We’ve been talking a lot recently about North American oil…
About new fracking technologies. About new formations. About the rush of foreign countries — namely European powers and China — rushing in to secure a piece of this newfound wealth.
Today, I want to make an important distinction.
Because with all the recent landgrabs and bullish sentiment and headlines about oil boomtowns, I want to make sure you see the forest for the trees.
Supply Still a Problem
The forest is still Peak Oil.
We’re simply staring at a few trees of increased production in one area.
The rest of the world isn’t as lucky. Here’s what I mean…
OPEC member Nigeria is producing the same amount of oil today as it was a decade ago:
Venezuela is actually producing less than it was ten years ago:
Libya is way down:
Iran has been sliding for six years:
And Angola started to slide four years ago:
That’s five OPEC nations with supply heading down, down, down, down, down.
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And it doesn’t get any better in non-OPEC countries that were once major producers…
Mexico has fallen off a cliff:
And so has Norway:
Consumption Also a Problem
In countries whose supply isn’t shrinking, there’s another problem: growing economies.
The New York Times reports:
The economies of many big oil-exporting countries are growing so fast that their need for energy within their borders is crimping how much they can sell abroad, adding new strains to the global oil market.
Experts say the sharp growth, if it continues, means several of the world’s most important suppliers may need to start importing oil within a decade to power all the new cars, houses and businesses they are buying and creating with their oil wealth.
Indonesia has already made this flip. By some projections, the same thing could happen within five years to Mexico, the No. 2 source of foreign oil for the United States, and soon after that to Iran, the world’s fourth-largest exporter.
It is a very serious threat that a lot of major exporters that we count on today for international oil supply are no longer going to be net exporters any more in 5 to 10 years.
To recap, many countries — both inside and outside OPEC — are undergoing supply contraction. Those that aren’t are exporting less because they’re using more internally.
Are you starting to see the forest?
World oil demand is marching up and to the right, expected to surpass 115 million barrels per day in 2025 from only 91 million barrels per day today:
Yet production in many countries is either waning or being consumed by the producing country.
It’s the perfect recipe for higher oil prices, which, by the way, Goldman, Barclays, and Deutsche are all forecasting for this year.
But Wait — There’s More
I just showed you notorious oil-producing countries whose production is on the skid.
Now take a look at production in Canada and the United States:
See the difference?
Canadian oil production has been surging for years.
American production is undergoing a renaissance.
As prices rise due to falling production elsewhere in the world, rising demand, and any consequences of the Iran situation…
Companies operating in the United States and Canada — especially in rich new shale finds — will be the main beneficiaries.
Companies like Northern Oil and Gas (NYSE: NOG), Oasis Petroleum (NYSE: OAS), Continental Resources (NYSE: CLL), Whiting Petroleum (NYSE: WLL), Petrobakken (TSX: PBN), and more are already showing how the strength of new North American oil production is translating into financial wealth.
Even as the Dow has tacked on 2,000 points since October, it can’t keep pace with shale oil stocks.
Oil prices aren’t getting any lower and shale production isn’t slowing down anytime soon, so you need to be putting yourself in a position to profit now.
Call it like you see it,
Nick is the founder and president of the Outsider Club, and the investment director of the thousands-strong stock advisories, Early Advantage and Wall Street’s Underground Profits. He also heads Nick’s Notebook, a private placement and alert service that has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world. For more on Nick, take a look at his editor’s page.