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A Crude Awakening for Us All

Written by Keith Kohl
Posted July 21, 2017 at 12:04PM

Oil is a helluva drug for a society.

Try to think of something else we use on such a grand scale.

Want to travel from London to New York in a matter of hours? Well, be sure to thank those refiners churning out enough jet fuel for the 4.2 million passengers who took that flight in 2015.

Interested in brushing your teeth this morning? It’s more than likely the toothpaste you just used contains dyes made from petroleum.

What’s the next summer concert you’re itching to see? If anyone on stage is playing a guitar, I have some bad news for you: most strings on that guitar are made of nylon, which, as you can probably guess by now, is — yes — made from petroleum.

Believe me, dear reader, this list goes on and on, and it is far longer than you would ever imagine.

The house you live in. The food you eat. The contacts you might have in your eyes as you read this.

Of course, we’ve come to take the United States’ thirst for petroleum for granted.

If there’s one thing you can count on, it’s our love for petroleum. And the cold, bitter pill for us to swallow is how much we truly rely on oil for our everyday conveniences.

Yet we still pay nothing more than lip service to the issue.

Every single president since Richard Nixon has told the public that NOW is the time to get serious about U.S. energy security.

And every new president, without fail, has pledged that they will put the U.S. on the track to energy independence.

Understand what that would take...

Here in the U.S., we burn through 19.5 million barrels of crude on a daily basis.

That amounts to one out of every five barrels consumed on Earth each day.

So any time someone tells you oil demand in the U.S. is dropping, be sure to take it with a grain of salt.

Although we’ve talked about weaning ourselves off of oil for decades, our demand has been steady:

oildemand1small

Click on Chart to Enlarge

But hey, at least we’re not alone.

A Crude Awakening for OPEC

There’s a growing trend of countries becoming increasingly reliant on crude oil.

China’s lust for oil grew by 6% last year. The Middle Kingdom accounted for 13.1% of the world’s oil consumption in 2016.

But China has been on everyone’s radar for more than a decade.

It’s the ones you don’t suspect that you have to be concerned about...

Within the mighty OPEC, the world’s largest oil-producing countries are quickly coming to the realization that their oil addiction is reaching untenable levels.

Between 2005 and 2015, Saudi Arabia’s oil demand rose by roughly 5.9% per year. In Qatar, crude consumption surged by 11.6% per year during the same period.

Now, even though Qatar’s overall demand is trivial compared to mammoth consumers like the U.S. and China, Saudi Arabia is a different story.

Remember, every barrel of oil that the Saudi population uses means one less barrel available for export.

That’s less money to keep the country’s lavish social spending programs up and running... and you and I both know how important it is for the Saudi government to keep its population complacent.

And nothing makes an oil-addicted society happier than paying $0.24 for a gallon of gas.

So, you can understand why Saudi Arabia is pouring money into renewables.

Don’t make the mistake of thinking the House of Saud suddenly grew an environmental conscience.

Take a look at the chart that gives young Saudi princes nightmares at night:

image2721

Click Chart to Enlarge

Do you hear that?

It’s the sound of inevitability.

The Curious Case of Mexico’s Oil Comeback

For all the talk and empty promises, the world’s oil addiction isn’t getting better.

In the first quarter of 2017, world oil demand averaged 96.45 million barrels per day.

So when one of my colleagues, Christian DeHaemer, told me a story about a country that was actually weaning itself off of oil, you can imagine my initial skepticism.

But it’s true...

Last year, Mexican oil consumption fell 2.1%.

It turns out all they needed was a monster oil discovery in a long-forgotten field.

Analysts are already calling it a game-changer.

Some are even comparing it to our shale boom that ignited back in 2008.

Christian is calling it Mexico’s Bakken Moment.”

But I don’t want you to simply take this story for granted.

I want you to realize the full potential behind this explosive situation.

If you haven’t, I strongly urge you to take a few minutes and check out Chris’ investment presentation right here.

Until next time,

Keith Kohl Signature

Keith Kohl

follow basic@KeithKohl1 on Twitter

A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.

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