Fossil fuels are still in the game. In a recent piece from IEA, the author argues that our “global energy crisis has triggered unprecedented momentum behind renewables, with the world set to add as much renewable power in the next 5 years as it did in the past 20.” This forecast is a promising development given the importance of energy security, which continues to plague developed and developing nations as our global population continues to rise.

However, it is critical to note that while increasing renewable energy sources and reducing reliance on fossil fuels is a strategic policy initiative in many nations, fossil fuels aren’t going away any time soon.

According to Ehud Ronn, Professor of Finance at the University of Texas in Austin, the US Energy Information Administration projects oil and natural gas to exceed the energy provided to the market from renewables in 2050. He argues that this yields interesting investment opportunities for the fossil fuel industry, which should continue to reign supreme as western nations indicate fossil fuel production remains a national security priority.

Ehud’s Thoughts:

“The point that I’d like to make is that as important as the growth will be in renewables going forward, we should recognize that fossil fuels, specifically oil and natural gas, will each one exceed the amount of energy provided to the markets in the year 2050. Each one separately will provide more energy than will renewables. So that’s something that I will share in an attachment I will provide from the US Energy Information Administration and ARM of the Department of Energy. That being the case, I recommend that people look at market opportunities for investment in oil and natural gas.

Fortunately, in finance, we have developed real option tools that provide us with the tools to look at these opportunities and to develop them as we go forward. I would recommend to us that we recognize what the current federal government has said, that it is a priority of theirs, a national security priority, to increase the amount of production of oil in the Western economies and so that is yet another motive for doing this kind of investment.