Shorting oil in the coming LENR world

On, BroKeeper wrote, “Perhaps it’s time to consider purchasing petroleum corporations’ put stock options. ;-)”

My response:

‘Best watch your buys and sells. I have been brainstorming this for a long time. While the long-term future of petroleum is sorrowful, there are regions of the petroleum industry that are going to blossom before they go belly up.

Watch my thoughts closely for a minute:

Making long-term investments in petroleum will be nuts as soon as LENR obviously exists. There are a bunch of these, such as the building of new refineries, and the building of pipelines, ships etc. All companies, therefore, that focus on the long term side of the business will be in trouble.

However, LENR will not impact the usage of petroleum products for a few years to come. It’ll start with heating fuels (natural gas, fuel oil). It’ll extend more slowly into all areas of transportation. However our petroleum needs are growing. China and India are increasingly their consumption of petroleum.

A third factor will play in. Countries, like the OPEC nations, will realize that their gold mine has a lifespan. They will want to sell their product as fast as they can, so the price of oil will go down. This will put downward pressure on the price of gas, increasing usage.

So long-term investments in petroleum production won’t be increasing available supply. The raw materials will be cheaper. Demand will be up. Who will benefit? The refineries, the finished product producers, I expect. They will be able to get their raw materials for cheap, while charging more for their finished product.

This analysis, I believe, must be factored into any investment decisions.

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14 Responses to “Shorting oil in the coming LENR world”

  1. AlainCo (@alain_co) Says:

    good points.
    Note that some big corps may take advantage of that revolution… Being Antifragile.
    Shell have some skunkwork I suspect.
    if you cannot block it, embrace it.

  2. Brad Arnold Says:

    My advice is to buy stocks of companies that prosper when energy prices go down. That won’t be as much profit as selling short on companies and communities, but it is much safer. BTW, when energy prices go down, the economy generally ought to do better, so aside from the conventional energy sector, every stock ought to be a winner.

    P.S. If you want to come up with a better financial strategy to take advantage of LENR’s emergence, you might want to consider starting a hedge fund to implement it.

    • brucefast Says:

      You’re probably right in your investment strategy.

      As far as “when energy prices go down, the economy generally ought to do better”, well, its complicated. In general there will be a 20% efficiency gain across the board — once the technology settles in. However, the process of settling in is going to be anything but smooth. Companies and countries will have to realign to new economic models. This will be hard on them, very hard on some. There will be a period of time where the old is being pushed out, but the new isn’t here yet. This will be anything but a smooth transition for some.

      Consider Ford motors. Who will want to buy a gas powered car when LENR is just a couple of years away? At the same time Ford is going to have to thunder R&D investment into the new technology to maintain their competitive edge. It’ll be a rough decade for the car companies, followed be a decade or more of boom times.


  3. Bernie Koppenhofer Says:

    Like anything in investing, timing will be critical, especially the timing of that first realization that LENR is real.

  4. iggydalrymple Says:

    I figure that IH has some big names for investment partners.

  5. iggydalrymple Says:

    IMO, would be better to short natural gas, which is the present go-to fuel for heat. Even after the news of LENR, natgas will continue to be produced because it’s a byproduct of shale oil production. Fertilizer and chemical companies will benefit from lower natgas (feedstock) prices.

  6. Craig Binns Says:

    Talking of financial matters, Cyclone Power Technologies whose site is linked to this blog doesn’t seem to be doing too well. Here’s the New York times current data.

    Stock Snapshot
    Monday’s open $0.02
    Monday’s close $0.02
    52-week range

    52-week high $0.10
    52-week low $0.02
    Market capitalization 4.2M
    Avg. volume (10-day) 970.8K
    Shares outstanding 260.3M
    CYPW does not pay dividends

    That 2 cents per share is down from about 40 cents a couple of years ago. And no dividends ever paid which is not surprising because I can’t find any trace of them ever selling a single product.

    So don’t count your chickens before they hatch, when you’re making these big oil and gas deals in anticipation of the free energy bonanza!

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