compare energy prices
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The Next Big Change in the Energy Markets
Thoughts are again turning to the next big change in the energy landscape.
As it unfolds, I have been working on how to exploit this trend and will be rolling out my recommendations when I appear at the MoneyShow in Las Vegas next Tuesday and Wednesday.
Of course, before I sketch my new approach to the Caesar's Palace audience, I'll outline it here first. You can expect more on this in coming Money Morning editions.
Today, I want to extend on Saturday's discussion and set the stage for the revisions I will be begin sketching out in my next article.
This is once again about hedging.
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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.
Nope.
Or perhaps you might think this is going to be a discussion of tax write offs for certain field projects that utilize public land.
Wrong again.
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.
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This Shifting Balance Will Have a Huge Impact on Energy Investors
I have written several times in Oil & Energy Investor about the shifting energy balance worldwide, stemming from the need to prioritize among both traditional and new sources.
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...
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Why I Cancelled Everything in Germany and Took the Next Flight to Dubai
Something big unfolded on my trip to Frankfurt last week.
It began with meetings in Germany over natural gas prices, but morphed into an interesting sidebar on the impact government subsidies have on energy prices.
As I noted last week, a recent International Monetary Fund (IMF) staff report concluded that public-sector support largely created more harm than good.
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Investing in Clean Energy Stocks Just Got More Risky
Despite its promising future, clean energy stocks have proved to be an investing minefield.
Even China-based clean energy stocks are no longer a safe haven. Yesterday (Monday) Suntech Power Holdings Co. Ltd. (NYSE ADR: STP) defaulted on its debt.
Heavy losses caused by plummeting prices for solar panels - which fell 73% from 2010 to 2012 - left Suntech unable to make the payment on a $541 million bond that was due Friday.
The news caused Suntech stock, already down 80% over the past year, to slip another 10%.
While numerous U.S. renewable energy companies have faltered, most notably the 2011 bankruptcy of solar panel maker Solyndra, Suntech is the first Chinese clean energy company that could go under.
What's new is a reluctance on the part of the Chinese government to keep pouring subsidies into money-losing companies.
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Watch What Carl Icahn Does to These Energy Stocks
Energy stocks have been largely left behind in the recent stock market rally - except for those with interest from activist investors like Carl Icahn.
You see, concerns about global demand as well as political pressure to focus on alternative energy have weighed on energy stocks. So have the low price and oversupply conditions in the natural gas markets.
Many of these energy stocks trade at what seem to be very low prices compared with the assets owned by the corporations and their future prospects.
This has attracted the attention of many activist investors looking to force the share price to unlock the real value of the underlying corporation.
One of the best-known activist investors, Carl Icahn, has accumulated several positions in leading energy companies in the past year because of low prices and under-valuations.
Take, for example, what Icahn's done with CVR Energy Inc. (NYSE: CVI).
Icahn owns 83% of CVR, a refiner that has seen its stock price soar recently as refining margins have improved. The company also has a fertilizer business that is a major beneficiary of lower natural gas prices.
The stock has better than doubled in the past year so it would be foolish for investors to chase the shares now.
But CVR does serve as an example of the sizable returns Icahn is looking to achieve in his foray into additional energy investments, like the following two stocks he's been accumulating.
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Why Oil Refiners Are Among the Best Energy Stocks to Buy Now
Shale oil production continues its upward path, increasing overall U.S. oil production and making specific groups of energy stocks among the best to buy right now.
In fact, the U.S. Energy Information Agency (EIA) reported last month that domestic oil production surpassed the 7 million barrel a day level, the highest point in nearly 20 years. Production this year, the EIA says, will rise by another 14%.
This is obviously good news for the companies producing that oil, and it gets even better. Many industries outside the energy sector, including chemicals and railroads, have benefited from the shale boom.
But there is one subsector in the energy industry that has reaped the rewards of plentiful oil from the Bakken and other areas more than any other, and that's the refining industry.
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The Next (Energy) Revolution Starts Here
There are a few times in life when you stand at the beginning of a revolutionary change.
This is one of those moments.
On Monday, I introduced the next wave coming in energy. Profit centers are going to develop in the interconnections among the production, processing, storage, transmission, and distribution of distinct energy sources.
Indicators are emerging from some heavyweights that the move in this direction has begun in earnest.
These include policy makers and analysts from the International Energy Agency (IEA) in Paris, the World Bank and White House in Washington, the Windsor Energy Group in London, as well as my industry contacts in several parts of the globe.
The new emphasis will be on energy balance.
To continue reading, please click here...
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Three Reasons Why the Energy "Experts" are Wrong
Last week, another batch of oversimplifications attempted to explain a significant decline in energy stocks.
Excuses ranged from declining demand to shale oil and gas gluts. Others pointed toward a general market Armageddon.
But you and I know better than to believe this hype.
Last week the S&P closed at a five-year high, NYMEX West Texas Intermediate (WTI) crude oil futures closed higher than in any session since September 18, while the spread between WTI and London's Brent benchmark rate is the narrowest it has been since September 14.
We recognize that the harbingers of doom are right only if markets and economies completely collapse. Once again, we know that is not going to happen.
None of this means we are simply off to the races. But they do indicate how the half-baked approaches used by some "experts" are not reflecting reality.
Their arguments are wrong for three very basic reasons. And once you learn them, you stand to profit from the biggest energy trend in decades.
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The Next Big Boom in Energy Isn't What You Think
As the ongoing debate between renewables and fossil fuels continues, there is a wrong-headed presumption that there will only be one clear victor.
But recent trends in the wind and solar age tell us that this conclusion just isn't so.
The truth is both types of energy will be required to work in tandem in order to achieve our energy goals in the future.
And - as these developments accelerate - it is in this "new" energy balance that individual investors will find the next big boom.
These days, with oil-rich countries like Saudi Arabia and the United Arab Emirates unveiling huge renewable energy projects, even some analysts are drawing the wrong conclusions.
But I have to stress, renewable development is not a signal these countries are running out of crude oil anytime soon.
Quite the contrary, countries like Saudi Arabia realize that one side of this energy equation will require the help of the other.
The same holds true in North America, where the surplus of unconventional natural gas has led some to the erroneous conclusion that wind and solar - still requiring significant government subsidies - have been dealt a fatal blow.
Wrong again. This is not a winner-take-all battle. There will be no silver bullet that delivers the next "new age of energy"
Rather, it will be in the integration of all the available energy sources that will lead to the next big development. And that is going to require sourcing from genuinely distinct and dissimilar energy categories-including wind and solar.
In fact, three recent events provide clear indications that this "energy integration boom" is already well underway.
To continue reading, please click here...
