FORBES EXPERT FORESEES 2008
Brian Wingfield on Energy
December 19, 2007 (Forbes)
Brian Wingfield, journalist and energy markets authority, Forbes and the New York Times
Wingfield picks his Big Trend, Unconventional Wisdom, Misplaced Assumption, Watch List and Bold Prediction for the year.
Unconventional Wisdom: Coal is inescapable and, therefore, “clean” coal (carbon-capture-and-sequestration, CCS) technologies will grow. Nuclear will also grow. Federal regulators expect applications for 32 new plants by 2009.
(What is the price of carbon? (click to enlarge)
Big Trend: Climate change. With a Democrat expected to win in the White House, a New Energy energy policy will follow. Cap-and-trade will be included, capping emissions and creating a trading scheme. As a result, New Energy will boom.
You better watch out but go ahead and shout, cap-and-trade is coming to town. (click to enlarge)
- Misplaced Assumption: Ethanol can keep oil prices down. (It can’t.) Expect corn ethanol to drive corn prices up and that will drive other food prices up. Only significant increases in oil supply (not expected) or decreases in oil demand will lower gas prices. High prices could curb demand.
- Watch List: (1) Energy Future Holdings Corp. is the new face of TXU plus Luminant Energy and it is going into new energy bigtime, just at the right time. (2) PetroChina is China's biggest oil and gas producer and, with China’s voracious energy appetite, a recent drop in stock price after an IPO is not indicative of value. (3) VeraSun Energy just merged with U.S. BioEnergy and will become biggest ethanol producer in the US just when the energy bill incentivizes biofuels.
But it is not a bubble if rising energy demand matches the rising the market. (click to enlarge)
- Bold Prediction: “Green energy is the next Internet bubble. With so much media attention focused on going green, a new crop of companies that provided the latest in energy efficiency and renewable technologies will sprout up, as will companies that sell carbon offset credits. Careless investors will flock to them. The bubble won't pop in 2008, but it will inflate tremendously.”