Petrobras and Vale: The Keys to Brazil's Growth
In our energy-starved world, this troubling fact speaks volumes; I want companies growing production and growing reserves. Petrobras is by far the most aggressive energy conglomerate in the world. According to Bloomberg, the company has locked up leases for 80% of the ultra-deepwater drilling rigs in its attempt to become a dominant exporter of crude over the next decade. And with oil trading in the $130s, so far, Petrobras has been dead right.
Finally, I must describe what really stood out to me -- the typical and average Brazilian gas station. The country has demonstrated on a large scale that it is possible to build a build a top-notch energy distribution infrastructure with many types of fuel and still prosper.
After the 1970s oil crisis, the Brazilian government adopted a policy to stop their dependence on foreign energy. In a single generation, government-initiated policy ended domestic dependence on imported oil, as it instituted programs mandating the adoption of a multifaceted energy distribution system.
In my recent time in Brazil, I badgered friends and most taxi drivers about the type of fuel they were using to power their cars. There are four major choices for fuel -- natural gas, ethanol (sugarcane-based, not our illogical corn-based), gasoline and diesel.More important, all these types of fuels were readily accessible. The infrastructure is exactly the same as our gas stations here, except that they have a variety of fuels to choose from. At minimum, most cars have at least two options for fueling their driving (most taxis used three -- natural gas, ethanol and gasoline). It was quite amazing -- pull into a gas station and fill up on natural gas, ethanol, gasoline or diesel. I don't understand why we can't do the same here; natural gas is cheap, clean and abundant in our country. It just takes a little bit of forward thinking by our leaders. In my next installment, I will explain what I view as the next growth catalyst to the Brazil story. I think most of Wall Street is missing the angle on this budding nation, and there is still enormous upside and opportunity. This was originally published on RealMoney on June 25, 2008. For more information about subscribing to RealMoney, please click here.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV