Truth vs. Reality

Forward to a Friend Having trouble viewing this issue? Click here. Refer a Friend to Energy and Capital.

Truth vs. Reality By Nick Hodge | Tuesday, June 19th, 2012 Energy solutions should be viable without government handouts. This we know. It's the song of those who rail against solar and wind: “It's too expensive,” the chorus. “Just look at Solyndra,” the refrain. They want renewables to be as cheap as fossil fuels. I couldn't agree more. But those same people look at me cross-eyed when I say we should expect the same of oil, coal, and gas. Advertisement The Wal-Mart "Triple Dividend" Secret Wal-Mart currently pays a 2.6% dividend. Not bad for one of the most stable companies in the entire world... But there's an easy way you can stick with Wal-Mart — and triple that dividend payment. Click here for details.  Down the Rabbit Hole The Congressional Budget Office says the U.S. federal government spent $24 billion on energy subsidies in 2011. About $16 billion went to renewables while $2.5 billion went to fossil fuels. Don't ask me where the other $5.5 billion went — it's Congress, after all. But the CBO only counts direct subsidies: payments or tax breaks issued directly to energy companies. The International Energy Agency, however, defines a subsidy as “any government action that lowers the cost of fossil fuel energy production, raises the price received by energy producers, or lowers the price paid by energy consumers.” Use that definition and the IEA says government handouts to fossil fuels dwarf what is given to renewables. Their most recent figures show oil, coal, and gas got $312 billion in 2009 — while renewables got “only” $57 billion. Why such a great difference? Well, we've never had to send ships to stop Iran from blocking solar shipments through the Strait of Hormuz. The Bureau of Land Management doesn't give away millions of acres of land to drill for wind turbines. And we've never used federal dollars to clean up an efficiency spill... You get the idea. Most people don't consider this type of spending before they jump to the conclusion that renewables are expensive. Yet it's precisely this type of wasteful hidden spending that's led to our woeful budget deficits. Last time I checked, $312 billion was five times more than $57 billion. Reality I don't tell you this to be preachy; I'm not trying to beat the drum for renewables. To be a great investor, you have to know the truth and invest in the reality. I just told you the truth, but the reality is that the misconception is mainstream. So — and I believe this is one of society's greatest current problems — you have to invest in the misconception. Advertisement This is the New Rare Earth The rare earth run of the last few years... will be nothing compared to this next resource crunch. Prices for this material have already climbed 300%. And the U.S. and UK have declared it a "critical supply mineral." Now meet the only company with the world's biggest deposit of the stuff... Click here.  What do I mean by that? I mean that even though it's true solar energy is very close to competing with coal, we have to invest in the reality. The reality is not many people know that. So even though it's true that oil should be at $100 or greater in order for OPEC to invest in new fields, we have to invest in the reality that the herd thinks oil should be cheaper because of global economic woes. And even though it's true that oil will soon be back to $100, the reality is we should wait until it sinks to $80 to buy. In the short term, it's easy money. In the long-term, I believe it spells trouble for society and global markets, because this truth-reality dichotomy forces people who know better to invest in blatant falsehoods. Eventually, the truth will come out. The International Energy Agency has come out in full support of ending hidden fossil fuel subsidies. More than a million people have signed a petition urging world leaders to end fossil fuel subsidies in conjunction with a UN meeting in Rio this week. Just as the great energy transition will take years, so too will the phasing out of wrongheaded government giveaways. As that happens, it's important to invest in the present while planning for the future... So I'll still own stocks like these — even as I sit at the Renewable Energy Finance Forum today in the ballroom of the Waldorf Astoria. I'll keep learning and spreading the truth while helping you invest in reality. Call it like you see it, Nick Hodge @nickchodge on Twitter Nick is an editor of Energy & Capital and the Investment Director of the thousands-strong stock advisory, Early Advantage. Co-author of the best-selling book Investing in Renewable Energy: Making Money on Green Chip Stocks, his insights have been shared on news programs and in magazines and newspapers around the world. For more on Nick, take a look at his editor's page.   I liked this article | I did not like this article Follow Energy and Capital on The Bottom Line Related Articles Senate Gears Up for Heated Oil Subsidies Debate U.S. Tariff on Chinese Solar Panels The Solar Blood is in the Street Warren Buffett Renewable Energy Investment Recently... Energy and Capital's Weekend Edition Fail Patience Pays Off Every Time Shale Oil Leads to Jobs, Wealth in Multiple Sectors Settle Your Natural Gas Investments

This email was sent to ignoble.experiment@arconati.us . You can manage your subscription and get our privacy policy here. Energy and Capital, Copyright © 2012, Angel Publishing LLC, 1012 Morton St, Baltimore, MD 21201. All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Energy and Capital does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment. Neither the publisher nor the editors are registered investment advisors. Subscribers should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question. Unauthorized reproduction of this newsletter or its contents by Xerography, facsimile, or any other means is illegal and punishable by law. Please note: It is not our intention to send email to anyone who doesn't want it. If you're not sure why you're getting this e-letter, or no longer wish to receive it, get more info here, including our privacy policy and information on how to manage your subscription.