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There’s a lot going on in the energy markets, from saber-rattling in the Middle East to battles over energy bills here in the United States.
But if you look beneath the headlines, there are a lot of facts that many Americans just don’t know — facts that will affect the price you pay for energy both near- and long-term.
Let’s look at three of those facts now …
1. America’s Economic Growth Is Decreasingly Dependent on Energy.
Take a look at U.S. energy consumption per real dollar of GDP over the past 40 years …
The Energy Information Administration reports that it took only 7.32 thousand British Thermal Units (BTUs) of energy to produce each dollar of real GDP in 2011, making last year’s economy the most energy-efficient in history. That’s down 2% from 2010 and less than half of what it was in 1979.
Why is this important? Well, the more-efficient the economy is, the better we compete in the global marketplace.
Also, if the economy is more-efficient, that means more money goes to profits (and hopefully wages).
Finally, the less energy we use to create each dollar of GDP means the less-vulnerable our country is to oil shocks. That is, the price of oil has to go even-higher to have the same shock effect on the economy that it did in the past.
2. America’s Energy Boom Is Creating a Jobs Boom.
Over the past six months, the number of people who are employed has risen by 2.3 million — an average of 385,000 per month, according to the Bureau of Labor Statistics (BLS). That’s the best growth since early 2000, when the dot-com bubble was boiling over.
Do you know which state has the lowest unemployment? North Dakota, at 3.1%.
That’s because North Dakota is the heart of the shale oil and gas boom. The number of new jobs for the state increased by 6.3% in January compared to January 2011, according to BLS data. West Virginia and Utah tied for second with a 2.6% increase. Texas was fourth with a 2.5% increase and Louisiana was fifth with a 2.4% increase. The nationwide growth rate was 1.5%.
North Dakota, Texas and Louisiana produce oil and gas, which makes an argument for acquiring some natural-resource-related skills. Alaska and South Dakota — two other energy-producing states — are also near the top of the job-creation list.
Aside from companies hiring more geologists as well as temporary, unskilled workers, energy investment creates demand for ancillary manufacturers. A new study by Citigroup says that low natural gas prices will promote “the re-industrialization of America” by favoring U.S. locations for petrochemical plants (gas is a feedstock) and industries with high energy costs.
That’s just what I’ve been saying in my information- and prediction-packed “New Fuel Revolution” report — which you can read right now for free.
3. U.S. Energy Production Could Surpass that of Russia and Saudi Arabia.
As I’ve told you in previous columns, the United States has become a net petroleum products exporter for the first time since 1949. This is partly due to the fall in U.S. demand (down 2 million barrels per day since 2005) and partly due to rising domestic production of oil and natural gas.
Last year, crude-oil output exceeded 2 billion barrels for the first time since 2003. And natural-gas production is blasting off.
The end result is that shipments of gasoline, diesel fuel and other products surpassed imports by an average of 439,000 barrels a day in 2011, according to the U.S. Energy Department.
Now, Citigroup has put out a report, “Energy 2020,” saying that U.S. energy production could surpass that of Saudi Arabia and Russia this decade! Take a look at this chart from Citi …
According to Citi, as projected on this chart, U.S. energy production is picking up speed and looks ready for take-off!
Edward L. Morse, Citigroup’s head of global commodities research, wrote in the report that: “The U.S. has become the fastest-growing oil- and natural-gas-producing area of the world.”
Also according to Citi …
- North American crude oil and natural-gas liquids (NGLs) production looks to DOUBLE to 26.6 million barrels per day (bpd) by 2020 from 15.4 million bpd in 2011.
- The U.S. and Canada are on track to see natural gas output rise by 22 billion cubic feet per day over the next decade.
- U.S. demand for petroleum products is likely to fall by another 2 million barrels per day over the next decade.
- The cumulative impact of new production, lower consumption and associated activity could increase GDP by 2% to 3% by 2020. And that would create an additional 2.7 to 3.6 million net new jobs.
Citi expects the new sources of North American energy production will come from five sources: Oil sands production in Canada, deepwater in the U.S. and Mexico, oil from shale and tight sands, NGLs associated with the production of natural gas, and biofuels.
Now, I don’t know whether North America will hit Citi’s target of an extra 11 million bpd of crude oil and NGLs over the next decade. But I do know this. Every barrel we pump here in North America is one less we have to buy from OPEC.
Considering that we still import a heck of a lot of oil (8.7 million barrels a day), any increase in domestic production makes us less-reliant on the kindness of strangers … and less likely to be squeezed by oil sheiks who have us over a barrel.
There are plenty of ways to play the New Fuel Revolution; we’re already loading up the truck in my Global Resource Hunter investing service. If you’re doing it on your own, be careful, because even good stocks can get dragged down in this whipsaw market. Do your own due diligence before you buy anything.
As long as the underlying business doesn’t change — and the outlook for select energy stocks and funds has never been brighter — you should find yourself on the road to profit.
All the best,
Sean
P.S. I’ve got a ton of great oil and gas stocks on my watch list. But many of my favorites are on my Global Resource Hunter buy list. My subscribers are the first to know when it’s time to get in and, best of all, cash out! Join today and see how we’re riding the New Fuel Revolution to some very happy returns throughout 2012 — click here to get started right away.
{ 2 comments… read them below or add one }
Every Summer I spend 2 mos on PEI…little cottage in cape traverse. Our family cottage is right next to the Irivngs family cottage.
Wonderful discussions about natty gas/oil for decades have happened while watching the old ferry boats crossing the North Umberland Strait….
The Irivngs have a great thing going on natty gas in St Johns NB……
The money is not in the gas….its in the infrastructure including land…gas is a widget….
and i learned a lot about futures and contango over all those clam bakes…
point…..yer approaching natty gas from the wrong direction….and gonna get burned…get it..
There is no way to know what might have been, but the national MB/D chart hit a nerve. Senator Ted Stevens of Alaska, died an angry man. He had been convicted falsely of a crime through government cheating and lying, lost an election due to the phony conviction, and counted his wounds. He voted to create ANWR, decades ago, on a gentleman’s agreement that exploration for hydrocarbons would shortly be allowed. Generations ago, primitive geological surveys predicted it was the mother lode of natural gas, and maybe crude. In Steven’s judgment, key Senators double crossed him, and forbade exploration rigs to drive into an area the size of South Carolina. Their reasoning: truck tire tracks would disturb the millions of caribou.
We still do not know what is up there.
If ANWR had been explored two generations ago, our need for energy from the middle east might have dropped to almost zero. Tens of millions of energy dependent careers would have been possible, tens of thousands of young people would live with whole bodies, not butchered in combat, thousands of others would not have died in the agony of war. America would be a much more wealthy nation.
Our value system is despicable. Insane.