The Future of Energy in Australia: How You Could Benefit from the Influx

How do you make a press release about energy policy interesting?

It’s not easy.

But a few weeks ago, a US Energy Department gave it a red-hot go.

Check out these corkers! (Emphasis added):

Increasing export capacity from the Freeport LNG project is critical to spreading freedom gas throughout the world by giving America’s allies a diverse and affordable source of clean energy.

‘Freedom gas’. You’ve got to be kidding me.

And then to round it off (emphasis added):

I am pleased that the Department of Energy is doing what it can to promote an efficient regulatory system that allows for molecules of U.S. freedom* to be exported to the world.

More like, little molecules of bull$*it.

Needless to say, this wording got the desired publicity.

The internet explored in a fit of mirth.

Do you smell that? That aroma, like many spoiled eggs congregating in a hot locker room? That is the wonderful, pleasing scent of American freedom’ wrote Alexandra Petri for the Chicago Tribune.

‘Sshhh it’s not fracking. It’s Freedom Gas’, read the Reuters headline.

Find out why this ‘hated’ resource could rise from the dead in 2019 (free report)

But my favourite response had to be this one on Twitter…

Money Morning

But live on, we must…

Besides, the yanks always had a penchant for such propaganda.

Remember how French fries became ‘freedom fries’ in 2006?

It was when the French — also referred to at the time as ‘cheese-eating surrender monkeys’ — refused to join the American-led ‘coalition of the willing’ into the Iraq war.

The point is this…

Energy is war

The fact that wartime propaganda is creeping into energy policy isn’t a coincidence.

Energy policy has always been a tool of war for the major powers.

In this case, ‘freedom gas’ is a not-so-subtle dig at Russia and their attempts to become the main supplier of gas in Europe.

According to US Energy secretary Rick Perry, the ‘freedom’ — in this case — is for Europeans who don’t want their energy needs to be held hostage by Russia.

Like we said, energy is war. And it’s a war playing out in several different ways, at the moment.

It’s no coincidence that two of the ‘most wanted’ on the US hit list right now are Venezuela and Iran — both big oil-producing nations.

Iraq, Iran, Syria, Libya…it doesn’t take Sherlock Holmes to work out the pattern here…

But I’m not here to take sides. You see, my opinion doesn’t really matter.

I’m here to simply wade through the energy policy propaganda, and try to find the truth.

Because as an investor, reality is where you invest your money. Not political word-games, internet flame wars or corny patriotism.

You’ve got to look beyond all that stuff to figure out the facts.

And one fact I’m sure about right now is this:

What happens over the next decade with energy is absolutely crucial to Australia’s economy

How you could benefit from the energy flux

Here’s the cold, hard truth…

Coal is Australia’s second biggest export and makes up 14.8% of total exports.

As a country, you can’t just stop exporting almost 15% of your exports, and not expect to become a lot poorer.

Similarly, natural gas and oil are both top 10 exports for Australia.

That means, as it stands, we can’t stop extracting fossil fuels and shipping them to the world.

To be clear, I’m not saying this is great for the environment or anything like that.

I’m simply saying that we’re an energy-exporting nation and if we don’t export what the world is demanding, US ‘freedom gas’, Saudi oil or international coal, will swoop in to fill in the gaps.

It’ll kill our economy for no net benefit to the global environment.


There’s a big flip side to the ‘do nothing’ strategy.

Let’s say the world does move onto renewables, nuclear and alternative energy sources much faster than imagined and we do nothing…

Well, then we’re at risk of losing three of our top 10 export industries, no matter what.

And without some thought now, that would make us even poorer…

There are signs that US rivals such as Germany and China are moving this way.

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Likely for strategic reasons as much as anything else, I’d say.

Germany is planning to shut down all 84 of its coal-fired plants over the next 19 years. They’re moving to 80% renewable energy.

China is also looking to shore up its own power generation capabilities. They have plans to build 99 new nuclear plants by 2030.

An exciting opportunity for Australian uranium miners, perhaps?

I have noticed murmurs of activity in this sector of late, with Deep Yellow Ltd [ASX:DYL] getting away an $11.2 million capital raising with decent institutional support last week.

Ultimately, it’ll be up to the major powers in the world to decide which way global energy policy goes.

But Australia cannot escape the outcome.

And finding the winners in all this energy flux is a huge investment opportunity, if you can find them first.

Good investing,

Ryan Dinse,
Editor, Money Morning

PS: My colleague Greg Canavan has been covering the rising gold price and the reason behind it, lately. He recently released a research report looking at an overlooked driver that could see the gold price rocket skyward in months to come. Check out the details here.

Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

Ryan's premium publications include:

Money Morning Australia