I’m writing to you from Barcelona, Spain, where I’ve got a bird’s eye view of the heatwaves roiling across the continent…
Yesterday, it was 90ºF during the day… and a sweltering 84ºF overnight.
And this week, temperatures are forecasted to hit 100ºF in many parts of the country.
This comes after the hottest July in Spain in 40 years. In the same month, the country saw more than 1,000 heat-related deaths.
Lots of Europeans have never dealt with weather like this before. And unsurprisingly, they’re turning to desperate measures to stay cool.
In the U.K. alone, air conditioner (“AC”) sales spiked more than 2,400% in just one week.
Here in Spain, the increased energy consumption is reaching unsustainable levels, and it’s being accelerated by geopolitical issues.
In the middle of the heatwave, the Spanish government has called for energy-saving measures to cut dependence on Russian oil and natural gas.
These include limits on AC in public buildings, shopping centers, cinemas, theatres, rail stations, and airports.
It’s part of a Europe-wide push to ditch Russian fossil fuels. And as you’ll see today, this will light a rocket under what colleague Nomi Prins calls the New Energy megatrend.
It’s an epic restructuring of the economy around wind, solar, geothermal, and nuclear energy. Among other green and renewable changes, it’ll see electric vehicles (“EVs”) replace the gas guzzlers on the road today.
And as Nomi has been showing her readers, it’s also a new sector for speculation and profit that will yield some of the biggest gains for investors over the next decade.
But before we get to what’s coming, it’s important you understand how dysfunctional energy markets are on this side of the Atlantic…
Take natural gas.
It accounts for 20% of the energy consumption in the 27-nation European Union (“EU”) bloc.
And it accounts for 32% of household energy consumption. That makes natural gas the biggest source of energy for households.
The EU imports 80% of its natural gas needs… and about half of those imports come from Russia.
And that’s now a major national security risk…
Russia’s president, Vladimir Putin, has launched a bloody war against EU ally Ukraine. And he can shut off that supply at any moment.
Europeans thought they could do business with Putin. Now, he’s using their dependence on Russian energy as a weapon of economic warfare against them.
And it could have an even worse effect on the EU economy than Western sanctions have had on Russia’s economy.
Last week, citing maintenance problems, Russian state-owned gas giant Gazprom cut supplies to 20% capacity through Nord Stream 1.
Nord Stream 1 is the main route for natural gas from Russia into Europe. It’s a symbol of European and Russian energy cooperation.
And Gazprom didn’t cut supplies by 20%… it cut them to 20% capacity.
What was once a flow of natural gas to Europe is now a trickle.
That, plus the fear that Putin will cut supply altogether, has sent European natural gas prices soaring.
Natural gas markets are regional. What you’re looking at is Dutch TTF Gas – a leading European gas price benchmark.
And as you can see, over the past 12 months, it’s rocketed 382%.
Winter is right around the corner. No gas means no heating for millions of Europeans.
If Putin shuts down the pipeline, hundreds of thousands of people could freeze to death.
And Europe is quickly draining its own stores of natural gas.
Spain isn’t the only European country dealing with a heatwave. The entire continent is. Everyone is running their ACs at home, which increases energy consumption. This means less gas available for winter.
In short, Europe is facing an energy crisis on a scale we haven’t seen since the oil shock of the 1970s. That’s when the Organization of Arab Petroleum Exporting Countries (OPEC) embargoed oil exports to the U.S., Europe, and Canada… and led to a market crash and recession back at home.
In France, for instance, the government will fine storeowners with AC €650 ($770) for leaving their doors open.
The German government has turned off water fountains and imposed cold water showers at municipal swimming pools and sports halls.
And in Greece, the government has unveiled “operation thermostat.” This includes limiting AC temperatures to no lower than 80.4ºF and installing heat shields over windows in public buildings.
But cuts like this will only go so far. Finding alternative energy sources to Russian fuel imports is vital.
Some of those alternatives will be fossil fuels such as coal. But Europe won’t achieve energy security without a renewed push for wind, solar, geothermal, and nuclear power.
If you don’t know her already, Nomi worked on Wall Street for its most prestigious investment banks.
But 20 years ago, she quit a seven-figure job at Goldman Sachs (GS) to blow the whistle on Wall Street’s dirty practices. And she has dedicated herself to helping self-directed investors build wealth through today’s highly distorted markets.
Over at our Distortion Report advisory headed up by Nomi, one of the main themes she writes about is the energy transition and how to profit.
Here she is with more on why the energy transition is one of the biggest profit opportunities in the world right now…
We’ve seen, throughout history, that investment opportunities emerge when we use less of one resource and more of others. People made fortunes in the oil and gas industry in the 20th century. And they’ll do it again, as we transition away from fossil fuels.
The transition to natural gas over the last decade was a good example. It happened despite how anyone felt about climate change. Now, we’re transitioning again.
For the first time in a century, lots of new energy technologies are becoming possible on a large scale. That includes wind, solar, geothermal, and next-generation nuclear.
The whole world is frantically looking for ways to generate power without releasing more carbon into the atmosphere.
And just like folks did during past energy shifts, those who invest now in the New Energy megatrend stand to make fortunes as it plays out.
Nomi’s New Energy recommendations have included an electrical utility holding company… an EV charging infrastructure stock… and one of the country’s leading lithium mining stocks.
Lithium is a key ingredient in the lithium-ion batteries need for EVs as well as what are known as stationary batteries. We need them to store power from wind and solar plants before sending it onto the grid.
Without it, much of the energy shift can’t happen.
That’s what’s great about the Global X Lithium & Battery Tech ETF (LIT).
It’s the exchange-traded fund that gives you exposure to lithium mining companies as well as lithium-ion battery makers.
I first put it on your radar in October 2018. And it’s up 130% since then. But it’s still a great way to play the New Energy transition megatrend while it’s still in its early innings.
Until tomorrow,
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Chris Lowe
August 3, 2022