Lithium Goes Global: Just One Concern Remains
Our Inevitable Transition to Metal Oil
You've never heard of Jan Józef Ignacy Lukasiewicz; there's even a pretty good chance you can't pronounce his name.
Don't worry; it's perfectly normal if his name doesn't ring a bell. Some people consider him the founder of the modern petroleum industry, while others consider him the father of the modern oil refinery, pioneering the first one almost 160 years ago.
He was the person who figured out how to distill kerosene from seep oil, then went on to invent the kerosene lamp. By 1887, a chemist working for Standard Oil named Hermann Frasch II learned how remove sulfur from oil (sulfur made distilling kerosene a lot harder). Suddenly, kerosene was not only more reliable but also more economical compared to other fuels of the day and quickly replaced other illuminants.
The incredible growth that followed laid the groundwork for the early oil magnates.
Once the auto industry was able to produce a car that was affordable for the middle class, it was off to the races.
Not much has changed, either. In 2014, petroleum accounted for 35% of the United States' total energy consumption. Last August, we guzzled down crude oil at a rate of 19.8 million barrels per day.
Now take into account the fact that 94% of the transportation sector (more than one-quarter of total U.S. energy consumption) is run on oil.
So you can imagine the kind of immense task it would be to overtake the petroleum industry.
Calling it a daunting endeavor would be a gross understatement.
And yet we're watching it happen... all that's needed is the same kind of innovation that propelled petroleum to the top in the 19th century.
All I can tell you is this:
Just watch rock oil turn into Metal Oil, then watch the cash roll in...
The Transition to Metal Oil
Any outsider looking into the lithium revolution taking place before our eyes should be able to clearly see that history is repeating itself.
Don't get me wrong; I'm not suggesting oil will be displaced within a matter of a few years.
Given the sheer amount of petroleum the world uses on a daily basis, even hinting at that would be ridiculous.
This transition to metal oil will be measured in decades, not years.
But it will happen, you can bank on that... I know a group of investors that already have!
Just this week, Tesla's Elon Musk said that a 500-mile battery-electric vehicle will be ready by 2025 — a full decade away from being a reality.
Personally, I don't think that will be the catalyst that will dethrone King Crude.
It's NOT churning out new Model Xs, an EV with a range of 500 miles, or even equipping them all with driverless technology.
Nope, none of that.
The true catalyst for the lithium revolution will be the exact same event that forged oil's energy crown...
It's going to come down to how soon Musk can produce his cars for the middle class. After all, not all of us have an extra $100,000 handy to pick up the Model S or Model X cars.
THAT'S the key to Tesla's success.
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The Last Lithium Hurdle: Giga-Where?
Consider the upcoming Gigafactory the world's first Metal Oil refinery.
Much like Jan's first refinery, Tesla's battery factory is expected to produce batteries for half a million vehicles by 2020.
Half a million is a drop in the bucket compared to the estimated 2 billion vehicles on the roads today — just 2.5% of which are expected to be battery electric, plug-in hybrids, or fuel-cell vehicles.
Fortunately, Nevada is simply the jumping-off point for more of Musk's Gigafactories.
Just to replace the 65 million cars (even more if we include two-wheelers) with electric vehicles would take over a hundred of these facilities.
And therein lies the ground-floor opportunity I've been hounding you for months over.
If the global fleet of electric vehicles truly does grow by 700% over the next five years, that alone will cause a 65% surge in lithium demand — possibly more if Musk really targets the middle class through his Model 3 car.
Hopefully, your next question will be, "Where will this new lithium supply come from?"
Once again, we circle back to the ground-floor opportunity I mentioned above. In fact, lithium is one of the few commodities in an uptrend!
As it stands now, only a handful of companies control the world's lithium supply.
That's about to change, and there's only one way individual investors like us can take advantage of the boom in lithium demand.
Until next time,
A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.
Energy Demand will Increase 58% Over the Next 25 Years
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