Investing for the oil bust

[DaveJ]

Say I had the supernatural ability I could predict one future event: oil was going to pretty much run out in 6 years.

Any oil reserves are allocated to the military. Jet fuel becomes super expensive so nobody is flying. The U.S. government is preparing by building train lines. We still have energy for electric cars, but the energy shift is going to be traumatic for industries that need to high power engines that only oil can provide.

Even Repukes then realize government is going to need to help manage this disaster. Where would be the best place to put money in such a scenario? Government bonds? Is the stock market going to do well through this?

[dtexdem]

1. Dirigibles. The U.S. has much helium.

[DaveJ]

3. Does anyone make helium blimps anymore?

That would be awesome. Maybe I'll create my own factory.

[ProgressiveProfessor]

11. Yes

[NickB79]

19. That's not what recent news articles state

http://www.star-telegram.com/2011/07/16/3225976/last-us-federal-helium-reserve.html


Last Federal Helium Reserve, near Amarillo, is running out

[Jackpine Radical]

2. Battery technologies, possibly fuel cells, watch for new H2 tech

[DaveJ]

7. Oh I meant generally, not specifically

Actually I'm wondering about my 401k, not specific stocks. I'm tried of watching it go down every quarter with it in stocks. I'm wondering if I should put more into gov bonds.

At least until the energy situation is resolved, I do not trust the market to behave normally. When someone gets behind a podium and says we have unlimited energy, then I will have confidence again.

[OHdem10]

4. Head of Goldman-Sach predicted last week the USA will be

TOP OIL PRODUCER by 2017. We will surpass Saudi
Arabia.

This was posted on DU at the end of last week. The
Poster was quoting INSIDER BUSINESS.

The article did not mention specifics. Maybe that
Alaskan Pipeline and Drill Baby Drill are closer
than we think.

[applegrove]

18. Also the tar sands from Alberta are going to be refined in the USA after

that pipeline passes. And it will pass.

[NickB79]

20. They're thinking they can simply replace cheap, easy crude with tar sands

It costs $10/barrel to pump Saudi crude, while it takes at least $50/barrel to extract Canadian tar sands, and the tar sands are heavily dependent on natural gas and fresh water supplies to function.

What could possibly go wrong with that idea? :eyes:

The problem with the claims made by BUSINESS magazines is that they aren't backed up by geologists or hydrologists. They look at the trend and say "if we just extend this out further, we'll be producing X amount of oil by 2020." What they fail to realize is that water is a MAJOR limiting factor in Canadian tar sands development, to the extent that entire rivers are already being diverted for use at current extraction levels. Without that water, the tar sands can't function.

[Blue Meany]

5. Buy a farm. Agribusiness is highly dependent on oil for fertilizer,

pesticides,for running machinery, and getting produce to processing sites and then to market. In the world of expensive oil, big agribusinesses will no longer be competitive and food will not be travelling an average of 2000 miles from field to table as it does now. Food will have to be grown and distributed locally. Since there is already a growing demand for locally-grown food, this is a good place to invest even now, and will be a good place for the long run as well.

[NickB79]

21. The flip side is that farming without large inputs of fossil fuels is backbreaking work

Not even close to the idyllic, peaceful life many like to imagine it to be.

But that's also one reason farming will become much smaller and more localized just like you said; can you imagine running 500 acres without easy fossil fuels? People are going to have to go back to the ole 40-acres-and-a-mule and break up the current megafarm operations back to small family farms.

[napoleon_in_rags]

6. I'm not a serious investor, but I've turned this one over and over in my mind.

Peak oil means more expensive energy all around for one thing. Transportation is the setting most dependent on oil, so you are looking at a world with less transport, less heating in homes. (invest in coat company???) On the other hand, you still have electricity for the lower level power consumers, like smart phones and laptops so IT structure isn't too affected. So there will be an attempt for smarter transport systems for moving things and people around. That means logistics, that means the companies with the IT infrastructure to manage that sort of thing, with all their map software ready to go.
I also bet it means a transport premium stuck on many imports to an area, so that local manufacturing company that looks weak now compared to China might not look so bad as the import situation changes.
Just my two cents.

[DaveJ]

10. I am looking into more domestic investments.

I think I'll just stick to American stocks and bonds. Just wondering if American industries are going to be hit by the oil bust. It doesn't sound like anyone here is too worried about it.

[napoleon_in_rags]

13. I'm actually very worried about it.

We built this country on oil. If gas prices keep rising, those old European cities with the narrow streets and everything close together start looking a lot less ridiculous to live in: We're talking about a huge drain on people's wallets just to get home to the suburbs from their jobs, and that effects everything negatively.

Honestly though I think anybody who tells you they have the answers is lying. Your guess is probably as good as any expert at this point as far as what to invest in.

[DaveJ]

14. Yeah I just get tired of them talking about historical trends

Nothing in history is going to match the world running out of oil. When I talk to our 401k lady she keeps thinking I'm being "emotional". This has nothing to do with current stock market events. She is so jaded, she can't even respond to the point I am trying to make. It's like she is reading from a script.

[jwirr]

15. I think the lesson we can take from history is simple: There was a

world and a USA before we had knowledge of the uses of oil. As to what to invest in - our family is going for the farm. We will continue to work in the economy that is as long as we can but we are planning to build that farm up to both survive on and to sell to others.

[DaveJ]

17. The economy and human race will survive, no doubt

I'm not saying the world is going to end. It's just that if I'm going to trust large sums of money to someone, I would like them to at least be aware that oil does not come from space aliens, that has a large role in industry today. I would expect them to be able to explain how funds are prepared to handle the fact that oil will run out before I retire. That's what I would 'like' but the reality is our 401k lady probably has no clue. So I went ahead and invested in the standard portfolio for my age. I just have to hope that whoever is higher up than her hows what they're doing.

[napoleon_in_rags]

16. Yeah, its scary.

I mean there's two sides to us: one is our scientific minds, which can see this kind of thing coming. The other is our animal minds, which are programmed to live the way we saw people living our whole lives, not to really expect change (like that lady you talked to) The latter is the more powerful driver of behavior, so we have this subconscious sense that it will be cars and hamburgers forever, when all indicators say this cannot be.

The real question is, how do we put the scientific rational mind in the drivers seat? How do we make it compelling enough to drive behavior? The deniers insult this kind thing and global warming as a "religion", but the sad truth is people don't connect to science at the fundamental level they experience religion. Maybe if we understood this thing in terms of angry Gods about to deliver a mighty judgement, we'd be in better shape... But as it stands I don't know what's going to happen.

[RUMMYisFROSTED]

8. Mattress

[RUMMYisFROSTED]

9. Wheelbarrow

[Ikonoklast]

12. The energy that is going to come out of the Utica and Marcellus Shales may forestall that a bit.

But, if that wasn't the case, I think investing in alternative and renewable energy companies is the play.

The demand would be there, in a big way.

[GliderGuider]

22. The advice I usually give is to invest in land, hand tools, knowledge and personal fitness.

IMO the financial markets are in for a major reset, so I see no real point in staying invested there, at least as a value investor. Traders will continue to fill their boots for a while, but there are some mighty short haircuts looming on the horizon.

And I think your wet finger of 6 years is a little exotic, but I'd be fine with a guesstimate of 20 years. At that point the USA will be burning only the oil it can pump out of its own ground, because the international oil market will probably run dry about then. That would leave the USA with a third of the oil it's burning today. Which will probably just about match demand if the markets stray crashed over the next couple of decades. Ick.

[DaveJ]

24. 20 years would amaze me

Considering we are squeezing out of the ground like a dried up sponge now.

Anyway, I'm not really concerned about my own survival. And I do not care about money, it is just the principle of the matter. I am wondering if the stock market will survive and adjust? If not, will bonds survive? Or is cash the way to go? I guess I'm just wondering if people think companies are prepared.

[Dover]

23. None gas autos

Also helps to burn fat.