The ousting of the government in Tunisia, followed by the current riots in Egypt and to a lesser degree in Yemen (and perhaps yet to come in other countries in the region), has sent stock markets down ... and sent gold, silver, gas and oil up.
This uprising will probably pass. But the next time, or some other time after that, it may succeed, and it may spread in such a way that our supply or cost of oil could be quite adversely impacted.
What good could possibly come to the United States from this current situation?
One possible good outcome would be for the government of the U.S. to strike a new balance between local (as opposed to global) environmental concerns to allow or facilitate more use of abundant natural gas and coal reserves in this country, and to reduce barriers to producing our own rare earths for batteries and other uses.
As we have strived to keep our own local environment clean, we have relied increasingly on other nations to supply our energy sources, often in dirtier ways than we would do here. On this small blue marble called earth, there is only a temporary environmental advantage for the U.S. by relying on other countries to pollute the air and water on our behalf.
We have compromised our national security by outsourcing so much of our energy supply and rare earths supply.
We fund both sides of the war against Jihadist terrorists by increasing our reliance on foreign oil, with a portion of that money funding the enemy. They want to kill us, take away our freedoms, and specify our faith, yet we fund their efforts by failing to internalize our energy sources.
We have embarked on an extraordinary rare earth dependent and unproved electric car program, while passing by the opportunity to utilize our massive supply of clean natural gas to power our transportation (which so many government agencies themselves have proven is possible by their own natural gas car, truck and bus fleets).
China produces 95-plus% of the world’s rare earths, which are strategic in nature, while we put environmental barriers in front of mining companies such as MolyCorp (MCP) that wish to develop our rare earth capacity domestically.
There are clean, or at least cleaner, coal technologies that could power our electric needs, which could reduce our use of oil for electricity. By following the proven technology of coal to liquids to power our transportation.
What good could come from this situation? We could stop talking about energy independence and start doing something about it, and stop daydreaming that alternative energy sources can do the job for us in any reasonable timeframe, if ever.
From an investment perspective, if we did start doing something about it, many companies in the energy field would be likely to respond strongly with price increases (and jobs), ranging from oil, gas and coal producers to the many companies that supply them with equipment and services.
Companies that we own in our portfolios, such as Chevron (CVX), ConocoPhillips (COP), Total (TOT), Shell (RDS.A), Alliance Resource (ARLP) and Hugoton (HGT) would benefit. But our real concern is that the United States would make important strides in reducing its trade imbalances, stop funding the enemy in the war on terror, bring jobs home, and internalize the production of resources that are important to our national security.
Holdings Disclosure: As of January 28, 2011, we hold positions in some but not all managed accounts for the following securities mentioned in this article: CVX, COP, TOT, RDS.A, ARLP, HGT.
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