The Climate Change Policy Disconnect – Will It Lead To An Energy Crisis?

Summary Seeking Alpha – Focus on curbing supply as opposed to demand for fossil fuels may lead to permanent under investment in new supply projects. This creates the risk of a supply-shock and energy crisis in the next decade. For investors, this will create an opportunity to generate superior returns as supply-side constraints lead to higher prices and profit margins for existing fossil fuel companies. Two news announcements recently caught our attention. Both announcements provided further comfort in our minds with regard to our positive thesis regarding the outlook for the broader energy sector over the next few years. The recent news announcements we are referring to are, firstly, this announcement by Glencore Plc (OTCPK:GLNCY), the international commodity trading and diversified mining conglomerate, in which it indicated that it would cap its coal production going forward. The second news item that caught our attention was the announcement made by Norway’s sovereign wealth fund in which they outlined their decision to reduce the exposure of the fund to oil and gas companies. It follows a report from Norway’s central bank in 2017 in which the central bank said that dropping oil and gas investment would be a good economic move. In some ways, the decision… continue reading

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