Reading the future of the energy sector is far from easy. And the consequence of reading the future is large. It could make the difference between vast profits – or losses, good policies - or bad.
Here are a few of the tidbits I have noticed in recent days that had me rubbing my chin. See if they add up to a complete picture for you.
Coal company stocks have fallen a shocking 57 percent in the last year – and the stocks are down 16 percent from the beginning of this year.
Natural gas prices may be low – but that is far from a turn off to commodity investors. Trading in natural gas futures is up 30 percent in the first quarter of this year.
GE’s energy business is one of its strongest. Its energy infrastructure unit saw profits increase 10 percent to $1.5 billion and revenue jump 18 percent in the first quarter.
Last week I had a fascinating conversation with three leading utility CFOs about the business of energy. You can listen in by clicking here. Caroline Dorsa, of PSE&G in New Jersey, told us that power demand at her company is going to grow a scant 1 percent a year over the next decade. Yet the company is slated to invest $6.7 billion in its enterprise in just the next three years, with half of it going to transmission investments and the pursuit of greater power reliability.
You add it all up. While the direction we are headed in may not be clear – and there may not be a unified national energy policy driving us there – one thing is certain.
Enormous financial churn in the electricity business is accelerating and it will utterly transform the vast industry that lies just beyond the nearest light switch.