Frack or Fail: Is It Time For California's Liberals to Go?
Editor's Note: California is in a LOT of trouble financially. Cities are going under and the state can't balance its budget. It also has almost half a trillion in state pensions to fund and revenue is drying up.
But there is one way out: Tap the largest oil and gas play in the Lower 48.
The question is whether this left-leaning state crowded with special interests like the Sierra Club will actually let oil services companies begin to start fracking on state land.
In our inaugural Money Morning Fight Club brawl, Frank Marchant and Garrett Baldwin square off on this contentious issue. The best part is we are asking you to turn in your scorecard and pick the winner at the end.
So let's get ready to rumble…
The Untold Truth About Solar Stocks
The price of solar energy shares has been spiking, leading to the obvious parallel questions:
Is it sustainable?…Or what prospects exist for the average individual retail investor?
Before we address these questions, it would be best to lay some groundwork.
The increase in solar share prices has been just about across the board. This is most clearly seen in the rise in solar and related exchange traded funds (ETF). Guggenheim Solar (NYSEArca: TAN) has advanced 24.8% this past month, while American Vector Solar Energy ETF (NYSEArca: KWT) is up 15.2%. The iShares S&P Global Clean Energy Index (NasadqGM: ICLN) has improved 11.8%.
However, before you rush out and buy any of these ETFs, consider the longer view.
From December 1, 2012, TAN is down 36%, KWT is off 34.9%, and ICLN is weaker by 10.7%. The recent push up has resulted in some – apparently – better solar plays. Yet the medium-term perspective indicates the run up might not last.
This Dangerous "New" Energy Crisis is Crippling the Middle East
Don't look now, but there are some problems developing in the global energy network.
It's hardly reassuring that the epicenter of all this is the Middle East.
The primary problem is hardly new. Actually, calling it an "old" problem is more accurate because the culprit is a collapsing network of delivery and storage that has been deteriorating for decades.
Unfortunately, this is hitting areas already beset by broad, accelerating economic shortfalls the hardest. That they also happen to be areas of significant unrest hardly improves the situation.
The latest is in Pakistan. There a combination of lower-than-expected water availability and a government powerless to provide the diesel fuel essential for the planting season means a population already on the brink is staring at food shortages.
The picture is very grim.
The Market for Clean Energy Investments Continues to Move East
While renewables and other "clean" energy solutions continue to lose steam with investors in North America, it's quite another story elsewhere.
Investment capital is moving east at an incredible pace.
Last week, the Pew Charitable Trusts issued the fourth annual "Who's Winning the Clean Energy Race?"
Worldwide, nations increased clean energy generation capacity by 88 gigawatts (GW) in 2012. However, that also complemented an 11% decline in overall investment compared to 2011.
Some of that is explained by the impending end of heavy government subsidies in both the U.S. and the European Union. But despite the drop, 2012 still marked the third straight year in which clean energy investments topped $200 billion worldwide.
The year still ended with more than five times the investment recorded in 2004, the year generally used as the base for calculations.
Dr. Kent Moors: How to Invest in Clean Energy
Due to declining subsidies, clean-energy investments have been on the wane in North America and Western Europe.
But according to Money Morning Global Energy Strategist Dr. Kent Moors, clean energy development is far from dead. Instead, Kent says clean-tech investments are moving eastward to, among other places, China.
"This is going to be a long, drawn-out rollout process. We're seeing the technology itself and the investment interest itself [in clean energy] moving to new areas of the world," said Dr. Moors, appearing Monday on CCTV News.
To see what else Dr. Moors had to say along with the three clean energy exchange-traded funds that he currently recommends, watch the video below.
The "Hybrid" Approach is a Great New Opportunity for Energy Investors
In places where energy supplies face the most pronounced crunch, they need to integrate energy sources in a more seamless manner.
It's a no-brainer and one element in the "new energy balance" that I have discussed over the past year.
This balance is less about finding a silver bullet (a breakthrough technology) than about finding a more efficient way to combine existing sources.
As this balance works itself out – sculptured by necessity, profit, competition, and innovation -more segmented sources of energy, each satisfying a portion of required demand, will come online.
Instead of looking for a replacement for crude oil, we must find a better way to integrate the entire energy spectrum to satisfy this new energy balance.
The most basic part of this is an ability to exchange energy sources, thereby enabling users to offset supply problems or availability considerations by rapidly exchanging sources. Certainly, some bottlenecks will exist in this process, and, in some cases, the balance remains elusive.
But where the process is already underway, there's a great opportunity for investors.
How to Play by the Rules and Beat the Tax Man with MLPs
Paying taxes is about a pleasurable as a root canal. It's hard not to think about all that money going bye bye.
But it's inevitable and there's nothing we can really do about it, I guess.
However, tax day does bring to mind something quite a bit more positive: Like how to make money in the energy sector.
Actually, that's not as much of a stretch as you might think. That's because the bridges are already in place between how taxes are paid and energy returns.
Right about now, some of you are probably thinking I will start talking about energy sources like renewables that survive on government tax concessions.
Or perhaps you might think this is going to be a discussion of tax write offs for certain field projects that utilize public land.
And unless you are prone to the more fanciful, your thoughts should not be wandering toward squirreling money away on a small island somewhere.
Because there has been a much more practical approach that's been generating success for a while now.
This is how you play by the rules and still beat the taxman in Washington.
Why I'm So Bullish About Natural Gas
I just arrived in Texas yesterday for my latest round of oil meetings.
The crude market continues to absorb accelerations in investment despite of some lateral price movements. That will be an important topic of discussion.
But my interest has moved in another direction.
Natural gas futures closed on the NYMEX on Thursday $4.14 per 1,000 cubic feet (or million BTUs). We have not seen prices reach these levels in quite some time.
Companies Race for Profits with Floating Liquefied Natural Gas (FLNG)
Recently two of the world's largest energy companies announced they were joining to develop a record-breaking liquefied natural gas (LNG) project – one that could deliver huge profits for the companies and investors.
Exxon Mobil Corp. (NYSE: XOM) and BHP Billiton (NYSE ADR: BHP) announced earlier this month they were forming a joint venture to build the biggest floating LNG, or FLNG, facility ever. It'll be located off the northwestern shore of Australia.
FLNG is the industry's answer to accessing supplying much needed LNG to energy-hungry Asia, but trying to avoid the increasing costs of onshore plants in Australia.
An increasingly number of companies plan to invest in FLNG over the next few years.
Energy research firm Douglas-Westwood recently reported that global spending on FLNG projects will reach $47.4 billion between 2013 and 2019. About $28 billion will go to FLNG liquefaction spending, and $19 billion on import terminals.
"For more than 30 years FLNG export has been an ambition of the offshore industry, but it is now well on the way to reality," said report author Murray Dormer.
This Shifting Balance Will Have a Huge Impact on Energy Investors
This will have a huge impact on how you invest in the sector.
As the new balance emerges, we will see a realignment of global energy prices, and both the sourcing and use of energy will open up significant opportunities worldwide.
We are already beginning to see the revisions working themselves out among the world's most developed nations.
Yet this time around, the changes will have the most positive effect on those regions usually left out of the picture. These regions have the lowest economic diversification, relying largely on sporadic, inefficient, and ecologically damaging energy sources.
Because of high pricing considerations – prompted by collapsing power generation, rusting refineries, and deteriorating delivery infrastructures – people in developing countries are usually cut off from market expansion taking place elsewhere.
In spite of such problems, these countries will provide major demand increases going forward, resulting in significant changes to the international market landscape.
And a damaging cycle that's been churning for half a century will begin to break down…