The Council on Foreign Relations said on October 12, 2006, that The lack of sustained attention to energy issues is undercutting U.S. foreign policy and U.S. national security.
In its report, "U.S. Energy Dependence Undercutting U.S. National Security", former CIA director John Deutch said;
"Higher energy prices are unleashing remarkable forces for innovation in this country. Entrepreneurs are seeking new ideas for products and services such as batteries, advanced oil and gas exploration and production techniques, and biofuels. However, no strategy will be effective without higher prices for transportation fuels, or regulatory incentives for more efficient vehicles, to stimulate new technologies that ultimately are vital to reducing the dependence on oil and gas, and to making a transition away from petroleum fuels.
Like we had said in previous posts, lower oil prices would reduce or eliminate incentives for consumers to curb their consumption of energy. We have believed all along that lower oil prices would kill demand for alternative energy sources, and hybrid automobiles. In addition, oil companies would have no incentives to drill for more oil if they began to lose money due to lower oil prices.
The incentives for American's are simple. They will only change their consumption habits, and allow drilling in places like Alaska, California, and off the coast of Florida when they are experiencing extreme pain in their pocketbooks. Logic and reason will not work. Change only takes place when there is pain involved, and by pain, I mean higher energy prices.
The CFR energy task force proposed three more options if drilling in the politically sensitive areas are not allowed: "a tax on gasoline; stricter and broader mandated Corporate Average Fuel Economy (CAFE) standards; and the use of tradable gasoline permits that would cap the total level of gasoline consumed in the economy."
Click here and you can read the CFR Task Force Recommendations
So, do we think selective energy stocks are still good investments? You bet!
