by Scott Martindale
CEO, Sabrient Systems LLC
Overview
I am writing this special 3-part series on Energy because: 1) it is the lifeblood of an economy, 2) it is a key component of inflation, 3) AI applications and datacenters are expected to surge global demand for electricity in the face of an already overburdened power grid, and 4) low energy costs benefit all aspects of the economy and raise our GDP growth rate, thus allowing us to more quickly grow our way out of debt rather than having to resort to austerity measures. In summary, it is essential that we have abundant, affordable, reliable, equitable, secure, and clean power generation, and the key energy sources to achieve that are natural gas today and nuclear in the longer term.
I began my professional career with Chevron Corporation, serving as a civil/structural design engineer and environmental compliance engineer for offshore oil & gas production, as well as senior analyst and operations manager in the oil shipping segment. I continue to follow the Energy sector to this day.
Key Points:
1. Global energy consumption, largely driven by hydrocarbons, continues to increase. Access to affordable energy is fundamental to economic health, supporting GDP growth, elevating living standards, reducing poverty, mitigating inflationary pressures, and enabling debt alleviation through economic expansion rather than austerity.
2. Advancements in artificial intelligence, automation, and electrification are anticipated to transform the economy and society primarily through productivity improvements. However, these trends will also contribute to rising global power demand, placing additional strain on already burdened power grids.
3. In the near term, hydrocarbons remain the most reliable and affordable fuel source, with natural gas being the cleanest and most efficient option. This is why global hydrocarbon consumption persists in its upward trajectory despite significant capital investments and government subsidies directed toward wind and solar initiatives.
4. Renewable energy sources promoted by governments—primarily wind and solar—exhibit lower energy density and conversion efficiency, and their intermittent nature necessitates battery storage and backup generation. These challenges can result in unreliability, grid instability, higher costs, suboptimal returns on investment, and continued reliance on government subsidies. Furthermore, as renewables cannot fully replace fossil fuels for reliable baseload power, they introduce redundancy that greatly increases the overall cost and complexity of power generation.
5. Looking ahead, it is improbable that fossil fuel reserves alone will sustain eternal economic growth. Nuclear energy, particularly emerging low-emission low-waste fission technologies using thorium or high-assay low-enriched uranium (HALEU), is poised to play a critical role, including small modular reactors (SMRs). But ultimately, nuclear fusion—having zero greenhouse gas emissions, minimal hazardous waste, and an unlimited fuel source (ocean water)—represents the long-term “holy grail” of sustainable energy production.
6. The growing electrification of the economy is increasing dependence on materials such as rare earth elements (REEs), which are vital components in wind turbines, electric vehicles, and photovoltaic cells. Additionally, superconductive materials like graphene may enhance efficiency and minimize transmission losses. Technology futurist George Gilder predicts that future datacenters could be consolidated into single graphene wafers, potentially eliminating the need for hyperscale cloud infrastructure.
7. Regarding investment opportunities, I identify some of the key industry players, accessible via both individual stocks and exchange-traded funds (ETFs).
In Part 1 of my 3-part commentary below, I discuss the following topics: 1) A brief history of energy, 2) Fossil fuels remain dominant today, and 3) The push for renewables. Then I close as usual with Sabrient’s latest fundamental-based SectorCast quantitative rankings of the ten U.S. business sectors, and current positioning of our sector rotation model.
Coming up next week in Part 2, I will discuss: 1) Green legislation and subsidies encounter roadblocks, 2) Europe hitting a breaking point, and 3) Surging power demand from AI and other new technologies. And then the following week in Part 3, I will discuss: 1) Solving the US grid fragility problem, 2) The future is nuclear, 3) Rare earth elements, 4) Superconductors, and 5) Investment opportunities. So, watch for those next two emails.
By the way, Sabrient’s latest Q3 2025 Baker’s Dozen launched on 7/18. Small Cap Growth 47 launched on 7/16 as an alpha-seeking alternative to the Russell 2000 for small cap exposure. And the current Dividend 52 will close out its time in primary market this Thursday 8/7. It is a growth & income strategy with a current yield of 3.31%. Note: The new Dividend 53 will launch this Friday 8/8.
Click HERE for a link to this post in printable PDF format. And as always, please email me your thoughts on this article, and feel free to contact me about speaking on any of these topics at your event!
Read on….
