Fukushima, Natural Gas, and…Fusion?
A blogger I like named Josh Brown (aka The Reformed Broker) has a recent post about how you have to be early to be right, and that timing is in the eye of the beholder. He is speaking about Wilbur Ross’ purchases of natural gas producers. Ross is the billionaire who famously bought up the U.S. steel industry (hyperbole alert) when everybody thought it was done a decade ago.
I think the point is right, from an investment strategy standpoint. But I also think that there is a very real possibility that scientists will perfect net-energy-gain fusion within the next couple of decades. What will this do to natural gas and oil and coal, and solar? If you aren’t already, you should be following the doings at Lawrence Livermore national laboratory. There they use powerful lasers to fuse hydrogen atoms. It is not net-energy-gain yet, and the primary purpose of the lab is to run simulations pertaining to America’s nuclear stockpile, not to create this new energy source, but if something like this succeeds, it will be a shift along the lines of the invention of the light bulb and the gasoline engine. And if you are under the age of forty, the chances are decent that it will happen in your lifetime.
This isn’t to say natural gas won’t have its day in the sun. I think the chances are very good (to great) that it will. I’m less sanguine about nuclear power, at least in America. I think that particularly in the wake of the Fukushima Daiichi disaster, we’ll see many coal plants converted to natural gas before we will see a truly significant expanded nuclear revolution, the recent approval of some new Southern Company reactors notwithstanding. My heavy investment in Exxon (based to some extent on its huge purchase of XTO for its natural gas business) largely reflects faith that natural gas will take the place of a lot of coal in power plants, and of a lot of gasoline and/or diesel in car and/or truck engines. But this is the kind of revolutionary new technology that investors should have their eye on, too. As a side-note, like the internet, like satellite technology, it is something being dreamed up by that thar dern gub’ment, arising primarily out of defense spending.