The truth is rarely pure and never simple.
Virtually nowhere else does this wild notion hold more weight than the U.S. oil industry. Not helping matters is the fact that opinions regarding our crude oil supply from the talking heads in the mainstream media vary greatly.
The spectrum ranges from a gross under-supply to an overwhelming glut ahead. Perhaps even more disconcerting is that this fact takes a backseat to hyperbole quicker than we can change the channel.
At the moment, the most incredulous story heard today is that we are smack dab in the middle of an oil glut.
Unfortunately, that’s hardly the case.
The Glut That Never Was
Never mistake this boom for an oil glut.
It isn’t easy, mind you. The United States is producing around 8 million barrels per day, which is almost 60% higher than in 2008. The gut reaction from the media is to immediately bombard us with tales of U.S. oil independence.
At the very least, we would expect to see a significant increase in crude oil stockpiles during a glut, right? Excluding the United States’ strategic petroleum reserves, inventory levels have been relatively flat for decades:
Click Chart to Enlarge
Even the latest data from the Energy Information Administration shows U.S. crude oil stocks are actually 1.4% lower now than they were a year ago.
Don’t come down on them too hard. Boosting our output that much in such a short period of time is encouraging.
Click Chart to Enlarge
But independence? Really?
The reality of the situation is that we’ll need to add a lot more oil to achieve that, and it’s too convenient to forget the amount of oil we’re importing.
In 2013, U.S. oil imports averaged 7.7 million barrels per day (imports of total crude oil and petroleum products actually averaged 9.5 million barrels per day!) — over 90% of which comes from Canada, Mexico, and OPEC.
Really kicking our foreign oil addiction would mean tacking on that much oil to our domestic supply (we can even take a little off of that number to adjust for our own exports of petroleum products) — and the chances of this happening are nil.
This isn’t some doom-and-gloom prophecy over the fate of U.S. oil supply, although there’s plenty of that to go around.
According to the EIA’s Short Term Energy Outlook, U.S. production will only increase by 1.5 million barrels per day over the next two years, reaching 9.5 million bbls/d by the end of 2015. Yet even that may be overly optimistic.
We already know that most of this growth will take place in the Bakken, Eagle Ford, and Permian Basin. Output in these three areas is expected to increase by about one million barrels per day in 2015.
Toss in another 300,000 barrels per day from growth in the Gulf of Mexico, and we still have to find an extra 200,000 barrels to add to our daily production.
I’d like to know which of the other states are capable of delivering that kind of growth. And even though I don’t want to throw another wrench into the gears here, let’s not forget that we also have to make up for the long-term production declines from some other major oil-producing states like Alaska and California.
But while we may be in the gutter eventually, some of us are looking at the stars…
Mindlessly Profitable Oil Investments
There’s only one catalyst that will drive the U.S. oil boom over the next few years: technology.
Today, it’s not enough to simply be sitting on a massive oil field. The fact is this conventional oil (I’m referring to the high quality crude of the light and sweet variety) is locked in unconventional formations.
And it’s how one tiny driller can outperform the biggest oil companies in the industry:
Like I’ve said before, it’s not just quantity; it’s also quantity. More important, however, is how efficiently it is extracted. Improved drilling technology doesn’t just level the playing field among shale and tight oil operators — it separates competition.
In fact, you can actually see for yourself the details of this particular Texas driller trading for less than $8 in this free investment report.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
