As the world faces the threat of inflation, countries around the world are rinsing rates. Energy prices are expected to stay high for a little longer. And the Fed keeps mentioning rising wages.
Two industries may be propped in economic environment like this, green energy and automotive production.
Clean Energy
Clean energy seems cheaper when oil is expensive. Even whey oil was cheap, many developed countries are talking about developing clean energy.
US is dedicated
Furthermore, it seems the US currently dedicated in transitioning into relying more on clean energy, here is a list of current announcements from the White House:
- "June 28, 2022, the Biden-Harris Administration is highlighting how President Biden’s leadership on electric vehicles is catalyzing more than $700 million in investments from the private sector that will increase our domestic capacity to manufacture more than 250,000 new electric vehicle (EV) chargers each year, add at least 2,000 good-paying jobs, and make EV charging more affordable, accessible, and equitable."
Keep an eye on the demand of oil
One thing I am watching is when the demand of oil, which would be a sign of clean energy is playing a more important role in the energy sector. Although, most developed countries are taking actions or at least talking about some combating climate change goals by years, say 2030, and if fossil fuel is more affordable for developing countries, I don't think the demand of oil would drop on average in the near future.
The drop of the demand for oil in 2020 was likely due to the Covid crisis which disrupted economic activities.
Automatic Production
The Fed keeps mentioning rising wages, according to the Fed's meeting minuts in June,
Nominal wage growth remained elevated, with average hourly earnings having risen 5.2 percent over the 12 months ending in May, and the increases were widespread across industries.... (and) tight labor markets would spur investment in automation by firms, boosting labor productivity. (page 4 and 8)
What the Fed keeps mentioning also include the supply bottleneck or disruption in supply chain. I think developed countries have the money to build a more resilient supply structure in the future, which would likely boost the investment in automation production, including the use of 5G for low-latency connectivity between either machines, gauges, managers and the use of AI for auto adjusting machine parameters.
Source:
The White House. https://www.whitehouse.gov/briefing-room/.2022/7/10
Supply and demand of Oil.IEA.https://www.iea.org/reports/oil-information-overview/supply-and-demand.2022/7/10
Minutes of the Federal Open Market Committee, June 14-15, 2022. Board of
Governors of the Federal Reserve System.
https://www.federalreserve.gov/newsevents/pressreleases/monetary20220706a.htm.
2022/7/6
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