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.