WWII-Era Energy Ingenuity Was Just the Beginning
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WWII-Era Energy Ingenuity Was Just the Beginning

by | published May 11th, 2019

I’m firmly of the belief that those who don’t learn from history are doomed to repeat it.

But those that do learn from history are doomed to watch others to repeat it.

Despite that, I’m an avid student of history. It’s served me well throughout my career, not to mention that I find learning about the past incredibly interesting.

Longtime Oil & Energy Investor readers will know that I spend much of my adult life working counterintelligence for the U.S. government during the Cold War.

Suffice it to say that I know more about the Cold War than anyone really should.

However, it’s what came before the Cold War that I’d like to discuss today.

That, of course, is World War II.

Often what comes to mind when discussing WWII are fighter planes, the London Blitz, the Russian Front, Little Boy and Fat Man, or Pearl Harbor.

But many people tend to overlook the small, but significant, details that came about behind the scenes.

These are things like the faux British Major Martin as part of Operation Mincemeat, General Rommel celebrating his wife’s birthday conveniently on the morning of the D-Day invasions, or Hitler’s refusal to withdraw troops from Stalingrad.

Today, however, I’d like to talk about a seemingly insignificant detail of the defeat of Germany that is closer to my area of interest:

Oil.

Germany’s Desperation Led to True Ingenuity

Before the war broke out in 1938, Germany obtained its natural resources through overseas imports, local oil fields, and synthetic oil made from coal. Much of this oil was imported, as Germany has few natural resources.

In 1938, Germany was using 44 million barrels of oil per year. At the beginning of the war, the country had 15 million barrels (20 million once they conquered Norway). And once the war was in full swing, overseas imports were no longer an option, and the country had to rely on its own natural resources – and those from conquered territories. As the war dragged on, however, Germany was getting desperate.

The U.S. produced 70% of the world’s oil during World War II, and obviously, importing from them was very much out of the question.

Now, oil was an essential part of the war going smoothly. After all, tanks and bomber airplanes couldn’t run on their own. In fact, if Germany hadn’t invaded the Soviet Union in 1941, it would have run out of oil in months, rather than years.

So, they used their German ingenuity.

Synthetic oil made from coal had been used prior to the war, but it wasn’t truly necessary with their other sources of obtaining regular oil.

But now, it was being made and utilized in full force.

Synthetic fuel became Nazi Germany’s main source of aviation gasoline, synthetic rubber, diesel, and several other products all vital for the war effort.

By 1944, Germany was producing over 124,000 barrels of synthetic fuel from 25 plants per day.

And for a while, it looked like things were looking up.

Until the Allies started bombing the refineries.

The Beginning of the End

It was the beginning of the end.

The Allies knew how important the Nazis’ fuel development was to its continued existence, and focused their attention on destroying the entire industry.

The last major bombing of an Axis oil refinery took place in Norway in April 1945. The war was over a month later.

Now, there were many factors involved with the Nazis’ defeat on all fronts, but the destruction of their oil refineries played no small part.

However, the use of synthetic oil from coal in a time of need marks an interesting development in the energy world.

Energy Resourcefulness in the Modern World

Although we are not using synthetic oil of the type used in World War II (you would likely be paying upward of $30 a gallon to fill your car if that were the case due to the expense of producing it), that doesn’t mean that those in the oil world are always relying on tried and true methods.

After all, as I’ve mentioned many times, the energy world revolves around ingenuity and creating new ways to power our modern way of life.

For example, the renewable revolution has been the fastest-growing sector in energy, and developments within the sector are making it even easier to transition to things like solar panels and wind turbines for electricity generation.

In fact, it was just revealed that total solar installations in the U.S. have exceeded 2 million, and could double that number by 2023.

And as I mentioned last week, solar energy has outpaced coal for the first time in history.

That’s not to say that coal has completely disappeared, but it’s ever so slowly fading.

Take China, for instance.

Beijing is famous for its obscuring smog caused by its ubiquitous coal plants, but the Chinese are working on ways to move their reliance off of coal and into other, more sustainable, energy sources.

Mainly liquefied natural gas (LNG), of which the Chinese are the world’s second-largest consumer.

And that number is only going to grow in the coming years.

Again, as I’ve discussed before, Asia will be the main driver of energy in the coming years, and no country more so than China.

When it comes to the growing demand for LNG, there is one place that’s ready and waiting to supply it on a global scale.

And that’s the U.S.

U.S. LNG production ranks third in the world (behind Qatar and Australia), production and export numbers broke records in 2018, and numbers are expected to get even higher by the end of this year. Which means that U.S. LNG producers and exporters are well-positioned to profit immensely.

In fact, I know of one company in particular that has been making waves in the LNG business recently, with several large-scale projects in the works backed by very significant investors.

In other words, this company is one of your best bets to creating some very impressive profits for yourself.

If you’d like to learn more about it, just click here to find all my research.

Sincerely,

Kent

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