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Is the United States on the Verge of Energy Independence?

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While in many ways alternative energy remains in its infancy, continuing developments have put the U.S. in a better position relative to energy independence than seemed even thinkable a decade ago. The advent of hydraulic fracturing -- known as fracking -- has opened up a significant oil and gas supply that continues to lower the need to import resources from abroad. Similarly, advances in solar energy are making it an increasing viable solution, and positive guidance from the solar sector supports this belief. Finally, the U.S. is sitting on huge deposits of kerogen that could contain as much as 6 trillion barrels of oil if it could be extracted.

A case for liquefied natural gas
While thus far liquefied natural gas, or LNG, has remained impractical and unavailable in smaller, non-commercial vehicles, there has been an increasing push toward adopting this fuel for larger applications. Within the past month, Warren Buffett's Berkshire Hathaway (NYSE: BRK-A  ) announced that it's rolling out a pilot program to test the viability of using LNG to power locomotives at its BNSF Railway. The rail company is the second largest consumer of diesel in the country, using more fuel than any entity other than the U.S. Navy. If rail could effectively switch to LNG, the reduction in oil consumption would be dramatic.

This type of reduction would serve to continue a trend that has already begun. According to the U.S. Department of Energy, oil imports have fallen from a peak of 60% of consumption being supplied by foreign oil to 32%; furthermore, since total consumption has fallen, this means that the lower percentage is of an already smaller number. Similarly, according to a B of A Merrill Lynch estimate, where the U.S. spent $216 billion on natural gas in 2008, that number had fallen to $76 billion in 2012. A large factor for the decrease has been the explosion in supply from fracking operations.

Also aiding this effort is a push being made by Clean Energy Fuels (NASDAQ: CLNE  ) to build enough LNG filling stations across the country to allow freight to traverse the U.S. in LNG-powered trucks. As the bulk of our goods still travels by truck, if these vehicles could be transitioned to LNG and away from diesel, consumption of foreign oil would fall even further. As the LNG trend continues, the position of the U.S. should continue to improve.

Solar flares
The second week of April saw solar companies explode to the upside, driven largely by bullish comments from First Solar (NASDAQ: FSLR  ) about the company's outlook for the rest of the year through 2015. The company also announced its acquisition of TetraSun under undisclosed financial terms. TetraSun brings expertise with silicon photovoltaic technology that's been used by other leaders in the field. The acquisition should open up new avenues for First Solar and give the company the ability to improve overall efficiency.

On that front, Sun Power (NASDAQ: SPWR  ) announced earlier this week that it was releasing its X-Series panels that are capable of achieving 21.5% efficiency. This level of efficiency puts the company in the industry-leading role and is probably one of the catalysts for First Solar's acquisition of TetraSun -- the company has achieved 21% efficiency in past projects. The flurry of good news provides solid evidence that solar energy is becoming increasingly viable and should aid in the U.S. push for energy independence.

Keep digging for oil
Early estimates suggest that the U.S. may be sitting on enough kerogen to yield up to 6 trillion barrels of oil should the technology become more readily available to extract it. The process by which organic materials become oil takes millions of years, passing through a variety of stages. Fairly early in the process, oil shale is created, which requires the application of high levels of heat to render usable oil for refining; the process is called retorting. In addition, because kerogen isn't easily liquefied, it can't be extracted easily and, unlike fracking, requires costly mining operations.

Device used to extract oil from oil shale. Source: State of Colorado GeoSurvey.

Because of the complexity of the process, kerogen is not typically economic viable. The reserves do exist, however, and speak of great potential when American ingenuity is able to be fully applied to the problem. In the interim, the existence of these reserves provides some evidence that the U.S. ultimately has the ability to become energy independent.

As LNG, solar power, and other resources like kerogen continue to be explored and exploited, the overall position of the U.S. in terms of energy consumption continues to improve. Without framing the issue in terms of national security, as scarce resources are depleted, the ability to look within becomes of increasing value. For investors, following these developments has significant potential and should not be overlooked.

Investors and bystanders alike have been shocked by First Solar's precipitous drop over the past two years. The stakes have never been higher for the company: Is it done for good, or ready for a rebound? If you're looking for continuing updates and guidance on the company whenever news breaks, The Motley Fool has created a brand-new report that details every must know side of this stock. To get started, simply click here now.

Read/Post Comments (10) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 14, 2013, at 12:29 PM, mikeflores2000 wrote:

    This article made my morning.

    Absolutely hilarious. Since when is still importing

    8 million barrels of oil per day declare us free?

    Demand destruction and a broke America is leading to reduced demand more than our infantile green projects.

  • Report this Comment On April 14, 2013, at 12:55 PM, 18RC wrote:

    i agree milkflorest2000 - the intellectual depth of Motley Fool articles is awe inspiring.

  • Report this Comment On April 14, 2013, at 1:10 PM, Ronmc2 wrote:

    Not surprisingly, the vast majority of the kinds of energy independence has been opposed by Obama.

  • Report this Comment On April 14, 2013, at 1:47 PM, kurtdabear wrote:

    First Solar is a government subsidy masquerading as a public corporation. Solar is a pitifully small part of the U.S. energy picture and doesn't have much room to grow because of technical problems that have not been solved in a century of trying. Fracking, however, is causing a sharp spike in oil and natural gas/NGL production; and if that trend continues, those tried and true energy producers could lead to U.S. energy independence by 2020.

  • Report this Comment On April 14, 2013, at 2:17 PM, gumby68 wrote:

    Republicans are against all energy independence they have to please their oil industry contributors like the Koch brothers.

  • Report this Comment On April 14, 2013, at 2:21 PM, ThatGuyInTheBack wrote:

    I'm not sure why the Motley fool has been promoting this nonsense lately, but this publication is soon going to lose what little credibility it had on the issue.

    Production is up to 1 million barrels a day in the USA. So what? The oil market is international. There are no export controls. If the Chinese offer a penny per barrel more, that oil goes to China. The oil companies are loyal to money, and nothing else. Nothing at all.

    So we can "drill, baby, drill" to our hearts content - to power China and India. We could legislate export controls, but that's (gasp!) regulation and interference with the free market! Oh, no!

    Can't have it both ways. Regulate, and keep the oil here, or sell it offshore to the highest bidder and maximize profit.

    Of course, from a quantitative aspect, this new oil might better be termed "crud," not "crude." It's poorer in quality (more sulfur). The wells deplete as much as 40% in the first year. It costs more to get it than the easy cheap stuff in Texas and Oklahoma, and worst of all, the net energy from frakked oil or heated oil sands is dismal - on the order of 5:1.

    We can get it. That's true. Assuming we want to pay, but as with the rest of the world. We're running, running, running to keep up production just to stay in place.

    For a more realistic picture of the world's hydrocarbon energy situation, start here:

  • Report this Comment On April 14, 2013, at 2:24 PM, aeosfool wrote:

    Fracking has a lot of problems from too much water use to pollution to causing earthquakes..but I'm not going to argue the benefits/negatives of each form of alternative or energy producing method. First off, solar has come down drastically in price and now makes sense with no subsidies. People are replacing their cars in record numbers with cars that get twice the gas mileage or more than their previous car/truck...even non-hybrids are getting drastically more mpg...and hybrids now are now cost effective with no subsidy...and even gas hogs are getting 50% better mileage. The train has left the station on solar and hybrids/electric cars and the technology is improving dramatically...we should see big energy savings in the next few years even without fracking...

  • Report this Comment On April 14, 2013, at 2:33 PM, Keenie123 wrote:

    Stop whining about lack of solar, hydro and oil. Just keep plugging away with the various forms of energy. Drill for oil. Build more solar units. Use creeks and rivers for electricity. Combine them all and we'll go independent from the Arabs and So. America. We won't need anybody to supply us with anything we don't want or need.

  • Report this Comment On April 14, 2013, at 4:16 PM, Dadw5boys wrote:

    I think qll of you have been Fooled. There is no measure on how much oil is Exported since the Oil Companys have their Export Tax Free Zone in Texas. We don't know if they are exporting oil from Public Lands while paying very little in Royalities to the American People or not.

    They want to Keystone Pipeline all the way to Texas for that reason the dirty oil from Canada will almost all go straight to China or Europe.

  • Report this Comment On April 14, 2013, at 8:54 PM, wt9684 wrote:

    We extract it, refine it and then export it so we will never be independent since it is a fungible commodity not restricted for domestic use so long as there is demand elsewhere in the world.

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