Bob Fraser from Aspen Funds argues energy prices will stay elevated through 2024 and beyond due to global supply shortages, Europe's shift away from Russian energy, and ESG-driven disinvestment. Since energy underpins agriculture, steel, and mining, high costs will keep inflation stubbornly high for the next decade.
One of the things you can be sure everybody's going to need is energy. And so it's, it's a potentially, it's just a great investment. I believe that prices are going to remain high. Yeah. And, and that it's, that it's a good investment. And of course, you know, even Buffett has now been investing in, in, in energy for, so he's got a lot of forward thinking. So here's our, here's our kind of summary of what we believe. Where we believe we're at here. We expect energy prices to remain elevated well into 2024 and beyond. So I don't see this being resolved really in, in, inside of 5 or 6 years because of the, of the systemic shortages that have been built into the system. Energy prices will not revert to normal even if the war ends due to the de-Russification of energy demand and energy policy. Europe is going to want to free themselves from a Russian gun to their head. I could pull oil anytime I want and destroy you. Who wants that? So they're going to want to get rid of it. Energy disinvestment combined with ESG and the global environmental movement's focus on supply reduction instead of just demand reduction ensures energy prices will remain high. So, you know, basically it's really this, this, you know, energy, this environmentalism, while it's, you know, you know, maybe morally nice and wonderful, it's impractical as it stands. And we've got to— we need to have a more balanced policy that balances long-term goals with short-term goals. Right. And here's the final— the final thought is that Energy is the mother of all commodities. And what I mean by that is all other commodities require it. Okay? For example, wheat, you know, is you, you need, you need diesel fuel, lots and lots of diesel fuel to run your farm equipment to produce that. You need, you know, for steel or mining or anything else, you need massive amounts of fossil fuels. So energy is the mother of all commodities. So if energy prices remain stubborn, stubbornly high, it ensures inflation is going to remain stubbornly high. And so I believe we, we're going to continue to see an inflationary impulse in the next, in the next decade because primarily of energy prices, if not any other reasons, just because of energy. Prices alone because it is the ultimate commodity. So bottom line is I believe energy is a great investment this time and represents a good opportunity for investors to get in. And we're going to be evaluating some opportunities and ways to play this trend that are very attractive.
