And the well-known Frank Sinatra song continues, “sitting on a rainbow got the string around my finger.” If Mr. Putin sings in the shower, this might be his favorite melody, as he watches the West dangling at the end of his string (gas pipeline).
If you’re looking for a solution here, you can stop reading now, but if you are an investor, you might want to be thinking about the investment opportunities inherent in addressing the world’s energy problems.
First, recognize that any solution to the world’s near term energy shortages is more likely to be political rather than economic.
Second, any solution that makes the West hostage to OPEC and/or Russia is, at best, ill advised, as is curtailing domestic production in favor of overseas efforts. This has no net environmental benefit. Drilling and mining are drilling and mining, no matter where they are done.
Taking a world view, there is plenty of oil and natural gas, in the ground. Unfortunately, much of it is in the wrong place, for political or logistical reasons, and extraction involves unfortunate environmental issues.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA