Above: International Energy Agency energy demand projections from BBC News report, "World risks 'dirty' energy future" (link here) dated 7 November 2006.
They mention pursuing nuclear option. (Not a bad idea considering how much of it is left untapped and that it produces heck of a lot of energy. But the Greens won't like it though cos of the risk of radioactive contamination, not giving 'green' energy sources a chance, etc. But Australia and South Africa's got a lot to gain from an interest in yellow cake uranium mining.)
They mention growth in the use of biofuel as a transport fuel (Ethanol? Biodiesel?).
From the article:
The report also projected that biofuels were set to play an increasing role in road transport, providing up to 7% of the total consumption in 2030.
But here's the interesting bit:
But the WEO warned that the growing demand for food would limit the potential of the plant-derived fuel produced using current technologies.
So if there's expectations of increased demand for grains for food purposes and as an alternative energy source, where do you think the price of grains would go?
If grain prices are going up, which companies will benefit? I can think of one: Noble Group, listed on the Singapore Stock Exchange. How about agricultural themed stocks? Or countries with significant infrastructure in palm oil and grains?
The assumption here however, is that world economic growth continues. We hope that emerging markets continue their upward trend, with some occasional periods of volatility. Energy companies tend to be highly leveraged with a sizable fixed cost component which makes their net profits very sensitive to economic fundamentals. A downturn could have a material impact on their revenues considering their large capital outlay.
As of today, I'm bullish on energy themed stocks and funds.
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