Dramatic weather events can have an adverse effect on the power grid, but this doesn't mean investing in the utility is a bad idea. In this Motley Fool Live segment from "The High Energy Show," recorded on May 31, Fool.com contributors Tyler Crowe, Travis Hoium, and Jason Hall discuss different events that could effect energy utilities and how investors should react.
Tyler Crowe: As an investor, let's really put a narrow gauge around as an investor. Not really because most of the things that I'm invested in aren't going to be directly impact by it, probably the thing that would, I guess, you could say benefit from it would be natural gas producers like if brownouts, because we're having to run all of our gas peaker, so maybe natural gas prices are going to spike. But as far as like if I were to look up and down my portfolio, I don't see anything in it where I'm like, oh, man, blackout, brown out, that's really going to be a risk for them. It stinks. To be honest, I just lived past six years in Sub-Saharan Africa. I had three brownouts a day. I lived with it. It stinks, but from an investment standpoint, I don't know. I don't put much thought into it.
Travis Hoium: I think Jason, you can add to this, but I think this is something that gets a lot more media attention than something that's a massive deal, especially when there's strange things that happen with weather. Things happen to the grid. We have a lot of trees around here and periodically the power goes out because a tree falls on a power line. It's not a reason not to invest in the utility. I know that somebody mentioned something about in the Midwest, there's a nuclear plant that was shut down. I just looked up. Headlines are, get ready for higher energy prices, and just typically those things have not happened because one power plant shuts down. If we were to say we're going to shut down all of our nuclear power plants tomorrow. That would be a massive deal. Shutting down one power plant, not really that big a deal. Jason, what do you want to add there?
Jason Hall: Yeah. I think just a good rule of thumb with these things. A good barometer is, if you hear more about it on news channels that focus on politics versus investing, [laughs] that's all you need to know about whether or not it's really a material risks to the thesis. A good example is this Texas ice storms a few years ago that affected so much renewable capacity and wind particularly there. There was a lot of focus on it by media pundits, focusing on government subsidies and all that kind of thing. And it was really a mismanagement of assets. That was kind of the thing and you didn't hear [laughs] a lot about it in the investing community all besides people saying, well, yes, these assets were not really managed properly. I think that's always a good barometer for that.
