Financial Sense Newshour on Energy

Jim welcomes Dan Steffens, the President of Energy Prospectus Group (EPG), a networking organization based in Houston, Texas. Dan publishes EPG’s newsletter, “The View From Houston”. Dan discusses his views on natural gas, and lays out the case for higher natural gas prices ahead. Dan and Jim also discuss the energy stocks, and Dan advises investors to look for companies that balance natural gas and oil production, and can switch back and forth as market conditions warrant.

Jim welcomes Joseph Dancy, Manager LSGI Venture Fund, and Professor at SMU Cox School of Business in Texas. Joe sees a discrepancy between energy company performance and share prices, as most major oil producers have underperformed the S&P 500 Index. Joe notes that the global demand for oil is rising relentlessly through industrialization and growth in China, India and other developing nations. With record oil company revenues and growing global demand likely to continue, Joe sees a much more positive performance for the energy sector looking ahead.

Jim welcomes back Kurt Wulff CFA, Independent Energy Analyst at McDep LLC. Kurt and Jim discuss energy equities today and Kurt sees Exxon as the Rodney Dangerfield of oil stocks, not getting the respect it deserves. He sees XOM as a must-own anchor of any energy portfolio. Kurt also discusses other energy equities, such as Encana and Suncor. He notes that Encana is a potential takeover target, perhaps by the Chinese. Energy stocks outside the US have been down lately, and Kurt sees many value opportunities in the energy sector.

Jim welcomes Jeffrey Brown, Independent Petroleum Geologist, creator of the Export Land Model, and ASPO-USA Board Member. Jeffrey explains his Export Land Model, and reviews the major trends regarding availability of oil exports on the world market. Jeffrey also looks at the growing tension between oil production and the rising internal demand of oil-producing nations as well as China, India, and other emerging economies. His overall thesis is that the US oil industry continues to make a serious mistake by providing, in his opinion, wildly unrealistic scenarios for future US and global crude oil production.

Jim welcomes back Gail Tverberg to speak on energy, and they discuss her views on limits to oil supply limiting long-term economic growth. Gail believes the key issue is that global oil supply is not rising very quickly, no matter how much investment is made. Because of this “sinkhole” phenomenon, we are getting less and less back for every dollar invested; or declining energy return on energy invested. Gail argues that the ultimate impact for developed (OECD) countries will be a long-term contraction of their economies. The problem is that our current global financial system depends on long-term growth.

Jim welcomes back Michael Kantrowitz CFA, Director, Portfolio Strategy & Quantitative Research at Wolfe Trahan in New York. Michael sees the inflationary set-up as the big difference between 2012 and 2013. He expects record high gas prices by May, and sees Chinese economic growth leading to more inflation for US consumers. He mentions a steady stream of early signs of inflation. Michael discusses investing in areas that will benefit from massive central bank stimulation: energy, materials, industrials and technology.

Jim is pleased to welcome economist Jeff Rubin, and author of “Why Your World Is About To Get A Whole Lot Smaller”. Jeff discusses lower economic growth as the “New Normal”, along with high energy prices. He sees rising oil prices in the future making tar sands and shale oil plays economic to produce. Jeff believes OPEC countries will be a less important source of supply in the future as they consume more of their own oil. He sees the North American manufacturing sector as the best investment play, as a rebirth in manufacturing gets underway, reconnecting production to its consumer markets.

Jim welcomes back Bill Powers, Editor of Powers Energy Investor. Bill believes the price of uranium has bottomed due to fundamental factors. This is the last year of the Megatons to Megawatts Program between the US and Russia, which provided a large supply of uranium into the market. Bill also notes rapid development of nuclear energy plants in both China and India, as well as plans in Japan to re-start the Fukushima nuclear facilities. Bill also sees tremendous value in small and mid-tier energy companies, and believes we will experience higher oil prices later this year.

In this special year-end edition of the Financial Sense Newshour, Jim looks back at the 2012 stock market and evaluates its performance. In the next topic, Jim looks at the recovering housing sector and the reasons behind it. Lastly, Jim covers the topic of shale oil, and if it could be the savior for our energy woes.