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Why Energy May Be The Best Investment Of The Next Decade With Wil Van Loh

https://www.youtube.com/watch?v=RPLK05po1Rs

TLDR Energy investing may offer unusually strong risk-adjusted returns as years of underinvestment, rising demand from AI and data centers, and limits to U.S. shale growth tighten future supply. Quantum Capital invests across energy sources but currently favors oil, gas, and midstream, using technical expertise and AI to assess assets and avoid costly mistakes. The speakers expect energy costs and existing infrastructure to become more valuable, while stressing that reliable transitions require investment across renewables, storage, nuclear, and dependable power.

Key Insights

Start with energy’s long-term supply and demand fundamentals

Assess energy investments against durable supply and demand trends, not just short-term headlines. The discussion points to rising electricity needs from data centers and AI, alongside years of underinvestment in oil and gas and declining reserve replacement. New energy projects can take years to deliver, so current supply constraints may persist even as demand grows. Treat these claims as investment considerations to test against current market data, rather than as guaranteed price forecasts.

Evaluate risk-adjusted returns across energy sources

Compare potential returns with the risks and capital requirements of each opportunity. An “all of the above” approach can include oil and gas, midstream infrastructure, renewables, thermal power, storage, and nuclear, while remaining flexible about where the strongest opportunities emerge. The practical lesson is to assess each asset on its economics, reliability, and downside exposure instead of relying on a preferred energy narrative. Diversification does not remove risk, but it can help investors avoid depending on a single technology or market outcome.

Use technical expertise to understand what you are buying

Energy assets require specialized knowledge of geology, engineering, operations, and commodity markets. Technical analysis can help distinguish poor results caused by weak execution from problems rooted in the asset itself, and can reveal when production has been accelerated rather than sustained. Combine investment professionals with domain experts to evaluate assets, operators, and development plans. This diligence can help identify risks before committing capital and reduce the chance of overpaying.

Make data and AI useful through clean, relevant inputs

Machine learning can analyze large volumes of data to support decisions such as where to drill, how to complete a well, and how much water or sand to use. Its usefulness depends on collecting accurate, consistent data and understanding the context behind it; poor inputs can produce misleading conclusions. Track measurable outcomes such as lower development costs, improved recovery, and incremental revenue. Also recognize the less visible value of better deal selection, faster rejection of weak opportunities, and more informed risk assessments.

Account for project timelines and replacement costs

Energy infrastructure often takes years to permit, finance, and build, while equipment and construction capacity can be limited. Compare the cost of acquiring an existing operating asset with the time and expense required to build a replacement. Consider regulatory delays, supply-chain constraints, and the reliability needs of the grid when evaluating power projects. These factors can make existing assets strategically valuable, but they should be verified through current asset-level research.

Protect portfolios against changing energy prices

Energy prices can influence inflation, company costs, consumer bills, and government finances, so investors should consider how their portfolios respond to commodity swings. The speakers argue that prolonged underinvestment and shifting global supply could make energy less of a subsidy to other sectors. Test this possibility with multiple price scenarios rather than assuming prices will rise. A clear view of exposure can help investors prepare for volatility without treating any forecast as certain.

Choose partners for integrity, discipline, and adaptability

In a capital-intensive and cyclical industry, the quality of the people managing investments matters as much as the opportunity itself. Look for integrity, aligned incentives, proven capital-allocation skills, and a demonstrated focus on limiting downside risk. Favor teams that combine technical expertise with creativity and a willingness to keep learning as markets and technologies change. Persistence is valuable, but it should be paired with the ability to learn from setbacks and adjust course.

Questions & Answers

Why did Will Van Loh choose to invest in energy?

After the oil and gas collapse of the mid-1980s, the sector had strong entrepreneurs but little available capital. Van Loh saw an underserved market where he could help build businesses, while investing in a sector essential to humanity.

What makes energy attractive to investors today?

Van Loh believes oil and gas, including midstream, offer some of the best risk-adjusted returns among major asset classes. Energy demand is growing, while capital has withdrawn from the sector and years of underinvestment have weakened future supply.

How can AI and machine learning improve oil and gas operations?

They can analyze many variables at scale to help determine where to drill, how to complete wells, and how much sand and water to use. This can improve recovery while reducing costs and waste, provided companies collect enough clean, usable data.

How does Quantum Capital Group use data science in investing?

Quantum combines investment professionals with engineers, geologists, geophysicists, petrophysicists, data scientists, and software engineers. Its proprietary data and analysis help evaluate assets, target opportunities, identify operator mistakes, recognize artificially accelerated production, and avoid bad investments.

Why does Van Loh favor an “all of the above” energy strategy?

He argues that new energy sources have historically supplemented rather than quickly replaced existing ones, and that demand for all forms of energy will grow. Quantum invests across oil and gas, midstream, renewables, thermal power, and battery storage, while developing expertise in nuclear power.

Why does Van Loh think the world may need more oil and gas investment?

A decade of underinvestment has reduced reserve replacement, while conventional projects can take seven to eight years to reach production. With U.S. shale growth potentially peaking and global supply increasingly reliant on conventional assets, he argues that the industry needs substantially more capital.

What changes could rising energy costs bring?

Higher energy prices could end the implicit subsidy that cheap energy has provided to other sectors. That could affect consumer costs, inflation, company valuations, and geopolitics, making inflation protection important for investors.

Why are existing power plants and energy infrastructure becoming more valuable?

Electricity demand is expected to rise after years of relative stagnation, partly because of AI data centers. Grid constraints, long equipment delays, higher construction costs, and regulatory obstacles make new power generation difficult and increase the value of existing assets.

What qualities does Van Loh prioritize in leaders and investment partners?

He values integrity and a win-win mindset, proven capital-allocation ability and downside protection, creativity and lifelong learning, and grit—the capacity to persevere, learn from setbacks, and adapt.

What role did adversity play in Van Loh’s life?

After failing to get a football scholarship at TCU, he stayed and found ways to pay for college. He says difficult periods helped build his character, persistence, and relationships, and shaped the course of his life.

Summary of Timestamps

Tony Robbins welcomes Will Van Loh, founder of Quantum Capital Group, to The Holy Grail of Investing podcast. Co-host Christopher Zook and partner Mark Wade introduce a conversation about energy investing, Van Loh’s career, and the forces shaping the industry.

Van Loh explains why he sees energy as offering some of the best risk-adjusted returns among major asset classes. He also cautions that the unusually responsive U.S. shale boom may be nearing its peak, making real commodities and tangible assets increasingly important to investors.

Van Loh traces his entrepreneurial roots to small-town Central Texas, where he started businesses to help pay for college. A value-investing course at TCU sparked his interest in investing, followed by work in Kidder Peabody’s energy group and early ventures serving energy entrepreneurs.

After the oil and gas collapse of the mid-1980s, Van Loh saw an underserved industry with talented entrepreneurs but little available capital. He moved from investment banking toward direct investing, ultimately launching a fund in 1997 to help build energy businesses.

Van Loh compares today’s energy market with the early-to-mid-1990s. He says much of the private equity capital that once flowed into energy has withdrawn, even as demand grows with global prosperity and the expansion of energy-intensive technologies such as AI.

The discussion turns to AI’s potential role in oil and gas. Van Loh says machine learning can evaluate more variables and improve drilling decisions, including where to drill and how to complete wells—potentially increasing recovery while lowering costs and waste.

Van Loh emphasizes that useful AI depends on collecting large volumes of clean, reliable data. Quantum has invested in data-driven analysis since its founding, combining technical specialists with investment professionals and building a proprietary database from public and company-generated information.

Quantum’s data science team helps assess assets, target opportunities, and identify weak deals sooner. Van Loh says the technology can distinguish poor results caused by operator mistakes from poor geology, and that avoiding a bad investment can be worth hundreds of millions of dollars.

Van Loh says energy expectations have changed as renewables have expanded, geopolitical conflict has heightened energy-security concerns, and AI-driven data-center construction has increased demand. He sees nuclear power gaining renewed interest because it is energy-dense and produces low-carbon electricity.

Quantum follows an “all of the above” investment approach, investing across oil and gas, midstream, renewables, thermal power, and battery storage while building nuclear expertise. The firm says it is agnostic about energy sources and focuses on risk-adjusted returns.

The speakers discuss changing investor sentiment toward hydrocarbons. Van Loh says European institutions largely stepped away from the firm’s latest fundraising, while some European families increased their commitments and many U.S. institutions initially chose to wait and see.

Van Loh argues that renewed interest in oil and gas is not necessarily too late, because major projects take years to bring into production. He points to prolonged underinvestment, low reserve replacement, and the limits of shale growth as reasons the industry needs more capital.

The conversation examines how U.S. shale reshaped global supply, with U.S. production accounting for much of the world’s growth over the past 15 years. As that growth slows, Van Loh says global supply dynamics—and the influence of major producing nations—could change.

The speakers consider the possibility that energy prices will rise after years of underinvestment and growing costs. They warn that more expensive oil and gas could affect inflation, consumer prices, company valuations, and geopolitics, making inflation protection relevant to investors.

Surging electricity demand, driven partly by AI data centers, is putting pressure on an aging U.S. grid. After years of nearly flat demand, electricity use is projected to rise substantially, while limited transmission, variable renewables, and regulatory delays complicate new construction.

The speakers describe long lead times and rising costs for new natural-gas power plants. With turbine manufacturing capacity reduced and equipment delivery taking years, they argue that existing power assets may become especially valuable during a major buildout.

The discussion emphasizes that a reliable energy transition requires balancing renewable power with storage and dependable baseload sources. The speakers also stress that successful energy investing depends on technical and operating expertise, careful capital allocation, and rigorous risk management.

Asked what they value in leaders and investment partners, the speakers highlight integrity, a win-win mindset, sound capital allocation, creativity, and lifelong learning. They also discuss grit: Van Loh says setbacks helped shape his character and career.

Van Loh and Christopher Zook reflect on overcoming adversity in college and sports. Both describe persistence, supportive routines, and viewing challenges as opportunities to grow as important parts of their personal and professional development.

Mark Wade reflects that energy investing is intensely physical and practical: it involves real commodities, locations, infrastructure, and complex problems. He also notes how AI can help investors quantify risk and ask better questions.

The closing discussion references the Houston Museum of Natural Science’s interactive energy exhibit and the many steps involved in producing fuels and electricity. The hosts end by celebrating technology, hard work, and lifelong learning, and thank their guests and listeners.