I knew it was going to happen — one day.
But I never actually knew how it would go down.
The transition of the global energy economy is not one that could possibly happen overnight. Yet there are certainly outside forces that are helping to speed up this transition.
Climate change policies, advances in alternative energy technologies, consumer demand — all of these things play a role. But these are also elements of change that aren’t always easy to quantify. And in all fairness, that’s what investors want.
But last week, a very clear signal was sent that there are indeed cracks in the dam.
A $2 Trillion Warning
This past Friday, we got word that Saudi Arabia was getting ready to create the largest sovereign wealth fund on the planet in order to prepare for a world where oil will no longer be the lifeblood of the global economy.
As reported in Bloomberg, Deputy Crown Prince Mohammed bin Salman recently laid out his vision for a Public Investment Fund, which will eventually control more than $2 trillion and help wean the kingdom off oil. As part of that strategy, the prince said Saudi Arabia will sell shares in Aramco’s parent company and transform the oil giant into an industrial conglomerate.
Here’s what the prince had to say about this new investment strategy:
IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil. What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.
I’m not exactly sure how this is going to pan out or what kinds of investments will be made, but what I do know is that there’s no denying now that a major sea change is underway. Even the Saudis know they can no longer rely on a steady flow of crude to fill their coffers.
Interestingly, this news out of Saudi Arabia came on the same day that Tesla had pre-sold more than 200,000 units of its newest electric car: the Model 3.
Someone had actually suggested Saudi Arabia and Tesla must have a secret alliance. I don’t buy that, but certainly these two events represent clear warning signs for oil investors looking to go long on oil.
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A Very Profitable Transition
Although the vehicle won’t be ready for deliveries until the end of 2017, in less than 48 hours, more than 200,000 people put down $1,000 deposits to be among the first to get the Model 3 when it’s ready.
There isn’t a single car manufacturer in the world that’s ever done something like this, and I don’t think we’ll ever see something like this happen again.
Hell, the first 100,000 or so were pre-ordered before anyone had even seen the car yet. It wasn’t even unveiled until 11:30 Thursday night.
Although these two recent events are not directly related, they do represent a glimpse of what’s to come over the next few years.
More and more, oil companies are going to struggle with everything from carbon bubble realities to the mere fact that demand for crude is no longer guaranteed — at least not at the levels we’ve grown accustomed to over the past few decades.
And of course, the rapid developments we’ve seen in the electric vehicle space over the past five years alone illustrate just how quickly electric cars are going to proliferate. And little by little, they will start eating into the market share of internal combustion vehicles.
Truth is, I’m thrilled to see this transition.
Although it was the steady supply of crude that helped turn this country into a powerhouse, it’s also been a steady supply of oil that’s been the catalyst for war, terror attacks, and economic manipulation by our enemies, both foreign and domestic.
And as an investor, I’m also thrilled as this transition away from fossil fuels and the internal combustion engine is making me a fortune.
From my early investments in Tesla (NASDAQ: TSLA) to more recent lithium plays that are already fattening my wallet, the end of oil is really nothing more to me than the beginning of a huge wealth-building opportunity in the electric car space.
To a new way of life and a new generation of wealth…
Jeff Siegel
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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.
