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Long term plays should be playing these changes. Assume that nothing stays the same other than political deadlock. In other countries, there is the political will and means to get things done, notably China.
Financial instability and sovereign debt threatens deeply. The only way to avoid the impact may be to invest in countries that do not have such structural defects. Investments that succeed there may also benefit from strong currency valuation shifts and inflows for money seeking a safe harbor. Canada looks good in that regard and oils sands looks like a strong long term play.
Gold seems to be a hedge against financial crisis. Gold producers make money when gold valuation increases, gold producers traded in the currency of countries with sound finances would generate compound gains.
Peak oil and growing demand will make oil expensive. This will increase the demand for oil exploration and off-shore drilling. One would expect some parts of big oil to make a lot of money. Arctic drilling, pipelines and shipping will be in play. Arctic sea ice will become much less of a barrier.
The ability to grow food is totally dependent on diesel fuel, you cannot plow, seed, harvest or deliver without it. In that sector, demand is not soft but fixed. Grains are a global commodity, food costs will increase which destabilizes many small countries. Without diesel fuel, there will be massive starvation, migration and instability.
Ethanol from grain is doomed in the long run. We can no longer convert diesel oil from imported oil into ethanol. The carbon footprint is larger as well. Natural gas for fertilizer and ag chemicals cannot be neglected. There is more money to be made selling grain to the world while improving the countries balance of trade.
High prices of petroleum fuels will reduce consumption. Moving personal automobiles from gasoline to diesel will happen, but doing that will push up the cost of diesel fuel even higher, increasing the costs of goods and food.
Coal fuels most industry. Coal requires delivery over long distances by rail. That consumes diesel oil. Long haul rail will never be electrified. Oil is not used to generate electricity, so those are decoupled to some extent. The CO2 and climate change problems are at play. The only way to reduce demand for coal is by adoption of nuclear power. The economics do not support that. For this to change, investment in nuclear requires political and popular support and altered economics. Carbon taxes can change the balance. Politics in the USA would appear to make such changes impossible. Only global sea rise and drastic climate change effects would appear to be able to force change.
If rail transport of coal becomes expensive, generation at source and movement of energy over high voltage DC transmission lines from coal mining sites may result.
Rail is very much more efficient than trucking. Expect to see more intermodal trucking and more rail utilization. Railroads are winners and they pass on the costs of fuel increases. Rolling stock production and locomotive production remain strong, but historically have been cyclic.
Sea levels will rise and coastal cities will suffer damage. Insurance companies will get out of some classes of coverage for this reason, or take crippling losses.
Natural gas now is over produced and prices are low. Natural gas and the cost of oil are now substantially decoupled. With gas from the Rocky Mountain foothills and from shale, the cost of natural gas will also be less impacted by oil wells in the Gulf of Mexico becoming shutdown by hurricanes. The only way that this will change is depletion of gas fields or new processes to economically convert natural gas to liquid fuels that can be used in the transportation industry.
Transocean transport of LNG to North America will not be a major market influence.
Natural gas is used to make plastics. Changes to the costs of natural gas would also affect the costs of plastic. The offset in demand would be a reduction in throwaway plastic packaging.
Some agricultural areas will decline and some will improve. Crop focus will change. If the cost of natural gas increases greatly, the cost of fertilizer will increase.
China will be the king of many manufacturing sectors as are not large countries with cheap labor to erode their dominance. India does not seem to have the social structure to rise to a dominant position. China will drive the consumption side of global resource demand. This will affect the flow of goods and services to domestic manufacturing entities.
Winners:
Improved diesel engine efficiencies and drive trains. Pure sector play would be Cummings. Improved locomotives; there is no strong pure sector play, GE dominates now.
Companies that are leaders in creating fuel efficiencies. GE has a role to play along with locomotives.
Nuclear system design, construction and commission. Strong demand and prices for chrome, nickel and other minerals needs for specialized alloys. Companies that can deploy teams of specialized welding crews. Independent 3rd party inspection companies.
Uranium seems obvious, but if liquid metal reactors and other advanced designs come into play, demand for uranium will drop. But early leaders in the new technology and fuel rod reprocessing will be winners. What large corporations will be doing that?
Increased costs of travel will change cash flows to local destinations.
Electrified rail for passenger travel will eventually get off the ground, but will always be a regional niche solution. Passenger rail may never be profitable and with the current political situation, government may not be able to make rapid rail or high speed work. Much uncertainty and risk as a pure play. In countries where passenger rail works, international companies that supply components to manufactures can make money, but domestic producers of rolling stock are subject to unsteady demands.
Automotive production that reduces or displaces petroleum fuel consumption will generate market value.
Companies will start to recycle batteries to recover lithium.
Rare earth magnets will be recycled and not be today's throwaway commodity.
All mineral commodities will increase in cost, altering demand. There are numerous factors, available deposits, difficulty of extraction, costs of transport and the degree of energy intensity required for processing and refining.
Tar sands and oil shale processing is very energy intensive, consuming very large amounts of natural gas. That also increases the carbon foot print of the final product to be greater than that of conventional oil. Very large facilities such as the Alberta tar sands could utilize nuclear reactors to generate the required low grade heat [steam] that is required. This could lead to other similar applications for process steam generating nuclear systems. The costs of natural gas would need to increase greatly to promote this change, or carbon taxes. While that is problematic in the USA, the Canadian Government could easily have a role to play, opening up opportunity for change.
Defense sector remains strong, even as demand for civil aircraft production is under pressure. Trend for advances weapons, intel and unnamed combat aircraft grows. Cost of fuel increase demand for force multiplier technologies.
There is a role for sector leaders to deal with cyber threats and warfare.
Loosers:
High costs of jet fuel will reduce air travel. While improved passenger-mile efficiencies will occur, air travel demand must fall.
Companies and developed countries that cannot secure supply of lithium and rare earth metals.
posted by 68.95.117...
, Wed, 13 Jul 2011 03:49:35
, Tue, 12 Jul 2011 16:07:06
, Tue, 12 Jul 2011 19:38:51
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