Tags: Energy Investing

Why It's Time to Invest in Energy, Today's "Must Have" Market

By , Associate Editor, Money Morning • @TaraKateClarke •

Right now, many investors are getting swept up by trendy, headline-making companies like Facebook (Nasdaq: FB) or Twitter.

Investing in stocks like these can be risky if the timing is wrong. That's especially true now, when U.S. budget battles can trigger stock market volatility that sends trend-based stocks like Facebook into a free fall.

Instead, investors should look at low-risk, high-gain "must-have" markets.  

The best must-have markets are in front of us at all times - so necessary to our daily lives that they will not disappear.

Even better: They're largely immune to Washington's hijinks.

And they're flooded with money.

That's why it's the perfect time to invest in energy.   

As Money Morning Chief Investment Strategist Keith Fitz-Gerald told his Money Map Report subscribers this month, energy is a "$12 trillion market that isn't going away any time soon."

Take a look...

Investing in Energy: These Billion-Dollar Numbers Say It All

You see, the world's population is growing at an astounding rate.

Today, there are 1.8 billion middle-class consumers in the global economy. By 2030, we can expect 3 billion more - that's a 266% increase.

And the existing power infrastructure can't keep up with that rate of growth.

For instance, power quality issues in the Unites States already cost more than $250 billion a year to resolve. In South America, the demand for electricity will double by 2020, and it completely lacks the grid to support that kind of growth - so outages will become commonplace.

That means there's going to be major investment in increasing energy supply to keep up with soaring demand. And those are just energy infrastructure problems facing the Americas.

The accompanying map shows how much global energy investment is needed in the coming years to keep up with demand.

This is why investing in energy will deliver gains far longer than any of today's trendy stocks.

Just look at these shocking numbers that reveal how big of an investment opportunity the energy market is*:

  • The U.S. will spend at least $540 billion per year in order to meet energy demands from 2013 to 2030. Worldwide, that number is roughly $700 billion per year.

    • And energy is not an expense that will get slashed by cost-cutting governments.

    "There's not a government in the world that can't afford to keep the lights on.  This spending is absolutely at the top of the priority list," Fitz-Gerald said.

  • On the low end, that means the world will spend approximately $12 trillion on energy needs by 2030; Fitz-Gerald believes we are looking at a figure closer to $15 to $17 trillion. To put that figure in perspective, there is approximately $1.22 trillion of U.S. currency presently in circulation, of which $1.17 trillion is in Federal Reserve notes.

  • Oil demand will increase with population growth, but the oil we need is increasingly challenging to access. The last decade has seen a doubling in the average cost to bring a new oil well on line.

    • "We've got to drill deeper, we've got to drill horizontally, and we've got to use new technology to get the same amount of oil to the surface and in production," Fitz-Gerald explains.

    Plus, there's going to be more reliance on these hard-to-reach, unconventional energy sources as a growing percentage of the world's oil fields are down for repairs, are badly in need of capital investment, and are increasingly subject to terrorist and military action.

  • Up to $1.1 trillion is spent by governments annually on resource subsidies.  Several countries commit at least 5% of their gross domestic product (GDP) to energy subsidies.

    • For instance, in 2011, the United States government spent $24 billion on energy subsidies. To break it down even further, renewable energy and energy efficiency accounted for $16 billion, and the fossil-fuel industry received $2.5 billion in tax breaks, according to the Congressional Budget Office.

    "I think that the percentage of GDP spent on energy subsidies is going to rise because the trade-off is between supplying energy and massive civil unrest; governments will obviously choose the former," Fitz-Gerald notes.

These numbers are why Fitz-Gerald, when hunting for this month's featured stock pick for Money Map Report subscribers, looked at companies deeply rooted in the energy industry.

He wanted his pick to be one that operates globally, consistently sees strong earnings, and has a high level of diversification.  

In fact, long-time Money Map Report subscribers might recognize this global name... 

That's because this particular company has already helped readers capture 100% gains on two separate occasions.

And it's about to deliver again.

To get in on Keith's pick, along with his other recommendations, learn more about Money Map Report here. [By the way, Keith has closed out 19 winners in 2013, for gains like 55.025%, 100%, and 61.76%.]  

*Numbers according to research by McKinsey Global Institute.

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