The hardest thing when writing about finance and money is figuring out what to write. It’s not that we’re short on a lack of things to write about. It’s hard trying to decide which things to write about.
After all, we only send out Money Morning to you once a day. With so much going on we could write to you 10 times a day. But of course we’d need an army of a thousand…maybe one day.
Today, while trying to decide what to write about, we had about a half dozen ideas bouncing through our head.
The first thing that came to mind was that the state of Nevada in the US has a big day coming up. On Saturday 1 July Nevada will allow the legal sale of recreational marijuana.
Nevada became one of the most recent US states to legalise recreational marijuana last year. But it’s only just now they are actually allowing the sale of it. Projections from Marijuana Business Daily estimate marijuana sales in Nevada alone could easily top US$550 million annually.
Let’s not forget one of the biggest tourist attractions in the US is Las Vegas. Which is smack bang in the heart of Nevada. Of course, there will still be the huge casino tourism. But now we foresee Vegas being a hot spot for ‘weed tourism’ as well.
The opening of legal weed in the US and in Canada is a huge area of opportunity for investment. We think that it’s only a matter of time until other countries (like Australia) take the progressive leap forward and follow suit.
If they do then Aussie investors holding a select few ASX listed ‘pot stocks’ could be set for a huge windfall. We think it’s an opportunity ripe for the taking.
Now, while the marijuana market is incredibly fascinating to write about, it wasn’t the main thing that caught our attention. That was the revolution in US energy.
A US energy renaissance
A massive story breaking as we write is the US push towards ‘energy dominance’. President Trump says the US is on the verge of an ‘energy revolution’.
They’re about to turn net exporter of energy. And when I say energy I mean oil and gas. The US has more natural gas than they know what to do with. And they’re getting set to offload it, and make a truckload from it.
Fair play to them. Natural gas, while still a ‘dirty fuel’, is at least the cleanest burning fossil fuel there is. Therefore it pleases the ‘traditional’ energy folk. And it pleases the greenies. Everyone wins.
With the US turning net exporter, maybe Trump’s right. Maybe the US is going through an energy renaissance. If they are (and it looks that way) then that’s great news for the companies that are tapping into those resources over in the US.
However, back home things aren’t as promising. Australia is getting set to suffer major power issues for the foreseeable future. The Australian Financial Review today says an ‘Energy Tsunami’ is coming. But not in terms of available power — in terms of prices.
With the closure of the Hazelwood coal power station, energy prices are set to skyrocket. Add to the mix the energy problems facing South Australia, and the situation is only getting worse.
This comes off the back of the government putting blocks on LNG exports to try and ensure there’s enough supply domestically. These restrictions kick into action on Saturday. While the idea to ensure domestic supply might sound right on the surface, it’s actually counterproductive.
Australia too has oodles of natural gas. So much that we could become the world’s biggest supplier. The problem is these restrictions on exports slow funding and development to increase supply. While the country starts to shut down power supply like Hazelwood, there’s nothing in place to replace it.
And there’s no visible effort for a power strategy to increase availability of power as the Australian population continues to grow.
This doesn’t bode well as the country heads into the winter months. If you want to know what happens in winter when energy prices are too expensive, have a look at the issues in the UK.
One person dies every seven minutes
Energy comparison website, comparethemarket.com estimates that 60% of elderly people ration their heating in winter because of high energy prices. That means they simply don’t use the heating in the middle of winter. Simply because they can’t afford it.
Age UK is a charity that works with the elderly. Their charity director, Caroline Abrahams said to The Telegraph,
‘The UK has an appalling record on cold-related deaths, with one older person dying every seven minutes from the winter cold.
‘Even ‘normal cold’ temperatures of around six degrees significantly raise the risk of life-changing health problems such as heart attacks and strokes.’
While on average Aussie winter temperatures aren’t as cold as the UK, they’re not far off. And in some places they are equally as cold, or colder.
If energy prices in Australia continue to rise, make no mistake, it will cost lives. People who can’t afford high energy prices will ration their usage in the times they need it most. That’s not just an energy problem. It’s a social problem.
The government’s flipping back and forth on this issue has helped no one. While shutting down ‘dirty’ energy creation is necessary, it should be a gradual process. And it really should only occur when there are greener energies ready to replace those lost.
Whether that’s gas, wind, solar or tidal…whatever, it doesn’t matter. When there are real lives at stake from rising energy prices, something must be done. The only question then is who’s going to do something about it?
And to be honest with you, we don’t know the answer to that question. The likely outcome is that nothing will be done. And that is exactly what’s wrong with the current government. Wrong with their energy policies, and their failure to address the biggest energy crisis the country has ever seen.