Energy Independence Can Push the Market Higher
I was struck by a slow moving, but powerful advancement few are talking about that could change the world, or at least America, in our lifetime. It is estimated that the U.S. will become the world’s #1 producer of both natural gas and crude oil within 5 years. Our domestic American oil production will rise from 5.6 million barrels a day to 9.1 million in just 2 years by 2015, meaning that we would produce almost 50% of our total 20 million barrels/day consumption rate, up from only 27% today. This is something no one expected 10 or even 5 years ago, and let me tell you, this is huge!
The value of the extra 3.5 million barrels produced per day works out to $122 billion a year at current prices (3.5 million X 365 X $96). That will drop America’s trade deficit by nearly 25% over the next three years, and will also offset much of the growth in China’s oil demand. Fewer oil exports to the U.S. also vastly expand the standby production capacity of Saudi Arabia. With increased supplies, OPEC will be forced to lower the cost. I don’t need to tell you that lower fuel costs will have an enormous effect on or economy at every level. As an added benefit, we all long for the day when we will no longer need to spend trillions of dollars and risk American lives in a war over oil resources.
The best part though, is that energy independence creates jobs, a lot of jobs! According to energy guru Daniel Yergin, in his Pulitzer Prize winning book on oil, The Prize, energy has created 1.7 million jobs in the last 5 years, and will double that in the next three. It has also created $60 billion a year in new revenues from taxes and oil leases. As the U.S. has increased its natural gas exploration and production, gas prices have dropped from $18cf to $2 and are at multi-year lows. This is driving international manufacturing companies to come to America and produce products because of lower prices! How’s that for a turn of events?
Even with this enormous energy boom advantage, we will still fight an uphill battle against the demographic wave I discuss in Facing Goliath- How To Triumph In The Dangerous Market Ahead, and it may be several years before the benefits are felt throughout our economy. Until we reach the next boom economic cycle, investors (especially those in the retirement red-zone) must remain properly invested to get the best returns with the least risk possible, as our investment approach is built to do.
…… and that’s where we can help. To learn more about our powerful proprietary Investment Management Strategy which manages risk and delivers returns in any market, and/or get a free second opinion on your portfolio, simply reply to this email, attend one of my free investor Workshops, or call for a no-cost no-obligation consultation today at (916) 925-8900.