99 Problems… But Oil Ain’t One of Them

25 comments

Posted on 17th February 2014 by Administrator in Economy |Politics |Social Issues

99 Problems… But Oil Ain’t One of Them

By Marin Katusa, Chief Energy Investment Strategist

America has some serious problems.

Despite the fact that the United States spends $15,171 per student—more than any other country in the world—American students consistently trail their foreign counterparts, ranking 23rd in science and 31st in math.

The US also spends more than twice as much on health care per capita than the average developed country, yet underperforms most of the developed world in infant mortality and life expectancy. The US rate of premature births, for example, resembles that of sub-Saharan Africa, rather than a First World country. And if you think Obamacare is going to change that… I have a bridge to sell you.

K Street has a bigger influence on American politics now than Main Street, and economic key players like the TBTF banks, the insurance industry, etc., have nearly carte blanche to act in whichever way they see fit, with no negative consequences.

The US government is spending more money to spy on Americans and foreigners than ever before. Since August 2011, the NSA has recorded 1.8 billion phone calls per day (!)—with the goal of creating a metadata repository capable of taking in 20 billion “record events” daily.

More than one in seven Americans are on the Supplemental Nutrition Assistance Program (SNAP)—better known as “food stamps.”

The list goes on and on.

But there is one problem that America doesn’t have—getting oil out of the ground.

After decades of declining domestic production, US producers finally figured out how to extract oil from difficult locations, whether that’s the shale formations or deposits under thousands of feet of water… and they’ve kept going ever since.

Today, the US is one of the few countries in the world that have seen double-digit growth in oil production over the past five years.

This presents some great investment opportunities for the discerning investor.

The oil industry’s new treasure trove, the legendary Bakken formation, has turned formerly sleepy North Dakota into one of the hottest places in the United States. According to the Minneapolis Fed, “the Bakken oil boom is five times larger than the oil boom in the 1980s.”

Unemployment in the state with 2.7% is the lowest in the nation; in Dickinson, ND, even the local McDonald’s offers a $300 signing bonus to new hires, on top of an hourly wage of $15.

Here are some more fun facts, courtesy of the Fiscal Times:

  • There are now an estimated 40,856 oil industry jobs in North Dakota, plus an additional 18,000 jobs supporting the industry. Between 2010 and 2012, Williston, ND, a town with a population of only 16,000, produced 14,000 new jobs.
  • While other US states are struggling, some even being close to bankruptcy, North Dakota now has a billion-dollar budget surplus.
  • The number of ND taxpayers reporting income of more than $1 million nearly tripled between 2005 and 2011—and that in a state with a total population of 700,000.
  • The low population numbers will soon be a thing of the past, though: the population in the oil-producing region is expected to climb over 50% in the next 20 years.
  • 2,000-3,000 new housing units are built every year in Williston, ND, but it’s still not enough to fill the need. Rents have gone from a pre-boom $350 per month for a two-bedroom apartment to over $2,000 today… the equivalent of a studio apartment in New York’s rich Upper East Side.

The entire “energy map” of the United States has been altered by the Bakken: the Midwest, rather than the Gulf, is now the go-to area.

And who profits the most? The pipeline companies that can quickly adapt to this new situation and the refinery companies that can use this readily available domestic oil.

Though the rest of the world is trying to catch up, the United States has a huge head start over everyone else. The advancements it holds in hydraulic fracturing and horizontal drilling had been built on the back of one and a half centuries of oil and gas exploration and the thousands of firms that service the drillers and producers.

So far, other countries simply lack the experience and the infrastructure to even compete.

In fact, American companies have spent 50% more money on energy research and development (R&D) than companies anywhere else in the world. What’s more, they are exporting this technology across the globe, enabling other countries to unlock their own hydrocarbon reserves.

Obviously, they’re not doing this out of philanthropy; there is a lot of money to be made by licensing out their technology and “lending a helping hand.”

The biggest winners, hands down, are the energy-service companies that already know how to get oil out of US fields… and that apply these methods to other fields worldwide to boost production and reduce decline rates.

As the easy-to-extract oil depletes in the US and abroad, oil companies and governments are beginning to look at past-producing oil fields. As it turns out, the producing wells drilled in the 1970s and ’80s weren’t very good at getting every drop of oil out of the ground. With modern technology, however, it is now possible to access previously out-of-reach deposits. Even a mere 5% or 10% improvement in oil recovery rates means billions, if not trillions, more in revenues.

Rediscovering previously overlooked fields was what started the boom in the Bakken as well as the Eagle Ford formations… and other countries are beginning to catch on.

We believe that this new trend of applying new technologies to old oil fields is not a fad but here to stay. That’s why our energy portfolios are stocked with companies doing just that in Europe, Oceania, and even South America.

As it’s becoming clear that the era of cheap, light, sweet crude is nearing its end, the industry is adapting to this new reality of oil becoming more difficult to access. And if investors want to make profits in today’s energy markets, they, too, must learn to adapt.

Read our 2014 Energy Forecast for more details on what’s hot and what’s not in this year’s energy markets. This free special report tells you about the 3 sectors we are most bullish on for this year, and which sectors to avoid in 2014. Read it now.

25 Comments
  1. llpoh says:

    So that mangy cur Admin finally shows up again. Thank goodness for that.

    Well-loved. Like or Dislike: Thumb up 9 Thumb down 1

    17th February 2014 at 4:53 pm

  2. llpoh says:

    The author says that the US does not have a problem getting oil out of the ground.

    And the author says oil is not one of the 99 problems.

    But then goes on to say “As it’s becoming clear that the era of cheap, light, sweet crude is nearing its end, ”

    What a fuckhead. So the author does not believe that expensive oil is a problem for the US. That is seriously dense.

    Well-loved. Like or Dislike: Thumb up 12 Thumb down 3

    17th February 2014 at 4:58 pm

  3. Kill Bill says:

    Admin didnt write that llpoh. It came from casey research.

    ~~~~

    btw isnt Norte Dakota with the state bank that withered the financial collapse?

    http://banknd.nd.gov/

    Yes, it was. Is there something that connects the two that the article seems to forego?

    Like or Dislike: Thumb up 2 Thumb down 2

    17th February 2014 at 5:21 pm

  4. llpoh says:

    Kill Bill – he posted it. Get with the program.

    Like or Dislike: Thumb up 5 Thumb down 1

    17th February 2014 at 5:23 pm

  5. Kill Bill says:

    llpoh I could post ‘the little red book” doesnt mean I agree with it just because I read it.

    Like or Dislike: Thumb up 1 Thumb down 2

    17th February 2014 at 5:49 pm

  6. Kill Bill says:

    admin, by his earlier negative comments on fracking, imo, would not agree with this article.

    the norte dakota boom will be short lived.

    Like or Dislike: Thumb up 4 Thumb down 1

    17th February 2014 at 6:03 pm

  7. llpoh says:

    Kil Bill – Admin has been fully absent from the site for a few days. He is now back posting articles thus my comment that he is back. What is so hard to understand? I did not imply he was the author.

    My comment re the author was not pointed at the Admin. The author is Marin Katusa. He appears to be a dolt. Unless Marin is a woman’s name, in which case shre is a doltess.

    Like or Dislike: Thumb up 4 Thumb down 1

    17th February 2014 at 6:03 pm

  8. Kill Bill says:

    Kil Bill – Admin has been fully absent from the site for a few days. He is now back posting articles thus my comment that he is back. What is so hard to understand? I did not imply he was the author. -llpoh

    True, I’m quite sure the coconut oil [aka beer] was the proper medicine. And no, you didn’t. I admit it. Thus we are reduced to arguing over the article and if it comes to pass.

    Like or Dislike: Thumb up 1 Thumb down 1

    17th February 2014 at 6:20 pm

  9. Kill Bill says:

    that said north dakota will have a short lived boom, and as this technology will be applied to other areas, imo, that once held inland seas we will see these short lived booms continue..

    Like or Dislike: Thumb up 1 Thumb down 1

    17th February 2014 at 6:24 pm

  10. Kill Bill says:

    ‘North Dakota now has a billion-dollar budget surplus.”

    fracking will dissolve that states surplus.

    Book it.

    Like or Dislike: Thumb up 2 Thumb down 2

    17th February 2014 at 7:14 pm

  11. MuckAbout says:

    It’s too bad that the “miracle of the year” – fracking for oil and natural gas – is going to turn out to be a fart in a windstorm.

    Yes it recovers previously unrecoverable gas and oil. It does it by cracking up rocks with chemicals and water within reach of each well. The wells cost from $1-3 million to drill and the recovery rate and amounts are maybe 2-3 times the cost of extraction.

    Overall, one has to drill-baby-drill because they exhaust the reach of the well into the shale very rapidly.

    Please see the article below..

    http://www.businessweek.com/articles/2013-10-10/u-dot-s-dot-shale-oil-boom-may-not-last-as-fracking-wells-lack-staying-power

    It’s a flash in the pan that might last a generation or two at the max, then back in the shitter we go as far as hydrocarbon fuels are concerned. Plus the destruction of water resources done in the process of fracking is humongous, played down and ignored.

    MA

    Well-loved. Like or Dislike: Thumb up 6 Thumb down 1

    17th February 2014 at 7:30 pm

  12. SSS says:

    “It’s a flash in the pan (fracking for oil and natural gas) that might last a generation or two at the max, then back in the shitter we go as far as hydrocarbon fuels are concerned. Plus the destruction of water resources done in the process of fracking is humongous, played down and ignored.”
    —-Muck About aka Murky

    Lasting a generation or two is better than not lasting at all. Do you have a replacement for the internal combustion engine? Well, do you, punk?

    As for destruction of water resources, WTF are you talking about? The Great Lakes? The Mississippi/Missouri River basin (includes the Ohio River for the geographically challenged)? The Colorado River basin? Or somebody’s backyard water well? I cannot WAIT for you to post a link to the bogus video showing someone’s water faucet on fire because of the methane in the water.

    Get fucking real, Murky.

    Hot debate. What do you think? Thumb up 2 Thumb down 6

    17th February 2014 at 9:16 pm

  13. SSS says:

    Murky, aka Muck About

    I’m not done with you. Are you for or against the Keystone pipeline? Yes or no. I’m 100% for it.

    I look out for this country’s energy future. You, not so much. On a par with water and food, there’s no other issue that’s as important as energy. None.

    You, on the other hand, seem to be (my conclusion) subject to bullshit inconsequential arguments that severely damage our nation’s energy future. Prove me wrong.

    Like or Dislike: Thumb up 1 Thumb down 2

    17th February 2014 at 9:39 pm

  14. LLPOH says:

    oooooh – SSS may be biting off more butt than he can chew. Muck doesn’t often come out to play, but when he does, he brings his entire arsenal.

    SSS is obviously desperate for a fight, given the pitiful opposition he met with his drug thread.

    Like or Dislike: Thumb up 5 Thumb down 1

    17th February 2014 at 9:49 pm

  15. bb says:

    MURKY ,AKA muck ,you said its a flash in the pan that might last a gentration or two at the MAX..Damn muck that 40 years or more .I say keep FRACKING.

    Like or Dislike: Thumb up 3 Thumb down 4

    17th February 2014 at 10:23 pm

  16. Kill Bill says:

    bb, you plan to move after your water turns shitty?

    so much for your doomer enclvave.

    Like or Dislike: Thumb up 4 Thumb down 0

    17th February 2014 at 10:56 pm

  17. Kill Bill says:

    I say keep FRACKING. -bb

    says him as his land is drilled

    Like or Dislike: Thumb up 0 Thumb down 2

    17th February 2014 at 11:06 pm

  18. Kill Bill says:

    I’m not done with you. Are you for or against the Keystone pipeline? Yes or no. I’m 100% for it. -SSS

    Though this question was not directed toward me, that oil being produced travels on raillines, some 860k barrels a day, we have seen some derailments.

    as to compare the AK pipeline is safer.

    Like or Dislike: Thumb up 1 Thumb down 2

    17th February 2014 at 11:13 pm

  19. Kill Bill says:

    says him as his land is drilled

    Like or Dislike: Thumb up 0 Thumb down 1

    shocker bb doesnt want fracking on his land

    Like or Dislike: Thumb up 1 Thumb down 0

    17th February 2014 at 11:14 pm

  20. bb says:

    KILL BILL , you lack sound judgement .

    Well-loved. Like or Dislike: Thumb up 7 Thumb down 0

    17th February 2014 at 11:43 pm

  21. Show Me the Nails says:

    We’re spending more money for education because our dollar’s worth more than other currencies. That means we’re actually spending less than most countries. I’m surprised Marin Katusa can’t understand this simple and basic economic fact.

    Health care spending doesn’t directly correlate with infant mortality and life expectancy. That’s another Katusa mistake. Population, genetic, ethnic and a few other factors are more significant. Any health trends specialist knows that.

    “The list goes on and on,” writes Katusa about supposed deficiencies in the American system. In fact, though we have our problems, the American System is superior in most every respect and most every way to that of any other country in the world. The UNiversal Nation Report has shown that year after year.

    Hot debate. What do you think? Thumb up 0 Thumb down 8

    17th February 2014 at 12:06 am

  22. A. R. Wasem says:

    U.S. (and world) “oil” production peaked decades ago. “Fracked” and “deep-water” production are, at best, minor upward “blips” on the long-term trendline. It’s all about the “elephants” – there aren’t any more of them – at least not any more recoverable at a production cost of less than $100.00 /bbl in today’s $$. These facts have inevitable consequences – just like the U.S. “baby-boomer” demographics. One of those consequences is collapse of the “Industrial-age” credit boom and the end of the current international (and national) financial system. BC-LR to all

    Like or Dislike: Thumb up 3 Thumb down 1

    17th February 2014 at 12:20 pm

  23. TJF says:

    People keep talking about all of this oil we have like it is now plentiful. We are producing about 2/3rds of what we did in 1970. In that time our population has increased about 50%. There is no oil glut.

    Like or Dislike: Thumb up 3 Thumb down 0

    17th February 2014 at 4:10 pm

  24. SKINBAG says:

    nowhere does this article mention the steep ‘depletion profile’ of these oil shale wells .

    Like or Dislike: Thumb up 2 Thumb down 0

    17th February 2014 at 11:06 pm

  25. SSS says:

    “U.S. (and world) “oil” production peaked decades ago. “Fracked” and “deep-water” production are, at best, minor upward “blips” on the long-term trendline. It’s all about the “elephants” – there aren’t any more of them – at least not any more recoverable at a production cost of less than $100.00 /bbl in today’s $$.”
    —-A.R. Wasem

    Stop right there. Minor upward blips are better than no blips at all. As for recoverable “elephants,” who cares if those elephants cost more than $100.bbl? They’re there. Off our Atlantic coast, Gulf coast, Pacific coast, and in the Arctic. Let Big Oil go elephant hunting.

    If $5-6 a gallon of gas, or more, is in our future, so what? It’s a future, goddamn it. Europe has been doing ok at up to double that price for a couple of decades, and most of THAT price is self-imposed taxes. Think, people, think.

    Like or Dislike: Thumb up 0 Thumb down 0

    17th February 2014 at 11:38 pm

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