My Plan for Putting America Back to Work

by David Fessler, Investment U’s Energy and Infrastructure Expert

Friday, November 19, 2010: Issue #1392

Time Magazine just released the list of 25 nominees for its 2010 “Person of the Year” Award.

Among the candidates: Barack Obama, British Prime Minister David Cameron, the 33 Chilean miners, Apple CEO Steve Jobs, Facebook co-founder Mark Zuckerberg, and Lady Gaga.

But there’s another finalist that has dominated the headlines this year. In fact, it’s not just one nominee… it’s 14.8 million.

The Unemployed American.

There’s no doubt about what America needs this holiday season: Jobs.

And what’s the best way to get people back to work? Glad you asked…

Out of the Unemployment Line and Onto the Job Site

I recently caught an interesting interview on CNBC with a Byron Wien, Vice-Chairman of Blackstone Advisory Services. He got my attention with this statement:

You’ve got to start spending money on infrastructure. If you travel around the world, other countries are getting a lead on us, even some of the developing nations. We’ve got a lot to do there. You’ve got to get the economy growing faster than 2%, you’ve got to get unemployment below 9%, and you’ve got to focus on programs that accomplish those goals.”

Amen. And here’s how putting people to work on the nation’s aging infrastructure tackles three big problems at once…

  1. It gets Americans back into the labor force.
  2. It addresses the need to repair and upgrade America’s aging infrastructure.
  3. We can extend the plan by focusing specifically on green energy initiatives that can help America move towards greater energy independence.

Build Up… and Build Green

Coincidentally, the group that would benefit the most from a vigorous, national infrastructure program is the very group that has one of the highest levels of unemployment: Construction workers.

According to the Associated General Contractors of America (AGCA), the construction industry’s unemployment figure is nearly double the national unemployment average.

Evidence of the malaise is exemplified in the fact that while total private sector employment rose by 593,000 over the past year, the construction industry lost 210,000 jobs.

One obvious solution is to get these hard-working Americans back to work, helping to rebuild and renew our infrastructure. And while they’re at it, that would include the “greening” of our energy supplies and distribution systems.

Unfortunately, the United States doesn’t have a clear-cut national infrastructure-rebuilding plan. And moving the country towards greener energy also appears to be losing steam.

Regulators Shifting into Reverse on Green Energy

According to a recent New York Times article, it’s clear that public utility commissions are starting to cave when it comes to backing green sources of energy.

Why? Because they’re often unwilling to make tough choices on energy supplies that would put their re-appointment at risk. And the easy way out is to base their decisions strictly on price. Talk about a myopic view.

Take energy regulators in Virginia, for example. According to the NYT article, wind energy company Invenergy had a contract to sell power to a Virginia utility. But state regulators nixed the deal because it would have raised the average monthly residential bill.

But here’s the problem: That increase would have totaled just 0.2% – a measly extra 20 cents on a monthly $100 utility bill.

But it’s not just Virginia. Projects in other states – including Idaho, Kentucky and Florida – have either been delayed or completely killed because the power generation might raise consumers’ electric rates in the short-term.

It’s classic backwards thinking. Sure, fossil fuel prices have dropped as a result of decreased demand and consequently made renewable sources less attractive. But a few years from now, many state regulators currently rejecting these “expensive” energy deals will be scrambling for alternative supply sources.

America Needs a Plan Before it Falls Further Behind

On the surface, it seems like a no-brainer to get Americans back to work in areas that are in pressing need of attention.

Problem is, it takes intestinal fortitude and logical, long-term thinking – two traits that are completely foreign to many of our nation’s lawmakers. At a time when the U.S. infrastructure is crumbling and we’re in dire need of improvement, politicians produce little more than hot air and partisan bickering, with one eye towards their re-election campaigns.

Meanwhile, the United States bumbles along with an outdated infrastructure and falls further behind many other nations in transitioning to greener energy sources.

Take China, for example. It’s spending billions on upgrading its infrastructure, as well as increasing its renewable energy sources. And in Europe, many countries have adopted (or are in the process of adopting) a feed-in-tariff concept, which guarantees set prices for solar or wind power.

Here’s what America needs: a national infrastructure rebuilding plan and a national energy plan. Our economic future depends on it. Modern infrastructure and homegrown energy are the hallmarks of economic growth.

Both would put more unemployed Americans back to work. And a national energy plan would bring renewable energy sources to the front of the stage, rather than lurking behind the curtain.

What are the chances of this happening?

The Companies at the Forefront of the Infrastructure Initiative

The good news is that in spite of a few myopic regulators, there are still thousands of renewable energy projects underway in the United States.

The beneficiaries? Companies that design, engineer and build big infrastructure and energy-related projects. For example…

  • Foster Wheeler Ltd. (Nasdaq: FWLT)
  • Jacobs Engineering Group, Inc. (NYSE: JEC)
  • The Shaw Group (NYSE: SHAW)
  • Fluor Corporation (NYSE: FLR)

Measures that could help the cause include…

  • A carbon tax, which would increase the price of fossil fuels and facilitate a faster shift towards alternative sources.
  • High-volume manufacturing of wind generators and solar panels, which would lower the price of the energy derived from them.
  • Mass introduction of electric vehicles.

The bottom line is this: If Americans want renewable energy sources, we’re going to have to pay for them. And – at least initially – they’re going to cost a little more than conventional fossil fuels. Such is the case when new trends take hold.

Our grandchildren will thank us, but they’ll wonder what took us so long to get there.

Good investing,

David Fessler

Investment U… Overtime: In today’s age of instant news and the court of public opinion, it’s increasingly difficult for U.S. politicians to think long term. But the government’s shortsightedness and partisan gridlock is damaging.

Take our foreign oil imports, for example. The United States sends $1 billion a day overseas to pay for foreign oil. And a look at the math reveals an interesting fact: $1 billion per day would fund roughly five million private sector jobs paying around $75,000 a year. In turn, that would cut the unemployment rate by nearly one-third.

I’m neither a protectionist, nor am I for bigger government. But I do subscribe to the idea that money spent in this country – as opposed to spending it elsewhere – is good for America and American jobs. Particularly when it comes to energy and infrastructure and the prosperity of the companies and people within the sectors.

And if you’d like to join me on the hunt for the most profitable energy and infrastructure stocks, jump on board my Peak Energy Strategist service. I’ll track down the latest developments and hottest trends within the energy and infrastructure sectors and give you the names of the companies in the best position to take advantage. It’s that simple.

And as the population grows and energy/infrastructure resources become increasingly strained, it’s an issue that isn’t going to disappear anytime soon. So for investors who know where to look, the profit potential could be enormous. Check out The Peak Energy Strategist.