Van’s Note: Here at The Bleeding Edge, we like to share engaging thoughts from around the business. And our friend and colleague Nomi Prins sees a storm building on the horizon… in energy.
Nomi has kept a close eye on the geopolitical situation we’re in – and its potential impact on the energy supply as we head into the winter months. She believes the coming crisis won’t limit itself to Europe, either.
That’s why she’s holding a summit on Wednesday to let investors know how to prepare. If you’d like to find out more, I’d highly encourage you to sign up here to attend.
By Nomi Prins, Editor, Inside Wall Street with Nomi Prins
The mood in the United Kingdom during my recent visit was somber. But not just because of the death of Queen Elizabeth.
Inflation there is rising. It could hit between 18% and 22% next year. Meanwhile, real wages are falling.
And energy prices could jump by 80% in October. Natural gas powers the majority of the U.K.’s electricity. But supplies are restricted due to actions taken by Russia in recent months.
And it’s not just a U.K. problem. Natural gas prices in Europe spiked by as much as 312% since Russia invaded Ukraine in February.
Governments in Europe are scrambling to secure alternative energy supplies as the cold winter approaches, while trying to agree on a set of measures to limit Russia’s oil and gas income.
And we haven’t been immune on this side of the Atlantic, either.
According to the latest U.S. Consumer Price Index (CPI) data, natural gas prices here in America are 33% higher than a year ago.
So today, I’ll show you how you can make some of that extra spend back as energy prices continue to rise. But first, a look at what’s coming next in the energy crisis…
Treading a Fine Line
During the summer, the European Union announced plans to ban seaborne imports of Russian crude oil from December 5. And it said it will impose a ban on petroleum product imports starting on February 5 next year.
If and when these bans are implemented, it will have a knock-on effect on all energy prices across the globe.
But there’s more…
Recently, the leaders of the EU and other G7 nations decided to try to limit Russia’s oil revenues.
They have proposed a price cap of somewhere between $40 and $60 a barrel on Russian oil. This would also come into effect on December 5.
The Group of 7 – or G7 – comprises Canada, France, Italy, Germany, Japan, the United Kingdom, and the United States.
To say that Russia doesn’t like these proposals would be putting it mildly.
Russian president Vladimir Putin said that he will make Europe freeze and turn off the gas valves to any country that imposes price caps.
Now, it remains to be seen whether he makes good on his promise in the event of a price cap being imposed. After all, Russia is no stranger to empty threats.
For example, about six months ago, it demanded that all payments for natural gas be made in its local currency, the ruble, or it would cut supplies.
This was to prop up its then-falling currency.
The EU countries refused. This caused a spike in natural gas prices.
In the end, however, Russia backed down… silently. Why? Because it couldn’t afford to cut off the flow of gas dollars.
It’s very hard to predict how this will play out. If Russia’s war in Ukraine has shown us anything, it’s that Putin can be unpredictable.
And the EU and G7 must tread a fine line between forcing Russia to abandon its “special operation” in Ukraine and keeping the lights on in Europe and around the world.
Heads of government from almost every country in the world have gathered in New York this month for the 77th United Nations General Assembly. The energy crisis and the situation in Ukraine are top of the agenda.
Unsurprisingly, Vladimir Putin was not in attendance, although he sent his foreign minister to the event.
Energy Prices Will Continue to Rise This Winter
The way things currently stand, the rise in natural gas prices is unlikely to be fully resolved in the short term.
And it’s destined to build into a crisis in the U.S. this winter.
According to the U.S. Energy Information Administration, we generate 38% of our electricity from natural gas.
When the weather gets colder, demand for natural gas-fueled electricity will rise. And in general, colder weather increases demand for natural gas for heating.
This is true in both the residential and commercial sectors. That puts upward pressure on prices.
And if the weather becomes unexpectedly cold or harsh, price spikes can intensify.
This means less natural gas would be available for storage. And this, in turn, would lead to higher prices as countries scramble to replenish their depleted natural gas reserves.
It’s a vicious circle.
And I’m sure we all remember what happened in February 2021.
Extreme weather conditions in Texas closed down U.S. oil refineries and plunged millions of Americans into darkness. Energy prices across the country soared as a result.
What This Means for You and Your Money
The good news is that the EU has already managed to fill 85% of its natural gas storage from alternative sources.
As a result, natural gas prices there have pulled back somewhat from their recent peak.
But they still remain more than double where they were in January 2022, before Russia invaded Ukraine.
And the ongoing uncertainty means energy prices look likely to stay elevated into 2023.
A good way to position yourself in the short term is with an energy-related exchange-traded fund (ETF). The United States 12 Month Natural Gas Fund (UNL) tracks natural gas price movements.
But if you want the best shot at protecting – and growing – your wealth as the energy crisis develops, I encourage you to tune in to the urgent briefing I’m holding this Wednesday, September 28 at 8 p.m. ET.
There, I’ll share the details of an even better opportunity – and a new strategy I’ve developed.
I’m combining everything I learned in my 15 years on Wall Street to help ordinary Americans make extraordinary gains when big moves happen in the energy markets.
Using this strategy, you could have made 352% in 50 days, 1,007% in 13 days, and even 1,471% in 52 days this year – all as stocks plunged.
So reserve your spot today by clicking here. And join me on Wednesday, September 28, at 8 p.m. ET for all the details.
Editor, Inside Wall Street with Nomi Prins
P.S. The energy crisis on the other side of the Atlantic won’t stay on the other side of the Atlantic. As the contagion spreads from Europe to America, and from the energy markets to the financial system – a portion of your retirement could be at great risk.
At my urgent briefing on September 28, I’ll explain what’s coming and how you can prepare. I’ll show you a strategy to
make up to 10 times your money.
Plus, for anyone who tunes in, I’ll even give away the name of one of my favorite stocks for this crisis, which could become a blue chip over time. Just click here to save your spot.