U.S. Moving to Energy Independence: Benefits to Stock Investors

One of the key missions of this financial blog is to highlight the tremendous news regarding our exciting futures due to the constant innovations all around us.  We believe this is a useful counterweight to the daily drumbeat of bad economic news that fills the airwaves: the aggregate U.S. debt passing $18 trillion, stubborn unemployment, and the continued unrest around the world.  I wrote a blog post to begin this counterweight by focusing on the Booming Farming Revolution taking place here in the United States.  The post is located here: U.S. Farming Revolution

This post deals with the United States march towards energy independence.  This would have seemed impossible to anyone who sat in long gas lines to fill their gas tanks in the early to mid-1970’s.  Who remembers lining up on alternate days based on the letters or numbers in the license plates? The pronouncement that we would be energy independent always seemed hollow when heard from the mouths of numerous politicians.

Gas car lines:  US heading towards Energy IndepedenceBut today – the dream of the United States not only being energy independent but exporting energy is taking shape.  Fuel is necessary to drive the economies of the world.  A myth that has been around for decades was that we were going to run out of fuel here in the U.S. and would need to import all of our energy needs.  However, once again, new technologies that could not have been foreseen have been developed by companies that will have a transformative impact on our energy future.

New technologies of fracking and horizontal drilling have allowed large areas of the U.S. to be ‘drilled’ for natural gas which also burns cleaner than the traditional fuel source of the U.S. – coal.

It is estimated that the United States today now has the largest combined gas, oil, and coal resources in the world.  With the opening of federal lands to new drilling by 2020, the U.S may also become the largest producer of all three as well.  California alone may have 35 billion barrels of oil reserves in the Monterey Shale formation.

An idea by T. Boone Pickens to convert the large diesel trucking fleets to natural gas would help accelerate this transformation.  The idea makes sense because there would be less infrastructure costs associated with creating natural gas stations only on the interstate freeways used as trucking routes.

Victor Davis Hanson, a Senior Fellow at the Hoover Institution, has written the gradual displacement of coal by natural gas from electrical production will not only help clean the American atmosphere (it has started already), but also create an industry of coal exportation to the fast growing, energy hungry, resource poor China and India.  It also has the additional benefit of reducing our trade imbalance with China.

Companies are always attracted to inexpensive fuel sources and this transformation will help U.S. companies already here and attract additional companies from energy-dependent industries such as those in the petrochemicals, fertilizers, and steel and aluminum production.  This is good news to both U.S. consumers of energy and the U.S. workforce.

You should continue to focus on the long-term benefits of investing in the great companies in the U.S.  and overseas who will be the beneficiaries of this transformation.  Own stocks for the long term.

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About Dan Crimmins

Dan Crimmins, co-founder of Crimmins Wealth Management, is a financial coach and fee only financial planner. Have a financial question? ASK DAN

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  1. American Manufacturing "Come Back" | Roots of Wealth - July 23, 2014

    […] The Boston Consulting Group (BCG) published a recent paper which discussed the United States manufacturing renaissance. The report discusses how the overall manufacturing cost structures of Mexico and the United States have improved relative to all other leading exporters across the globe. They point to the following key reasons for this improvement:  stable wage growth, sustained productivity gains, steady currency exchange rates and the big energy cost advantage that is largely driven by the 50% fall in natural gas prices since large-scale production of shale prices began in 2005. We discuss this energy revolution in the following post:  THE ENERGY REVOLUTION […]

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