports, especially in the transportation sector.

T. Boone Pickens went so far as to suggest that these imports may be helping fund such terror groups as ISIS and Al-Qaeda, saying:

“Oil from the Middle East is no longer just an economic issue. It has become a national security issue.”

The answer, according to him, is the other shale resource that we hold in vast quantities: natural gas.

Of course, he's also putting his money where his mouth is, and is a large shareholder in Clean Energy Fuels, which focuses on supplying natural gas for transportation fuel. This is the main goal of the 2008 Pickens Plan as well.

Even if only heavy-duty trucks were to convert, it would be a huge step.

However, Mr. Pickens also understands that this may be a more difficult step for consumer vehicles, smaller cars and trucks, which is why he supports battery-powered vehicles to reduce the need for imported oil.

The end goal, he says, should be an improved North American Energy Alliance with both Canada and Mexico to further cut ties with dangerous Middle Eastern oil.

To continue reading...

Click here to read the Time article.

A Rough Week for Oil Investing

Many oil investors will look back at this week and say something like, “Man, that was rough.”

And they'd be right... in one sense.

On news of the Greek referendum, a Chinese stock market crash, and a potential Iran nuclear deal, oil investors fled for the hills as prices collapsed nearly $10, stifling what had been a steady recovery from the bear market.

One look at the chart for West Texas Intermediate over the last two months, and you could easily agree with the pessimistic investors among us that see no hope for oil.

Every time there's good news, some other catastrophe kills investment, prices, and any optimism we once held.

But this is just one perspective... and in my opinion, it kills your chance at real returns.

I look at a drop like we had this week — heck, even the one we had last fall — and I say, “It's time to buy again.”

Sure, on the face of it, that's a counterintuitive philosophy. I mean, who wants to buy something that's losing value?

Someone who knows the value will always go up.

Plus, I also know that many other investors are fleeing oil, so in true capitalist fashion, I plan to buy up what they've left behind and sell it back to them when it's worth double what it is now.

That's how investors should play this drop. I mean, it's not like Americans are going to stop buying gas-guzzling SUVs and trucks anytime soon.

Besides, China is in desperate need of a recovery in its markets, and the best way for it to achieve that is through economic development, which is impossible without oil.

So investors should be greedy now or lose their shirts later...

It's Not All That Bad

While it's easy to read something like, “Buy now because prices are low,” action is a whole different animal.

When you look at that red percentage on an oil driller's stock ticker or see the chart above and the steep drop from this past week, releasing funds to invest in oil is anathema compared to our normal mode of operations.

But, again, this is all about perspective. Take a look at this chart instead:

Compared to the drop last fall, the one this week is negligible. It just decreases the risk on any investment we make.

And if you look at oil prices this time last year, you'll see that WTI, shale stocks, and other oil companies in the U.S. have a lot of recovery left.

At this point, if you buy now, it's all about time: You buy, you wait, and you collect your money when prices recover. You'll end up collecting a whole lot of money if you wait for prices to return to early 2014 levels, too.

Shale oil drillers like Pioneer Natural Resources (NYSE: PXD) are already planning more rigs for later this year and the beginning of next year.

Pioneer said it will add eight new rigs in Texas in 2016, which would bring it back to the same level before the bear market.

Other companies are doing the same in the Bakken, Eagle Ford, Permian, and Niobrara.

Oil firms want to add more rigs now because they know they can get great prices on services, equipment, and labor while oil is down. These companies know investing low pays big dividends over time.

We should replicate this strategy, especially now that oil took a few lumps this week.

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Deals, Rigs, and Sales

Essentially, what I'm trying to say is that oil is on sale.

It's like when you go to buy a car and the dealer wants to get rid of the older models before the new ones come in. You get a deal because the dealership is oversupplied with last year's model.

Or when you go to a florist two days after Valentine's Day... you get a deal on a dozen roses because the florist has to get rid of them or else they'll be garbage.

Right now, oil stocks are on sale. The market is oversupplied, so stock sellers are willing to give away their shares for less for whatever reason: impatience, ineptitude, lack of fortitude, etc.

Now, I will issue a warning: This weekend, we could see a new Greece deal and a nuclear agreement between Iran and the United States. If so, oil prices could fall further, opening up another great buying opportunity...

This is a great time to invest in oil.

Until next time,

Keith Kohl

@KeithKohl1 on Twitter

Nuclear Energy Makes Huge Strides in the U.S. Energy Portfolio

The recent drop in natural gas prices has made it a major contender for cleaner energy production in the U.S. However, some argue that it should not be our only alternative.

In the spotlight for clean energy are solar, wind, and hydropower. These have in the past represented as much as 0.7%, 13.4%, and 21.2% of U.S. low-carbon energy production respectively. And while this market, especially for wind and solar, is growing fast, it is still not up to par with other more efficient power sources.

The nuclear industry has provided 63.3% of U.S. low-carbon produced power in the past, and 19% of the country's overall power. Nuclear also provides $60 billion a year to economic output, 475,000 direct and secondary jobs, and 573 million tons of carbon emissions not put into the air.

This comes from a study by the Brattle Group, which also asserted that nuclear reactors run at 90% capacity on average, higher than any other type of plant. This leads to inexpensive energy that puts many less pollutants into the air.

Excelon, the country's largest nuclear power producer, has said it could close some of its facilities, but still calls for the EPA to reevaluate the nuclear climate contributions. This would help keep the remaining nuclear plants open and a viable option for U.S. energy.

The push for renewable energy continues, and so does the growth of natural gas as a cheaper cleaner energy source. But in the end, nuclear will still continue to be a large part of U.S. power portfolios.

To continue reading...

Click here to read the Forbes article.

Shale Sale 2015

April 8, 2015 started out like any typical day for most of us.

At least, it was normal until news hit the wire that Royal Dutch Shell was ready to dish out £47 billion to take over BG Group. And in case you were wondering, this was the largest takeover in the oil sector in the past decade.

It's the largest since Royal Dutch merged with Shell Transport & Trading back in 2004.

In fact, Shell's takeover of BG in April ranks as the biggest M&A deal in history.

Of course, shareholders of BG woke up that morning to an instant 27% premium on their shares.

So what compelled Shell to make such a bold move?

The simple answer: opportunity.

And they're not the only ones looking for a good buy in the energy sector.

Buy, Buy, Buy

There's a mantra going around lately that we can't ignore any longer: Snap up the oil patch!

Well, that's not entirely accurate.

You see, M&A activity in the oil and gas industry hit a bit of a rough patch during the first quarter of 2015. During the quarter, approximately 39 oil and gas deals over $50 million were made for a total value of $34.5 billion. This represents a sharp 44% decline compared to the roughly 70 deals that were made during the first quarter of 2014 (which were valued at about $103 billion).

As you might've guessed, the decrease in activity was largely due to the oil price crash in the latter half of 2014.

Then again, 2014 set some pretty high standards; last year was record-breaking for mergers and acquisitions, with oil and gas deals totaling $321.5 billion.

Things were a little better during the second quarter, with approximately $115 million in E&P deals, led by Royal Dutch Shell's takeover of BG Group.

But now that oil prices have stabilized somewhat after bottoming earlier this year, there's a good chance we'll see M&A activity in the oil and gas industry jump during the second half of 2015.

So who's next?

Some of you might recall the rumors that surfaced last year of BP being bought out by Exxon. Whether or not the Macondo-cursed company is actually bought out remains to be seen, but that doesn't mean there aren't other targets available.

Truth is, there are better fish in the pond, and it's not just Big Oil that's gearing up for a spending spree...

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You'll also get our free report, "Marcellus Shale: The Future of American Energy" by our resident expert Keith Kohl.

Follow the Big Money... Capitalize on the Opportunity

When in doubt, follow the money.

Since 2009, private equity funds have raised more than $157 billion for energy-related investments — that's not exactly chump change we're talking about.

Yet there's a kicker here...

After watching oil prices plummet more than 57% from August of 2014 through January, you can bet these firms are salivating at new opportunities.

Remember, the low oil price environment is putting a lot of stress on upstream companies, and the fact that we've seen market capitalizations decline precipitously since last summer means there are a host of undervalued gems out there.

As it stands now, the private equity industry has earmarked over $40 billion for these upstream deals.

It's even bigger than that, too.

When crude prices started to tumble, you can bet a lot of these deals were sidelined. So when crude prices rally later this year and into 2016, expect to see M&A activity ramp up.

In other words, these equity firms hold the exact same bullishness over oil and natural gas as we do. That is, this downturn in energy prices is only for the short term.

So how do you capitalize on this burgeoning opportunity?

Simple: You have to be one step ahead of the Big Money. And to help you navigate the upcoming wave of M&A activity, I've put together a detailed report for my readers that identifies three of those undervalued gems in the U.S. oil patch.

Keep an eye out for my report to hit your email inbox on Thursday morning.

Until next time,

Keith Kohl

@KeithKohl1 on Twitter

U.S. LNG Could Thrive in Turkey

There are currently 9 liquefied natural gas (LNG) export terminals being built in the U.S. in Texas, Louisiana, and Maryland. These are set to be in use in the next three years.

With the shale boom came a glut of natural gas supply, and the U.S. is now poised to become a major LNG exporter...

We just need to find some committed buyers.

Although it may take some time to gain traction in Asia and some European countries, places like Spain and the U.K. would be easy targets for potential U.S. LNG shipments.

It also turns out that Turkey will be open for LNG exports as well. Turkey's transition from oil to natural gas as a major energy source has driven demand up.

Below you can see the rise in Turkey's natural gas consumption from 2001 to 2013, and that domestic production only covers about 10% of those energy needs.

Thanks to the supply glut in the U.S., natural gas prices on the Henry Hub are about one-third that of European prices, and about one-quarter of the price of natural gas in Japan.

Turkey currently gets most of their natural gas supplies from Iran and Russia at much higher prices than the U.S. will have to offer. In 2021, when our LNG export terminals are up and running, and Turkey's contracts with Iran and Russia run out, the U.S. will be a more viable, and affordable option for natural gas.

To continue reading...

Click here to read the Global Trade article.

Tesla (NASDAQ: TSLA) Boosted By Popular Opinion and More

Have you ever heard the word zeitgeist? It refers to the popular opinions and social mood of a period of time.

And this time's zeitgeist is bullish on renewable energy and Tesla.

Of the 10 most popular stocks on the market, Tesla Motors has the youngest fan base, followed by Alibaba, Amazon, and Apple. Those young fans have a huge impact on how well a company does.

And it's not just in the U.S. that Tesla has such popular support. As many countries move away from coal and put more restrictions on emissions from oil and natural gas, renewable energies take center stage. Even religion is stepping in as the Pope recently called for a reduction of fossil fuel use to save the planet.

This popularity attracts the 'ethical funds' which are growing in number. One such fund is Triodos Sustainable Pioneer Fund, which invests in both Tesla and its sister company SolarCity. Funds like Triodos are encouraging other investors to drop their fossil fuel portfolios in favor of more clean energy investments.

Economically, Tesla is looking good too. Credit Suisse has raised their target price to $325, and their recent record Model S sales aren't a bad show of growth either.

As 'ethical' and 'green' investments grow, and popular opinion supports the theory that they will, Tesla will be set to grow along with them.

To continue reading...

Click here to read the Seeking Alpha article.

Saudi Oil Consumption Could Drain Their Massive Supply

Saudi Arabia was the world's largest oil producer for many years, until the U.S. finally surpassed their average 9.22 million barrels a day between 2006 and 2014.

Naturally, the supply glut has kept prices at prices at the pump low, which in turn has led to an increase in demand.

The Saudis, however, have something bigger to worry about...

Saudi Arabia's population has risen 17% over the past 10 years, with domestic energy demand increasing about 8% per year for the past 3 years.

The execs at Saudi Aramco are estimating that by 2030, the country could be consuming 8.2 million barrels a per day.

Not only will this demand increase drain the amount of oil that could potentially be exported, but Citigroup estimates that at these rates, Saudi Arabia will be importing oil by 2030.

Currently, one-quarter of Saudi oil produced is used domestically, and more will be needed in the future. And as you know, boosting production also requires huge investments in the country's oil infrastructure.

And the U.S. shale boom is still holding the price of oil down near $60 a barrel, making exports more necessary than ever for the previous oil masters. 90% of Saudi revenue comes from their oil exports.

To continue reading...

Click here to read the Wall Street Journal article. (May require a subscription to read in full.)

The Supreme Court Saves Coal?

There's a war happening...

For the last few years, we've been caught up in the back-and-forth between two distinct factions.

On one side is President Obama, armed with the Environmental Protection Agency, and on the other side are coal companies, utilities, and most Republican politicians.

Republican Senate Majority Leader Mitch McConnell accuses the president of inciting a “war on coal” whenever he discusses the most recent energy regulation.

And if this is indeed a war, it's a very one-sided one at that. Take a look at this...

The chart above shows the last five years for shares of Arch Coal (NYSE: ACI) and Peabody Energy (NYSE: BTU), two stalwarts of the coal industry, versus the performance of the S&P 500.

The market at large went up nearly 100% in just five years, while coal stocks dropped by 100%. Peabody, the world's largest coal company, once traded at nearly $90 per share but now trades for less than $2.

Hey, the company still pays a dividend (of $0.01 per year)... if you like low yields.

But in all seriousness, the dramatic free-fall for Peabody and all other coal companies has been the result of a wave of regulations laid down by Obama and the EPA under the authority of the Clean Air Act.

Utilities and coal producers have to comply with each and every rule, and the only way they can fight against them is through legal action.

But as a case earlier this week showed us, legal action is largely a moot point while the government continues to wage its war.

What a Waste of Time

In the latest salvo between the two sides in the war on coal, it appears as though the coal power industry recorded a victory.

On Monday, in the case Michigan v. EPA, the Supreme Court ruled against EPA regulations on emissions of mercury and other heavy metals from power plants by a vote of 5 to 4.

Justice Antonin Scalia issued the majority opinion in the case, and he argued much in the same way others have argued against EPA regulations: “The agency must consider cost — including, most importantly, cost of compliance — before deciding whether regulation is appropriate and necessary.”

Several opponents of the EPA hailed the decision...

Texas Governor Greg Abbott said the ruling was “good news for Texas.”

The state's Attorney General, Ken Paxton, said the ruling was a “victory in our efforts to rein in an out of control EPA.”

However, if you look closely at the situation, the mercury ruling by the Supreme Court does little to hurt the EPA or any of its regulations against coal.

For one, the rules on carbon emissions from new and existing plants are still intact, and this ruling offers no precedents for future litigation.

Also, Monday's decision doesn't actually kill this regulation in any way; it just forces the EPA to rewrite the rules with more attention to cost and benefit, which some estimate as $10 billion in cost versus $80 billion in benefit.

When the rules are rewritten to include cost (this could take years — after all, the EPA is a government agency), it isn't a stretch to assume they'll survive the courts.

Even then, these rules are several years old and went into effect in April. By that time, most utilities had either upgraded their facilities in order to comply with the rules or shut down operations as a result, and it is unlikely they will decide to reverse upgrades already in place.

So even though the coal industry technically won a ruling in the highest court in the land, it's all a waste of time since the damage has been done and the rule will likely remain in effect.

The only real outcome from the case was a brief but powerful spasm of false hope for coal investors...

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A Paroxysm of Exuberance

On Monday, after the ruling was announced, Peabody's stock rose by nearly 20% as investors flooded in on the hope that the decision was more valuable than it really is.

They were wrong, and they paid for it when the price fell back down to earth.

But other investors should realize that this war on coal doesn't just kill the industry — it also creates investment opportunities in the industries that replace coal power.

Nuclear energy, in theory, is a good replacement, but the world hates nuclear power because of its risk potential.

The real answer here is natural gas or renewable energy.

In truth, both are good investments: Solar has been one of the best-performing industries of 2015, as costs drop every day, and natural gas is poised to see a historic bull market that will make coal investors green with envy.

Until next time,

Keith Kohl

@KeithKohl1 on Twitter

Enterprise Leads the 'Internet of Things' Growth

Business Insider released a report on the future of the Internet of Things (IoT) market that focused on three main IoT sectors: enterprise, home, and government.

Enterprise will be the top investor in this growing technology, including industries like manufacturing, transportation, utilities, and construction.

According to the report, manufacturing is expected to be at the top of industry investments, due to the strong support of our previous assertions that such large industries will fuel major growth in the Internet of Things. In fact, manufacturers are expected to spend an estimated $140 billion over the next five years.

Moreover, there are expected to be an estimated 23.3 billion IoT devices in use by 2019, with 9.1 billion – or 40% – being used in the enterprise industry.

To put that into perspective, the IoT market is slated to outgrow both the smartphone and tablet markets combined!

And to break it down further, the report suggests that the IoT software will be more lucrative than the hardware for providers. This may be because one of the main concerns for this market is vulnerability to cyber attacks. So as you might've guessed, any providers who can protect against such invasions will be extremely profitable once the Internet of Things expands towards its full potential.

To continue reading...

Click here to read the Business Insider article.

Tesla (NASDAQ: TSLA) Electric V.S. Toyota (OTC: TOYOF) Hydrogen

Even as Tesla Motors continues to sell its Model X and Model S electric vehicles — the latter having reached a record number of sales in the second quarter of 2015 — several other car companies are going head-to-head with the EV forerunner.

But not all of Tesla's competition is in EV cars.

Toyota has plans for a fall release of their newest energy-efficient vehicle, the Mirai, which will run an estimated 312 miles per tank of hydrogen. This is a far cry farther than even Tesla's upcoming Model 3, which will reach 250 miles on a single charge.

There's a major catch though: where Tesla owners have access to Supercharger stations and independently owned EV charging stations all over the country, only California has enough hydrogen fuel stations to accommodate a market for this kind of car.

There are currently only a total of 12 public hydrogen stations in the whole country, and 10 of them are in California. Toyota, noting this problem, has made plans to build an additional 46 stations in California.

It seems only one state will be able to use these long-range hydrogen vehicles, and only if they stay within range of these fuel stations.

Even Toyota's offer of three years or $15,000 worth of free hydrogen fuel may not be able to make this restriction worth it. Tesla owners have free access to Supercharger stations for long-distance drives, and those are found practically everywhere.

Toyota has some work to do before their Mirai is up to speed with any of Tesla's models.

To continue reading...

Click here to read the Fortune article.

The World Moving Away from Coal

With concern over emissions growing, many companies in the U.S. are shutting down their coal power plants and replacing them with cleaner, more cost-efficient plants.

One company in Columbus, Ohio, shut down 10 coal-fired plants this May, and plans to shut down two more next year.

Another company, operating in the Western U.S., shut down two plants in April and has plans to discontinue 3,000 megawatts of coal power by 2029. Naturally, the company will end up replacing the lost wattage with renewable power.

Yet another company in North Dakota is switching its plants to natural gas to help lower emissions and comply with the Environmental Protection Agency's regulations.

But it's not just the U.S. that is cutting out coal...

Many industrialized countries are taking clean air to heart. Canada and the U.K. are creating new policies to phase out coal. And that's not to mention the fact that France, Italy, and Germany have weak markets for the dirty fuel, France having reduced their total coal-fired plant count to 4 this year.

Only Japan has increased their use of coal recently, and that decision was made because the Fukushima nuclear disaster compelled them to cut nuclear power out completely. Yet, even this may not be enough to save coal power, as a previous report noted that natural gas will be picking up the majority of the slack.

To continue reading...

Click here to read the Forbes article.

Russia and Ukraine Natural Gas Price War

Ukraine imports of natural gas come from just two sources: Russia, and the European Union.

For years, the country has enjoyed a large discount from Russia... and that's about to change.

In 2015, Russia is trying to decrease that discount by 60%, which as you can probably guess, doesn't make the Ukraine very happy.

You see, not only did the Ukraine want to pay the lower price, but also asked Russia to sign a three-way international accord that would offer continuous trade at least until next winter.

Naturally, Russia refused, on both political grounds and economic grounds, and claimed the price was in line with what other countries are currently paying.

In other words, the market called for a price increase.

Although the Ukraine is still open to negotiation, Russia won't budge. And this this disagreement comes with a deadline: Ukraine needs at least two months to replenish their underground natural gas stores before the cold season. At Russia's current prices, it would cost the Ukraine $1.7 billion.

Until a compromise is made, Ukraine will continue to import gas from the EU and is looking for lenders to loan the $1 billion they need to afford their required storage needs.

To continue reading...

Click here to read the Bloomberg article.

El Nino May Spark Gas Price Spike

This year's Atlantic storm season is expected to be calmer than usual, which is a good thing for oil tankers making their way around the Cape of Good Hope in Africa.

However, it's a different story in the Pacific, where storms could be much more threatening to routes between the Middle East and Asia.

Already this year, both major blizzards and recent heat waves have taken their toll and hurt countries all over the world. Both U.S. coasts have been hit hard; California is still in a drought.

Current forecasts estimate that storm activity will be at its highest levels in a decade, since the El Niño event back in 2006 and 2007. Back then, energy prices rose 58%.

And with 27 tropical storms predicted to hit this season – more than half of which are likely to reach typhoon levels – it's easy to see how this could happen again.

Currently, both crude oil prices and the cost of transportation are staying low. That could change quickly, however, if inclement weather starts interrupting things.

This could potentially be a major problem for consumers, who have been enjoying the lower prices at the gas pumps. For individual investors, however, it may be a welcome reprieve from the bouncing oil prices of late.

To continue reading...

Click here to read the USA Today article.