CHICKENS COMING HOME TO ROOST IN AUSTRALIA
Remember when we discussed this a few months back?
Well, now them chickens are comin’ home to roost. The cliff that the “Net Zero” ideology is pushing Australia towards (if it isn’t already half over). Here’s The Australian):
A looming gas shortfall that threatens to curtail industries and derail Australia’s energy transition is the fault of 10 successive government interventions, the Gina Rinehart-backed Senex Energy has declared, and now the country has little time left to fix the mess.
Australia faces a looming gas shortage which could emerge as soon as next winter, and while there are marginal supply boosts that can be implemented, authorities said the chasm would be impossible to bridge by 2028 without urgent new supplies.
Should new supplies not be brought online, large industries that rely on gas are likely to face a battle for survival and Australia’s energy transition away from coal could be scuppered.
Senex Energy, half-owned by mining billionaire Gina Rinehart, said the difficulties were a direct consequence of governments intervening to pick winners – though there is now a gradual acceptance that gas is vital and will be required for decades to come.
Chief executive Ian Davies said Labor and its state counterparts would need to show “unambiguous and unequivocal support” for gas.
“Something needs to change – and quickly – before the warning bells turn to a death knell for industry and lights out for households,” Mr Davies will say in an industry speech in Sydney on Tuesday. “Unrelenting gas market intervention has created this mess and it’s time for effective energy policy to get us out.”
All rather miserable if you are so fortunate to live in Aussie. However, that aside, this highlights one huge issue. Once you realise you have an energy crisis, you can’t just “turn on the taps” because the crisis is a result of the “reservoirs upon which the taps are attached running dry.” It takes time and considerable money to develop new reservoirs. This applies not only to natural gas but coal, uranium, oil, copper, and the like.
Yes, money will be thrown at developing new resources with gay abandon. Economics and greed (the desire for a better standard of living) will always win over the prevailing Malthusian ideology gripping the West. But by the time that happens, stock prices of service and producer companies will have lost their asymmetry (i.e. they will have rocketed higher).
The most value still sits with small cap oil and gas service and producer stocks.
But it isn’t easy. Remember MMA Offshore? We first talked about it in mid-2020 when MMA was trading at about AU$0.30-0.50 (actually, it was 3-5 cents before the stock consolidation). We were bullish for all the same reasons we were bullish on Tidewater. Well, blow me down — any genius who followed our idea took about two years to get back to break even (if they were patient enough), and at one stage were down 30-50% even after 18 months of being in the trade. The rest, as they say, is history.
And now? Well, as they say in Aussie, “buggar my days.” That elusive 10x return gets pulled from beneath our feet yet again.
Ah, well — a 4x return is better than a poke in the eye with a burnt stick. We take our chips and move on.
The Insider Newsletter - Capitalist Exploits Insider
Stay ahead of the investment game with our professional investment service.
- Get unique and carefully researched stock ideas,
- A comprehensive idea database, a rational analysis of global market issues,
- Educational resources, and guidance on international investing - all directly in your inbox.
Managed by experienced investors responsible for managing significant funds, our newsletter is designed for aspiring investors and financial professionals.
No constant marketing, sharing of data, or infotainment - just valuable content.
Try our 30-day trial with a minimal fee and the flexibility to cancel anytime.
