We’ve been talking all week about energy. Energy is the master economic resource.
And when it comes to investing, we have two choices. We can own energy. Or we can own currency. That’s it.
The thing is – we can own energy in many different forms. And, as we discussed yesterday, we can also generate passive income by owning energy.
Today let’s take a step back and take an even more holistic view.
If the historians are to be trusted, homo sapiens – humans – have been around for about 300,000 years now. However, the first written records we have from a human civilization date back to about 4,000 BC. That’s just over 6,000 years ago.
We call that first civilization the Sumerians. And the records indicate that they formed city-states around fertile agriculture land in modern-day Iraq and Kuwait.
My understanding is that most humans lived as hunter-gatherers prior to the Sumerians. I’m sure that’s an oversimplification… and I haven’t spent much time on it. But this seems to be widely believed.
As hunter-gatherers, humans lived off the land. They hunted for meat and scavenged for fruits and nuts.
This dynamic meant that the Earth could only support a small number of us. Tribes couldn’t get too big or else they may face food shortages.
The development of sedentary agriculture changed that dynamic. Once we were able to farm the land, we could produce enough food to support a larger population.
That said, the average person’s quality of life didn’t change terribly much from the time of the Sumerians all the way up until the 18th and 19th centuries.
That’s a period of roughly 5,800 years, give or take a few decades. And most people lived as subsistence farmers during this time. That was the world’s top occupation.
Meanwhile, the population grew very slowly. It’s estimated that 200 to 300 million humans lived on the Earth around the year 1 AD. By the year 1800 AD, we estimate the human population was around 800 million.
So the population grew 4X… but quality of life improved only slightly. Most people lived in what we would consider today to be extreme poverty. And they were often one bad harvest away from food shortages.
But then something happened.
From 1800 through today, the population exploded from 800 million to about 8 billion people. That’s 10X growth in just over 200 years.
What’s more, quality of life skyrocketed as well.
Today, relatively few people live as subsistence farmers. And almost nobody in the developed world lives in extreme poverty.
Our “poor” live comfortably in climate-controlled homes. They have plenty of food available to them. And they have flatscreen TVs and smartphones to keep them connected and entertained.
That is to say, those who we consider poor in the developed world enjoy far more conveniences than nearly everybody who lived prior to the 19th century.
This dynamic is thanks to two things. Human ingenuity and carbon-based energy.
Carbon-based energy refers to coal, oil, and natural gas. These energy sources enabled our population to explode higher… while also providing a much higher standard of living for everybody.
Yet, there’s a very vocal movement out there to stop the use of these energy sources. There are strong political forces pushing to do away with them all. They promote a “carbon-neutral” world.
But here’s the thing – our modern way of life simply could not exist without carbon-based energy.
Sure, clean energy technologies like nuclear fusion have the potential to provide for all our power needs one day… but that day is still a ways into the future.
So the people who are rallying against carbon-based energy today are pushing for something that would impoverish billions of people around the world. They would take us back to where we were prior to the 19th century… and that’s the best-case scenario. We talked about this on our monthly call for The Phoenician League last week.
And that means those who are anti-coal, anti-oil, and anti-gas are in fact anti-human. Whether they realize it or not.
The point is, energy is what has lifted humanity out of the darkness. I mean that literally and figuratively.
And as we’ve been talking all week – if we understand this, we come to the conclusion that investing is all about figuring out the best ways to own energy. That’s it.
More to come tomorrow,
-Joe Withrow
P.S. If you enjoy these kinds of discussions, please give our investment membership The Phoenician League a look. We explore these ideas in more detail every month – both in written form and in our members’ only calls.
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