Investment Briefs

Interesting Times, Expensive Energy: How to Prepare, Hedge, and Invest

An energy shock can strain household budgets and portfolios at the same time. A practical plan for resilience, hedging, and evaluating CNQ, Cheniere, and Valero.

Hayabusa Research

Sept 29, 2026 • 11 min read

There is a familiar saying: “May you live in interesting times.” Interesting times, indeed.

The AI revolution is here, changing how we work and opening new possibilities in science, mathematics, and medicine. Quantum computing could eventually help us solve important problems beyond the practical reach of today’s machines. Fusion research offers the possibility of abundant low-carbon energy. There are good reasons to be optimistic about what humanity can accomplish.

There are also reasons to be patient. Useful quantum computing at scale and commercially competitive fusion still face substantial engineering challenges. Scientific progress does not arrive everywhere at once, and a breakthrough in a laboratory does not immediately lower the electricity bill.[1], [2]

Meanwhile, we live with expensive energy, geopolitical instability, fears of wider war, pandemic risk, and extreme weather that can disrupt food supplies and everyday life. The promise of a more capable future can coexist with a very unsettled present.

So how should we prepare? For now, I want to focus on one of the most immediate pressure points: energy. It touches the cost of moving goods, growing food, heating homes, running factories, and powering the technology on which our future increasingly depends.

My approach has three parts: make the household more resilient, protect the portfolio from losses we cannot comfortably absorb, and look for investments whose price still leaves room for a worthwhile return. The order matters.

Why Energy Reaches So Far

This pressure is already visible. The US Energy Information Administration reported national on-highway diesel prices of $6.529 per gallon on September 21. The West Coast average was $7.456. Those are dated weekly observations, not live quotes, but they show why this issue extends well beyond a trader’s oil chart.[3]

Diesel powers much of the machinery and transportation that moves the physical economy. Higher fuel costs can reach farms, freight operators, construction businesses, retailers, and ultimately households. Companies must absorb some of the increase, pass it to customers, or reduce activity. The burden does not fall evenly.

An energy shock can also create an awkward combination of weaker growth and inflation pressure. Higher interest rates cannot manufacture additional fuel, although they can restrain demand. If households and businesses eventually cut spending enough, the same shock that initially lifts energy profits can later undermine them.

That sequence matters for investors. We need to think about both the shortage and the response to it: repairs, rerouting, substitution, new supply, and demand destruction. A credible investment case must survive more than one possible outcome.

Start With the Household

I would begin with a practical question: if our routine were disrupted for several days, what would become difficult first? Food, drinking water, communications, transportation, access to essential medication, or the ability to keep the home comfortable?

Washington’s emergency-management guidance recommends working toward two weeks of household readiness. That is a useful planning reference, including for storms and outages that have nothing to do with geopolitics. Supplies can be built gradually around what the household actually uses.[4]

Preparation also means knowing the household’s energy dependence. A home that relies heavily on electric heating has different vulnerabilities from one dependent on delivered fuel. A long commute creates different exposure from working at home. Backup power should be sized around essential needs and installed or operated safely, rather than purchased simply because a frightening headline appears.

The financial side deserves the same attention. List essential monthly expenses, identify which could rise, and keep an accessible reserve sized to the stability of household income and unavoidable obligations. Money needed for near-term bills should not depend on selling a volatile investment at a favorable price.

A reserve buys time to make decisions. That can be especially valuable when living costs rise at the same moment that markets become less forgiving.

Remove the Conditions That Could Force a Sale

Before adding a hedge, I would examine leverage. Borrowing increases exposure when the trade works, but it also creates obligations that continue when the market moves against us. A portfolio can contain excellent businesses and still be vulnerable if the financing leaves too little room for a drawdown.

Margin deserves particular care. FINRA explains that brokers can raise their own maintenance requirements and may liquidate securities without first contacting the investor. A long-term thesis does not control the timing of a forced sale.[5]

This is why reducing expensive or unstable borrowing can be more useful than adding another complicated position. The appropriate choice depends on borrowing costs, taxes, liquidity needs, and the investment’s realistic prospective return. Available borrowing capacity should not be treated as an emergency cash reserve.

Cash and short-term Treasury bills can help preserve flexibility. Bills have short maturities, but maturity dates and access still need to match expected spending. Selling before maturity can involve price changes, and securities held through TreasuryDirect have transfer restrictions. Keep immediately needed money immediately accessible.[6], [7]

There is an opportunity cost to holding reserves. There is also an opportunity cost to having no capital available when attractive assets finally become cheaper. Both belong in the decision.

Give Each Hedge a Specific Job

A hedge should address a defined loss. “I am worried about the world” is too broad to tell us which instrument to buy, how much to spend, or when to stop paying for protection.

Concern	Possible Response	Limit to Recognize
Higher living costs or interrupted income	Accessible reserves and lower fixed obligations	Cash can lose purchasing power; excessive reserves also have an opportunity cost.
A broad equity decline	Less equity exposure, less leverage, or appropriately sized index puts	Puts cost money, expire, and may poorly match the holdings being protected.
Monetary or currency instability	A measured gold allocation as a diversifier	Gold is volatile and does not reliably offset every inflation episode or equity decline.
Persistent oil or refined-fuel scarcity	Selected energy businesses bought at suitable valuations	Their shares remain exposed to operations, policy, valuation, and demand destruction.

A put spread can reduce the upfront cost of an option hedge by selling a lower-strike put against a purchased put. The trade-off is capped protection: below the lower strike, the spread stops adding further payoff while portfolio losses can continue. Expiration and the amount hedged matter as much as the broad market view.[8]

I would set a protection budget before buying options and compare that cost with simply reducing the risk being carried. Expensive insurance can consume a meaningful part of a portfolio’s return. A fresh options chain and current holdings are necessary before selecting a contract; this article does not prescribe one.

Energy shares deserve their own distinction. They can benefit from a particular shortage, but they can also decline with the wider stock market during a recession. Buying them does not eliminate the need for cash reserves or sensible position sizes.

The Investment Question Is What the Price Already Assumes

Once those foundations are in place, we can ask where the opportunity lies. A shortage can create substantial profits. Shareholders benefit only to the extent that those profits reach them and exceed the expectations embedded in the price they pay.

That led us to three different businesses: an oil producer, an LNG exporter, and a refiner. They do not respond to energy prices in the same way. Our research compared their cash generation under more ordinary conditions, credited retained cash and repurchases, and tested downside cases.

The current conclusion: Canadian Natural Resources and Cheniere belong on the watchlist. Valero’s entry valuation is much harder to justify. None clears the return hurdle we would want for a concentrated two-year investment at the reference prices below.

Company	September 28 Close	Two-Year Base Value	Base Total Return	Research Entry Zone
Canadian Natural Resources Limited (CNQ)	$47.55	About $49	About +10%	$37–40
Cheniere Energy, Inc. (LNG)	$269.65	About $287	About +8%	$220–225
Valero Energy Corporation (VLO)	$389.57	About $279	About −26%	$200–220

US-listed common shares; prices from IBKR regular-session daily bars. Values and returns are Hayabusa scenarios for approximately September 2028, not company guidance. Total returns include assumed dividends before taxes and fees. Entry zones are conditional research triggers, not automatic orders.

Canadian Natural Resources Limited (CNQ): Watch the Oil Economics

CNQ is our preferred direct oil-scarcity candidate among these three. Its long-life assets and relatively low production decline support cash generation without the same replacement burden as a more rapidly depleting production base.[9]

The appeal still needs to be tested against ordinary oil prices. Q2 benefited from WTI averaging $92.85 and a strong premium for synthetic crude. Sulfur contributed C$270 million in net revenue, but it is a supporting benefit rather than a sufficient reason to own the stock.[10]

We also adjusted the headline cash-flow presentation for recurring cash uses, including abandonment spending and lease payments. Spending does not become optional because it sits outside a prominently displayed metric.[9], [11]

Our base uses $75 WTI, an 8.5% required yield on normalized equity cash flow, modest share reduction, and credit for cash accumulated during the holding period. That produces about $49 per share, or roughly 10% total return over two years from $47.55.

The bear and bull values are approximately $25 and $72, using $65 and $85 oil alongside different valuation assumptions. That wide range is a reminder of the commodity exposure. Around $37–40, we would have more room for an attractive return without requiring unusually strong oil prices to persist.

Cheniere Energy, Inc. (LNG): Follow the Contracts and Capital Spending

Cheniere offers a different economic profile. At least 90% of anticipated production is contracted through the mid-2030s. That supports visibility, while also limiting how much of a new international gas-price spike necessarily reaches shareholders.[12]

The important distinction is between this year’s strength and the cash the completed business can generate under normalized conditions. Cheniere’s 2026 attributable distributable-cash-flow guidance is $5.3–5.8 billion. Its Q2 presentation’s normalized framework, including Trains 8/9 and debottlenecking, is $4.1–4.7 billion. Growth spending is not deducted from that distributable-cash-flow measure.[13], [14]

Timing matters. Stage 3 reached substantial completion in August. Trains 8/9 are expected in the second half of 2028, making their full-year contribution principally a 2029 consideration. Our late-2028 valuation anticipates that next run rate; it is not a forecast that all of those cash receipts arrive during 2028.[15], [13]

Using $4.4 billion of normalized attributable cash flow, 195 million future shares, an 8% required cash yield and an allowance for excess cash produces a base value near $287. That offers about 8% total return over two years from $269.65. The bear and bull values are roughly $176 and $396. We would be more interested around $220–225, provided the contracts, construction progress and capital allocation remain sound.

Valero Energy Corporation (VLO): Respect the Cycle and the Price

Valero buys crude and sells refined products. Its economics depend on the margin between the two after operating costs. A shortage of diesel and other fuels can be highly profitable if feedstock is available and the refineries are running.

That benefit is visible in the numbers. Valero’s Q2 realized refining margin reached $23.62 per barrel, compared with $12.29 for full-year 2025. Adjusted Q2 earnings were $12.54 per share. Annualizing that quarter would carry unusually strong commodity conditions into what looks like an ordinary earnings multiple.[16], [17]

Our base still grants a strong first holding year at $20 per barrel, followed by $15. It credits only Valero’s economic share of Diamond Green Diesel and includes roughly $37 per share of retained cash after modeled investment, buybacks and dividends. Even with that cash allowance, the base value is about $279, well below $389.57.[18]

There is a serious bull case: damaged global refining capacity and depleted product inventories could sustain unusually strong margins for longer. Our bull value is about $517. The bear is approximately $106. Those imply total returns near +35% and −70%, respectively, compared with a base around −26%.

We would revisit the stock around $200–220, or if evidence materially raised our estimate of sustainable earnings. Passing at the current price is a valuation judgment. It does not imply that the company will stop producing strong near-term results.

Know What Would Change the View

The estimates above are sensitive to oil prices, refining margins, construction spending, share repurchases and the valuation investors assign to future cash. They are stress-tested possibilities, not precise forecasts or calibrated probabilities. A lower stock price becomes useful only if the business case remains intact.

For CNQ, we want to see healthy cash generation at a more ordinary oil price, controlled recurring spending, and real net share reduction. For Cheniere, we want construction progress and growth spending that leave room for shareholder returns. For Valero, we need evidence about how long elevated realized refining margins can persist.

The next confirmed results checkpoints are October 22 for Valero and November 5 for CNQ. Cheniere’s next reporting date was not yet confirmed on its official calendar when this article was prepared. We will update the research as those results and budgets become available.[19], [20], [21]

Across the sector, actual exports, plant availability, inventories and realized company margins deserve more weight than the emotional intensity of a headline. Supply can improve before geopolitical uncertainty disappears. Demand can weaken while the conflict continues. Both outcomes belong in the analysis.

Leave Room for a Better Opportunity

I remain optimistic about the long-term possibilities of technology and human ingenuity. I also want a financial plan that can withstand delays, higher costs and events that no forecast anticipated.

For me, that means a prepared household, obligations I can comfortably carry, a clear purpose for any hedge, and patience about the price paid for an investment. The energy shortage deserves attention. Our research has not yet established a compelling entry in these three stocks.

We can keep learning, keep checking the evidence, and keep capital available. When the price and the business outlook finally offer a strong combination, we will be in a better position to act.

Research Notes and Sources

Prepared September 28, 2026. The familiar opening saying has no established Chinese source; its attribution has therefore been omitted. [22]

Scenario values are derived from Hayabusa’s September 28 candidate underwriting. CNQ uses $65/$75/$85 WTI, 10%/8.5%/8% equity cash yields and C$1.40 per US dollar. LNG uses $3.6/$4.4/$5.2 billion attributable cash flow, 205/195/190 million shares and 10%/8%/7% yields. Valero uses second-year realized margins of $11/$15/$21.50 per barrel and 14×/11×/10× earnings, plus retained cash. Repurchases are counted once. Assumed two-year dividends are C$5 for CNQ, $4.44/$4.80/$5.10 for LNG and $9.60 for Valero.

The base total returns annualize to about 5% for CNQ and 4% for LNG. Both fall short of the illustrative 15% annual hurdle used to test a concentrated equity opportunity. A two-year 15% annual hurdle requires approximately 32% total return. The full models simplify taxes, dilution and capital allocation; current consensus and executable hedge pricing were not verified. The original Cheniere slide was inspected through a public mirror after the company-hosted deck could not be retrieved.

This article presents general research and illustrative scenarios, not individualized investment advice. Outcomes may differ materially, and all investments involve risk. Prepared September 28, 2026. Cover: AI-generated editorial illustration.