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Investing in Shortages

A sad fact brought up by disasters such as the BP oil spill is that investing in shortages can be profitable. The ongoing news story in the Gulf of Mexico is the difficulty that teams of experts are having in shutting off the ongoing oil spill. Commentators go on about how the government may well increase regulation of offshore drilling and how the disaster will certainly drive down the price of BP stock or even spell the end of the company. The background story to this drama is that pretty much all of the easy to find oil in the world has been found. Investing in shortages is what Exxon and BP and others do when they drill in deep water and invest billions of dollars exploring in politically unstable third world countries. When considering whether BP will succumb because of this disaster investors should consider energy alternatives when investing in oil and how deep they have to mine when investing in gold in this world of investing in shortages.

The world of investing in shortages is certainly not limited to oil. Uranium could be in scarce supply if the difficulties in drilling for oil drive countries back to nuclear power. Uranium investing can include mining stocks or uranium processing companies. Investing in shortages of energy can involve investing in companies like Westinghouse, one of the few companies able to design, build, and maintain nuclear power plants. Successful stock investing has to do with anticipating how one set of changes in the world will make something else more profitable and to what degree. A quick means of finding profits in an upswing of uranium usage is to look for which companies have the largest proven reserves. Cameco, for example, is the world’s largest uranium producer, providing roughly a fifth of the current need. This company has proven and probable uranium reserves of 500 million pounds. The point of this is not to invest, for example, in Cameco or sell BP. Picking new winners in the world of investing in shortages will mean determining the shortage, looking at solutions, and finding out who can most profitably address the problem.

In a world where most of the surface is covered with water only three percent of that water is fresh water. Furthermore much of the fresh water is polluted and fresh water is unevenly distributed throughout the land masses of the earth. China, for example, has about as much fresh water as Canada and a hundred times as many people. These facts make fresh water a valuable commodity in a world of investing in shortages. Desalinization plants, filtration plants, and water purification plants have become profitable ventures often out performing broad investment categories. Not only is clean water a sellable commodity in high population countries such as China and India but also in the dry states of the Southwestern USA and oil rich nations of the Persian Gulf. Saudi Arabia has estimated that it will spend $100 Billion on desalinization projects in the coming years. Fundamental analysis of how much the Saudis are going to spend and who will provide the technology, building expertise, and know how for maintenance will give those investing in shortages a head start on knowing where to invest.





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