Turning Bullish on Energy

The Amazing Growth of Energy Consumption
Peak Oil or Cheap Oil?
Energy Reduces Poverty
Houston, Dallas, Denver, and Tampa

I literally grew up in the oil patch: Wise County, Texas, 60 or 70 miles northwest of Fort Worth in a little town called Bridgeport. The two first-generation Greek immigrant brothers who became Mitchell Energy talked old man Christie into funding Christie, Mitchell and Mitchell and they drilled (hundreds?) of natural gas wells which they eventually sold to an Illinois utility. This was in the 1950s and ‘60s.

So, I was introduced early on to the boom-bust cycle of oil and gas. When it was a bust, my friends’ fathers didn’t have jobs. More immediate to me was that they didn’t subscribe to newspapers which was how I made my money—delivering papers.

Today’s letter is the first of what will be a series on energy. My research and observations lead me to believe that there is the potential for traditional energy to break out of its boom-bust cycle, at least for an investable period of time. Today’s letter will hit the highlights and we will get into details in later papers. Let’s jump right in…

The Amazing Growth of Energy Consumption

While whole books have been written on the remarkable creativity of human beings in adapting their environment to improve their lives, with pumps and water mills and forges, our real story is going to begin a little before 1800 with James Watt and the invention of a practical steam engine. The use of energy literally exploded. Sixteen times since just 1900 and approximately 5 times since 1950.

This is the real energy hockey stick. And there is no reason, short of a catastrophic event, that the parabolic nature of this curve will not continue. Annual ups and downs? Absolutely, but the trajectory over time will increase.