That the lights have gone out at Bulb, so far the biggest UK energy supplier to blow its fuse board, can only reinforce our present obsession with energy, or – as looks likely this winter – the lack of it. And that reminds us that fossil fuels – reliable, efficient and running on proven, embedded infrastructure – have a future.
Indeed, there was a delicious irony to note early this month as the COP26 climate conference got under way in Glasgow. Minimal wind power meant power generator Drax had to fire up its coal-fuelled boilers to keep the lights on in Britain and wholesale prices within the UK’s electricity-transmission system peaked at £4,000 per megawatt hour, about 100 times their usual rate.
All of which indicates that there may well be profitable ways for retail investors to ride the energy transition (if that’s not too glib a term for a process that could easily take the next 50 years). One such way – and an easy one for investors to access via specialist exchange traded funds – is to take long-term bets on the oil price. For example, happy is the investor who was smart enough – or lucky enough – to buy oil for around $20 per barrel in the spring of 2020. By early this month, the price had quadrupled.