2 Huge Energy Trends and How You Should Play Them

The energy renaissance is a secular growth trend that everyday retail investors can easily participate in. Here are two important trends, with one key investment idea for each trend.

Jul 17, 2014 at 8:52AM

For the last five or six years growth has been pretty hard to find, and it doesn't look like that dynamic will change anytime soon. While some emerging markets do offer solid growth, it can be difficult for the overseas, retail investors, to find ways to profit from that growth. Big technology companies, a wellspring of growth just over ten years ago, have largely matured.

But in oil and gas, several transformations have been under way thanks to technological advancements across the board. These transformations have led to spectacular growth, growth that, this time, retail investors can participate easily in. This article will go over two important, transformative trends in energy and will offer one investment for each trend. While these names are certainly not the only choices available, I believe that each represent a good place to start. 

Lng Carrier Pic Shipsandharbours

Photo credit of Ships And Harbours

Rise of LNG
The world's energy demand is still growing. At the same time, many power-hungry, manufacturing countries such as Japan and Germany have announced plans to reduce or eliminate reliance on nuclear energy. Many other western countries are working to reduce reliance on coal. This leaves a powerful vacuum that is most economically filled by natural gas. 

The biggest sources of natural gas in the world are Australia, the U.S., Africa, and Russia. The greatest demand, however, comes from Europe and East Asia. Complicating things further, exporting natural gas is a capital-intensive operation. That's where LNG shippers come in. 

Between now and 2025, capacity to ship liquefied natural gas, or LNG, will rise by 5% per year. Shippers of LNG will have a lot more to ship. The demand for LNG export vessels, ships which take a lot of time and capital to make, is expected to rise to almost 600 by 2025. Yet, only 300 LNG vessels are forecasted to be online by that time. 

GasLog (NYSE:GLOG) is one of a handful of names focused exclusively on LNG charter ships. This $2.2 billion company has a fleet utilization rate of 100%, and despite the company's ambitious ship construction program, it is unlikely that utilization rate will change much, given current market fundamentals. GasLog has put itself into one of the best trends in energy today.


Pipeline construction in Schwerin, Germany. Source: Wiki Commons

North to south
In the past, US pipelines moved natural gas from the traditional supply source, the Gulf Coast, to the traditional demand source, the Northeastern seaboard. Today that trend has reversed, or has at least become much more complicated. Thanks to huge shale discoveries, the greatest source of dry gas supply in the US is now the Marcellus Shale in Pennsylvania. This discovery was so game-changing that natural gas prices in the US dropped well below those of the rest of the world, thereby giving the US petrochemical industry, which depends on natural gas as an input for so many chemicals, to boom all along the Gulf Coast. 

The end result is that gas now flows from Pennsylvania to both the eastern seaboard and the South. Most pipeline operators were not ready for this, but Williams Partners (NYSE:WPZ) certainly was. Years ago, when Williams built its Gulf Coast to New England gas pipeline, the Transco Pipeline, the company decided to make the pipeline a bi-directional one. Management at the time had no idea what a great decision that would be. As other pipeline companies scramble to retool their systems to the new reality, Transco is the single fastest-growing pipeline system in America. 

Foolish takeaway
These two important energy trends are not the only ones going on today, but I believe that both now provide fantastic opportunities to investors who can be be enterprising but patient. In the coming years, LNG will become a much bigger pie than it is today. In the U.S., gas will increasingly flow from the north, not the south. While Williams and GasLog are certainly not the only choices here, I believe that both represent a good place to start looking. 

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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