In Switzerland, the question of a train arriving at its destination both safely and perfectly on time has never really been an issue. The Swiss train system has for decades been renowned the world over for its punctuality.
Strange though, considering that we are running the world’s densest, most intricate network of railways. So far, we seem to have done something right.
But last week, the Swiss trains suddenly ground to a halt. Not just one or two, but all of them. The entire railway system of Switzerland had come to a standstill.
Imagine your train stopping in the middle of a tunnel (of which we obviously have many). For the first few moments you would think of nothing but a short delay due to a signal problems. But once the first minutes have passed, you do start to wonder what’s happening.
That’s what happened to my dear wife last week. She was on one of those Swiss trains, and the moment she really started to worry came when she noticed that the air conditioning had stopped working. Something was clearly out of order…
On the evening of what had first seemed to be just another hot summer day, June 22nd, the entire Swiss railway suffered an unprecedented power failure. My wife had been stuck in the midst of a tunnel, where their train stood still for one and a half hours before finally being pulled out by an old-fashioned diesel train.
The Swiss railway system is closely linked with that of its neighbours, simply due to the fact that Switzerland lies at the very centre of Europe. A total railway breakdown in Switzerland affects railway traffic in every neighbouring country – Austria, Germany, France, Italy.
With the Swiss railway’s reputation in tatters (at least for the time being), the public and companies that are relying on the swift movement of goods by train, will develop an increased interest in a project that the Swiss call ‘Neue Eisenbahn-Alpentransversale’, or ‘NEAT’ in its short version.
This project intends to improve Europe’s traffic flow, by shifting heavy goods from trucks onto railway carriages, particularly when travelling on the North/South axis through Europe. One spectacular part of these plans is to build the longest railway tunnel the world has ever seen. The new tunnel beneath the Gotthardt mountain will be 57 kilometres in length, and its opening is planned for 2015.
Projects like these will have implications for investors too. Think energy supply, and energy shares.
The state-owned Swiss railway, SBB, is not only one of the largest employers of Switzerland, but also the country’s largest consumer of energy. The SBB’s annual consumption is 2,000 giga watt hours, about the same that a town wit100,000 inhabitants uses. SBB accounts for about 5% of Switzerland’s power consumption.
There is a clear trend in the European energy market: demand rises, but few have the answer ready for just how to supply all this energy. The Swiss power supplier AXPO just stated that power production will decrease till 2020. The lag between power consumption and supply may increase in the coming years and may result in winter-time bottlenecks by 2012.
In other European countries, it’s exactly the same. France has just stopped its electricity exports to Germany, because it needs all the power to itself due to the hot weather.
My initial example may stem from what my wife went through on a train in Switzerland, but this is a global trend! Simply put, global power demand will increase further, with power production having a hard time coping with the increased demand. The effect on the price for power is obvious – and electricity firms seem set to make a fortune on their increased pricing power.
If you don’t want to miss out on one the megatrends of the next few years, buy energy producing companies now! They used to be a defensive investment with high dividends, now they might be a key to the very survival of your assets.
Even the legendary investor Warren Buffett has discovered the power production industry for himself. According to media reports, during an energy conference Buffett recently said that he was interested in further purchases of power supply companies, and that he’d be looking at such investment opportunities on a global basis.
Buffett estimates that energy will be a very important investment theme for the next ‘10, 20, 50 years’.
By Beat Erni, For Profit Hunter Files
PS: We like to call the sort of investment we look for “Forbidden Investments”. They are special situations that are so far beyond the scope of the average investor, that they present phenomenal opportunities for the daring, smart investor.