Always good to know what the world’s largest consumer of energy is thinking. I have my grave doubts about biofuels – they do not scale at economical prices.
The development of economical shale gas is the probable cause of the divergence between crude and natural gas pricing, but this seems to be mostly baked into the marketplace now.
Fossil fuels, from a physics perspective, continue to be the only real portable energy option. They have the highest energy density and the technology is mature and developed. Every other alternative is poorer. There are advocates claiming that plug-in vehicles will solve car fuel issues, but they are sadly mistaken. The only real alternative at present seems to be natural gas driven vehicles, but natural gas engines are much more fickle and require more maintenance, in addition to requiring natural gas fuel stations. If the price between crude and natural gas continues to diverge even further, you may see a resurgence in technology in this general direction.
Countries like China and India, with developing economies and zero regard for greenhouse gas emissions, will continue to pick up much of the demand for fossil fuels.
There is also significant geopolitical risk with respect to Israel and Iran that would have a disproportionate effect in the event of a war developing in the region. I do not believe markets currently are pricing in this to its proper degree.
It is a virtual guarantee that the combination of US dollar devaluation plus the increased demand and decreased supply of fossil fuels will result in a long-term price increase of fossil fuels. The question is how to time it and how to ensure that even if you are correct that your fossil fuel assets are not going to get expropriated by a national government – at this point I would only count on Canadian assets. Even our country faces geopolitical risk due to our lack of military infrastructure, but fortunately the country is so big that it would be nearly impossible to invade by force. A political invasion, however, is completely plausible.