I expect some very interesting discussions on possible breakthroughs in batteries and storage system technologies as this year's Windsor Energy Consultations.
For many parts of the world, the provision of regular electricity is the single most important priority.
Early this week, Marina and I will be flying "across the pond" for another stay at Windsor Castle outside London.
We'll be there for the annual Windsor Energy Consultations. It's a three-day event that promises to include some intense discussions with some of the most gifted energy minds in the world.
Established by royal charter, this world-renowned group holds sessions throughout the year and all around the globe. But this particular event takes its name from the seminal session that is held each year on the first weekend of March while the royal family is in residence at the castle.
And once again, we'll be taking you inside.
As is custom, these discussions will take place under Chatham House rules. Those rules dictate that the conclusions and themes can be made public as long as the opinions aren't attributed to named individuals.
These rules allow for frank exchanges, which rarely happen at other high-powered gatherings.
These are the folks who will decide what the energy market looks like over the next 12 months (and sometimes beyond).
And what I learn here will give us a rare (and profitable) peek into where the energy market goes from here…
However, something is going to be very different about this trip.
The bond market is about to enter a phase we haven't seen in over 70 years…
A rising interest rate cycle.
A trend that has only been accentuated by the U.S. Federal Reserve's aggressive plans to accelerate interest rate hikes and ongoing concerns over an impending major stock market correction.
And while it is too early to jump on the "death of the bond bull market" sentiment swirling around Wall Street, the current direction of interest rates could be worrisome for U.S. oil producers.
You see, any way you look at it, a wide swath of U.S. oil and natural gas producers are going to take rising rates on the chin. Bankruptcies, mergers and acquisitions, and asset sales one step ahead of the sheriff will be increasing.
That doesn't mean there's no profit to be made here… On the contrary, in fact.
Those are all opportunities.
As the markets begin to show signs of finding a bottom – with four consecutive positive sessions through yesterday's close – the energy sector has continued to perform weaker than most of the other S&P 500 sectors.
Because of that, analysts have started grasping at straws.
Some are predicting a gradual lowering of prices from current levels…
While others are taking their cues from more immediate production figures, supply levels, and demand estimates.
Fact is, volatility has taken hold of the global oil markets.
After a seven-month period of remarkably low volatility in oil, the last few weeks have been turbulent.
And that has a lot of oil enthusiasts nervous.
However, all of this needs to be put into perspective to understand what's really at work here.
In a little more than two weeks, Marina and I will once again be traveling to Windsor Castle outside London.
The occasion?
The annual Windsor Energy Consultation held under royal charter.
This year will mark the ninth year in which I have briefed the gathering. The importance of that meeting, and the way in which it galvanizes global energy conversations, will be something we will continue to cover over the next couple of weeks here.
But there is one matter that will be discussed there that I want to bring to your attention today…
It involves a new "energy revolution" that is already sending shockwaves throughout the global energy sector.
In 2005, I was at a meeting of energy experts close to Dominion Energy's liquefied natural energy (LNG) terminal in Cove Point, Maryland.
At the meeting, it was unanimously concluded that at least 15% of U.S. natural gas demand would be met by LNG imports within the next decade.
In those days, nearly 70% of the U.S crude demand was projected to be met by imports.
At that time, American oil production was not even 7 million barrels a day, with well over 60% of total volume coming from "stripper wells" – each providing less than 10 barrels daily but many more barrels of water than oil.
Back then, we were aware of the potential lurking in shale and tight oil and gas…
But nobody could have foreseen (myself included) the largesse LNG would provide.
Well, a great deal has changed since then…
Last Wednesday, the U.S. Department of Energy reported that the United States would become a net exporter of crude oil and natural gas by 2022, which would mark the first year that U.S. energy exports surpassed imports since 1957, when Dwight Eisenhower was president.
The stock market freak-out hit a crescendo on Monday, with the Dow plunging nearly 1,600 points at its lows – marking the biggest intraday point drop in history.
The Dow fell 1,175.21 points, or 4.6%…
The S&P 500 lost 113.17 points, or 4.10%…
And the Nasdaq Composite dropped 3.78% to 6,967.53…
However, even with Wall Street stocks posting record losses over the past few days, oil prices have not suffered to the same extent.
WTI (the New York benchmark for crude oil futures) was down 2.5% over the same sessions, while Brent (the other and more widely used global dollar-denominated benchmark set in London) shed 3%.
Of course, two days does not a trend make.
But the relatively "less bad" performance by oil gives us some pause.
Unlike earlier bouts of investor angst, this time around, the swoon in oil wasn't about a decline in the broader markets.
This week I'm writing to you from the balmy Bahamas where I've come to provide energy briefings to local bankers, investment houses, and government officials.
I'm already learning that the primary interest from people over here is how their region will internalize what is happening elsewhere.
And this is a recurring refrain that I'm picking up worldwide.
Not too long ago, it was the norm for places with smaller populations – and in large part undiversified economies – to seek direction from larger national partners.
The 2018 oil rally is happening at breakneck speed.
As I write this, West Texas Intermediate (WTI) is above $66 a barrel, while Brent crude is breaching $71 a barrel for the first time since December 2014.
That means, as of Wednesday's close, WTI has risen 12.2% for the month; Brent 8.1%.
Now, I've written about the narrowing of the global crude oil balance for some time.
But it's looking more and more like that balance is arriving quicker than anticipated.
Years ago, during one of my stints advising a foreign government on their energy policy, I had to contend with a rather obstinate official intent on a single solution for his country's economic woes.
This jolly little fellow insisted that relying only on domestic production would benefit both an episodic unemployment problem and jump-start local factories.
In short, high protective tariff walls were the answer.
Now, I must always be careful in such situations…
If, on the one hand, I provide advice that turns out to improve the situation, usually that just advances the political prospects of the minister who steals the idea.
On the other hand, if my advice causes problems (usually because it's not correctly administered), there's the risk that the locals will read newspaper headlines proclaiming that an American advisor has just ruined their children's future.
Still, protective tariffs are rarely the answer to economic difficulties. They increase internal prices and inefficiency by depriving the market of an essential ingredient…
Outside competition.
My experience has always been that this sort of give and take – someone suggesting tariffs, me showing them in great detail why that'll just come back to bite them – plays out only in developing countries.
