That’s according to the International Energy Agency’s (IEA) latest annual World Energy Outlook report – a study that says global energy demand will soar by over 50% within the next 25 years.

And thanks to what the IEA calls “years of underinvestment,” prices are poised to soar in with rising demand. Just last week, the IEA said oil prices will balloon by 50% if the Saudis don’t invest in new production facilities. But in this report, the group says the global oil industry as a whole needs to pump a whopping US$20.3 trillion into new production and refinery facilities by 2030. That means producers need to double their annual investment in oil fields to avoid precipitous price spikes.

My colleague Brit Ryle says that the fierce energy price spikes seen this year are “having a profound effect on the development of alternative and renewable energy sources. Global investment in renewable energy hit US$30 billion in 2004 - 20% to 25% of the total investment in the power industry. At a global energy conference in Beijing, China announced that it would meet 15% of its energy needs through renewable energy by 2020.”

Brit’s call to action? “As an investor, you should already be investing in alternative energy stocks. These stocks are as close to a sure thing as you can get.”

But back to the oil thing…

As you know, oil company profits shot to record-breaking levels during the third quarter – around US$10 billion for Exxon-Mobil alone, the highest amount ever reported by any oil firm. Shell followed, with US$9 billion, with BP and Conoco-Phillips making US$6.4 billion and US$3.8 billion respectively.

I thought this piece from my colleague Christian DeHaemer was enlightening:

“Members of Congress immediately called these companies and congratulated them on their record earnings and for working hard to meet the world’s oil needs.

“Um, no – that didn’t happen. Members of both chambers of Congress are calling for hearings to find out how the evil oil companies are sticking it to the consumer.

“On the radio this morning, the Chevron CEO, told senators that not allowing a new refinery to be built in 25 years might be partly responsible for our supply shortages. He also said that shipping processed oil from Angola is hardly cost effective.”

Nice way to keep things in perspective.

In any event, the oil stock selloff is here now. Crude oil is below US$57 and the hurricane premium of US$13 has been erased. Back to Chris again:

“Today, the International Energy Agency and the U.S. Energy Department cut its forecasts for this week’s world oil consumption. The group blamed “warmer-than-normal weather in the northern U.S.” for cutting heating fuel use. I no longer give credence to this old saw. It’s like saying stock prices went up on “bargain hunting.” Or saying they sold off on “profit taking.” It’s meaningless tripe regurgitated by lazy reporters and flat-footed analysts.”

“Regardless of the fact that oil prices have dropped 18% from a record US$70.85 a barrel on August 30, the fact is, demand is still there. The U.S. economy is growing at 3.8%, the Chinese economy growing at 9.4%, and the Indian economy at 8.1%.”

* * * * * * * * * *

The US Power Grid Is a Meltdown Waiting to Happen

And this company’s technology may be the only thing standing in the way of a catastrophic failure.

This US$3 stock will save utilities and U.S. taxpayers billions – and could make you as much as 1,148% over the next 2 years.

Check out this link for full details:

http://www.agora-inc.com/reports/TPS/ETPSFB18/

* * * * * * * * * *

CORPORATION ZERO?

These are the kinds of figures that corporate America will only be able dream about in 2006, however – at least according to one economist anyway.

In an ominous-sounding note, Abhijt Chakrabortti, a global stock analyst at Merrill Lynch, said an ugly and potent combination of economic factors could combine to produce a nasty poison next year – one that could result in zero corporate earnings growth.

Yeah, you read that correctly: Zero!

All sounds rather doom-and-gloom, doesn’t it? The biggest, most bearish bear of them all. Zero earnings growth for the first time in four years. In an economy that appears to be growing solidly, if unspectacularly, this might come as a surprise to many.

Specifically, Chakrabortti mentioned that rising inflation and interest rates could prove a major stumbling block for corporate earnings growth.

While zero earnings might be too pessimistic, many economists are actually projecting some kind of slowdown, an expected correction following three years of solid earnings growth. But considering that a batch of economists polled by Thomson Financial said S&P 500 corporate growth would roll in at 12.6% next year after 14.5% this year, zero truly does look like Armageddon. We say “fuggedaboudit”!

As for next year’s likely top-performing sector? Well, no surprise to see energy companies leading the way. Following massive 50% earnings growth this year, their strength is expected to continue into 2006, with earnings swelling a further 13%. Technology firms are also expected to fare well, with earnings up 16% this year and 17% in 2006.

TRADE TOSH!

Sometimes, I don’t know how some folks get such wacky ideas.

With September’s trade deficit figure rolling in at US$66.1 billion, some economists still maintain that it will stabilize over the next few months. Yeah, right!

As we sometimes say in England: “What tosh!”

How, exactly? US$20 billion of the total came courtesy of America’s lopsided trade with China, while a further US$23.8 billion was thanks to crude oil. I don’t see a much of a slowdown any time soon.

That wraps things up for this week. I’m outta here – ciao.

Martin Denholm

Executive Editor, Taipan

MMM

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