The Energy Battles – Who Will Win?

Monday, October 19, 2009

High voltage symbolIn The New York Times today is a front-page article, “Energy Firms Find No Unity on Climate Bill.” The Senate is about to take on global warming, causing the energy sector to fragment, as described in the article…

All energy is festering, with unhappy souls.

Big oil hates natural gas, and gas hates the coals.

Utilities are fragmented, into gas, coal and such.

And renewables don’t like anyone very much!!

(Second verse adaptation of The Merry Minuet, sung by The Kingston Trio)

“Producers of natural gas are battling their erstwhile allies, the oil companies. Electrical utilities are fighting among themselves over the use of coal versus wind power or other renewable energy. Coal companies are battling natural gas firms over which should be used to produce electricity. And the renewable power industry is elbowing for advantage against all of them.”

The reason: money. Hundreds of billions in costs/revenues are at stake. And different energy companies (producers and users) have strengths and needs they wish to protect. So, who will win?

Analyzing these issues and the potential outcomes is very complex. There are significant costs and benefits, including important non-monetary components. Many decision tools include theories and sizeable unknowns. Now toss in politics, high public interest and global dynamics, and any forecast becomes very murky.

The important investing point is not to overly commit to any one approach, thinking that the rationale ensures a particular outcome.

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John Tobey on Seeking Alpha

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October 2009