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3 Ways the U.S. Energy Boom Will Change the World

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Ever since the 1958, the United States has consumed more crude oil than it could produce domestically. That marked the defining moment when the United States could no longer be considered energy independent. Back in 2006, the U.S. imported more than 13 million barrels of oil per day, our highest level of foreign oil dependence. Thanks to the boom in oil and gas production in the U.S., though, today we import half that much.

The way the U.S. is weaning its way off of imports will have a profound effect on more than just domestic consumption -- it will also fundamentally change the way we think about the global energy supply. Here are three ways the U.S. could profoundly alter the way the world does energy.

1. OPEC and Russia will have less pricing control
In October, it will have been 40 years since OPEC cut oil shipments to the U.S. in response to the United States' support of Israel in the Yom Kippur War. For parts of Europe, though, their struggles with supply shortages are much more recent. Multiple times in the past decade, Russia has cut gas supplies off from Ukraine, which has resulted in supply problems and price spikes in as many as 18 European countries. 

Combined, OPEC nations and Russia represent 69% of the world's crude oil and 40% of the world's natural gas exports. These countries' capacity to produce oil is so great that they are able to shut in production to help control global oil prices.

At the peak of U.S. imports, we represented 25% of the world's import demand. As that position winds down to zero, our former suppliers will need to find new clients, especially our North American trade partners, Canada and Mexico. Combined, the two countries currently supply the U.S. with about 4 million barrels per day that will need to eventually go elsewhere. 

Oil and gas revenues make up 45% and 10% of Saudi Arabia's and Russia's GDP, respectively. The two oil powers may have the ability to shut in production, but they can only do so much because they need oil revenues to keep their respective countries going. As oil that was previously destined for the U.S. starts to find its way toward other clients, OPEC and Russia's share of exported oil will shrink, which will give them less pricing control and make the global oil market less volatile. Of course, it won't completely cripple these countries, and OPEC and Russia will continue to be large players in the global supply market, but more domestic oil production in the U.S. will certainly chip away at the throne. 

2. Improved U.S.-China relationship
There aren't many things the U.S. and China have in common, but there is one thing these two economic giants share: They rely greatly on foreign energy sources to keep their economic engines running. For years, both countries have divided up the global energy markets and to a certain degree enacted very different foreign policies along the way to secure them. As a country that's more politically agnostic with its foreign policy, China has been willing to work with the likes of Sudan, Myanmar, and Zimbabwe -- countries that the U.S. hasn't had a working relationship with for quite some time because of their leadership. The most egregious example is our differing relationships with Iran. While the U.S. has been employing strict economic sanctions against the nation, China imports about 500,000 barrels per day from there, making China Iran's largest oil export market. 

Surprisingly, our energy boom could help China, but not in the way you might think. The energy sector in the U.S. has been an incubator for innovative drilling techniques and technologies over the past few years. Now we have a near monopoly on the technology. Like the U.S., China has massive shale gas deposits, and the technology we possess could help them develop domestic sources and allow them to become more energy self-sufficient. We're starting to see it happen. Royal Dutch Shell (NYSE: RDS-A  ) has signed a deal with PetroChina (NYSE: PTR  ) to spend $1 billion a year to develop shale resources there. Also, fracking specialists Haliburton (NYSE: HAL  ) and Schlumberger (NYSE: SLB  ) are partnering with various Chinese companies to supply the country with hydraulic fracturing equipment and specialty fluids. 

As both countries move toward more domestic energy production, the two countries won't have to outmaneuver each other as much for foreign sources. That should ease tensions between the two counties somewhat and could lead to more cooperation in dealing with countries like Iran. There will still be several ideological, political, and economic topics where the U.S. will not see eye-to-eye with China, but this step will certainly help the situation.

3. Countries will adapt the American gas market model
Before the U.S. starts to export oil, it will have a much larger excess supply of natural gas. The U.S. has been deliberating the merits of exporting LNG for some time now, but some recent signs signal that the government will give the OK for natural gas exports. If this were to happen, it would pit two global pricing models against each other. 

In parts of Europe and Asia, natural gas prices are based on long-term contracts that have a minimum price indexed to oil based on a BTU equivalency. This arrangement makes natural gas prices artificially high in comparison with the U.S., where natural gas prices are based on spot prices and are independent from oil prices. In Europe, Russian gas companies and Norway's Statoil (NYSE: STO  )  combined supply more than 40% of the continent's gas under these lucrative contracts. 

If the U.S. were to start exporting natural gas to these markets, our pricing model would allow us to sell at a pretty hefty discount to current gas contract prices. We would have the potential to disrupt the way these markets currently price natural gas and would force them to go away from their oil-indexed contracts. This model is already starting to take place. Today, 50% of all natural gas in Europe is sold based on a spot price model, compared with only 20% less than a decade ago.

What a Fool believes
The world's energy supply is caught in a delicate balancing act. Small disruptions in supply from the smallest countries can reverberate throughout the entire market. Having the U.S. take on a larger share of the global supply will have a deep effect on the market in many other ways not mentioned here. Ultimately, though, the energy sector is not a binary-outcome industry, and there are some things that will never change. Will it bring an end to OPEC's dominance? Absolutely not. Will the U.S. completely overhaul its foreign policy based U.S. energy independence? Unlikely. But making the U.S. energy-independent will certainly shift momentum in those directions.

There are few companies that understand the global energy market better than Halliburton. As one of the premier oil services companies around the world, the company has intimate working relationships that help them gain strong insight into what companies needs. To access The Motley Fool's new premium research report on this industry stalwart, simply click here now and learn everything you need to know about how Halliburton is positioning itself both at home and abroad.

Read/Post Comments (44) | Recommend This Article (50)

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  • Report this Comment On May 27, 2013, at 1:06 PM, Hjin wrote:

    First and second are great points. Third one? Not so much.

    A similar argument can be made that our companies will adapt to other countries' pricing model. The reason is simple: if other countries are used to selling something at $10, why are our companies willing to settle for less? A pricing model is not a reason for companies to sacrifice profits.

  • Report this Comment On May 27, 2013, at 1:13 PM, externity wrote:

    Since we don't care about reality, much.

    "How about Three Ways the Final Energy Bust Will Charge Everything"

    General standard of life will be equal to that centuries ago.

    World Population will be equal to that centuries ago.

    Goverment organizations will be pretty much impractical beyond county size and tribal feudalism/tribal warfare will be the norm. There will be reminders of technology in the trash heaps from 1900 to 2100. Education may survive in isolated pockets.

    Of couse, every motley fool out there, knows that fossil fuels will never run out; and if they do, they can be easily replaced by growing algae, or some really serious prayer. Oh, and Nukes, which are so inexpensive to build and so free of probllems. Then there probably will be Nuclear cars too. We can get on with building those nuclear cars as soon as we get the Mars Colony up and working.

  • Report this Comment On May 27, 2013, at 1:33 PM, megalo99 wrote:

    And yet gas will still be $5/gallon in a year or two. So whose revolution in this anyway? The elite?

    Their mountain of money grows a few more feet and the rest of us are left with what exactly?

  • Report this Comment On May 27, 2013, at 2:38 PM, FMagyar wrote:

    This never ending drumbeat of the US becoming energy independent and overcoming Saudi Arabia in energy production is simply a myth! Why exactly it seems to be spread nonstop by the mainstream media is quite an interesting story in and of itself.

    May I recommend spending sometime at The Energy Data Browser, mazama science dot com

    Google the work of Jeffrey Brown specifically his Export Land Model and take a look at some interesting math over at The Oil Conundrum.

    The only things that matter are with respect this issue are science, specifically geology, physics and chemistry. Then there is data, data and more data. It seem that it behooves journalists to dig a bit deeper and actually do some real research on the topics they write about. Otherwise they are just regurgitating what they have been fed.

  • Report this Comment On May 27, 2013, at 3:24 PM, TedKaye wrote:

    We need to increase our refining capacity and continuing gradual 2% to 3% annual improvement in our fleet mileage will continually reduce domestic demand for oil. 3% per year over a 10 yr period adds up fast. Also we need to accelerate conversion of our transport infratstructure to natural gas. This is the holy grail of energy independence which will lead to an era of being able to travel 50 miles for $1.00.

  • Report this Comment On May 27, 2013, at 4:18 PM, luckyagain wrote:

    Do not count your oil until it leaves the ground. Somehow during this so-called oil boom in the US, the price of gasoline is higher than ever. Just because the oil is produced in the US does not mean it will any cheaper. If it is not cheaper, than for most Americans it will not make difference. The only thing that brings down price of oil is to lessen demand. EV and hybrids will probably have bigger effect upon the price of oil than where it is produced.

    Simple economics: less demand, lower cost.

  • Report this Comment On May 27, 2013, at 4:22 PM, jdmeth123 wrote:

    Saudi Arabia has no economy beyond selling oil. The oil will eventually dry up. All their servants and slaves will be sent packing and the Saudis will again become camel jockeys.The US economy just needs energy. We will make what we can't buy. Who built the world's first nuclear reactor? How long did it take? If the US government decides it needs something done NOW, stand back, it will be done.

  • Report this Comment On May 27, 2013, at 4:30 PM, hellno187 wrote:

    Well I thought it was a interesting article unlike some of these insane people. To tell you the truth I'm not sure which insane comment is more laughable? Mr. no period (or syntax of any kind) and his suck the planet dry theory kyoat, or the outstanding Mad Max theory of externity lol.

  • Report this Comment On May 27, 2013, at 5:43 PM, ddcmall wrote:

    You forgot to mention how it will change Congress. for example Martha Stewart went to prison but Congressmen can legally get rich off insider trading. We may never be able to drink ground water again but at least China will get our natural gas. Our weapons may never work again but at least Apple can make money selling Chinese compromised electronics to the Pentagon and congressmen can live like pimps.

  • Report this Comment On May 27, 2013, at 5:57 PM, sporttster wrote:

    Megalo, exactly. So how does this benefit US consumers anyway?? Will gas go down? Or will we be ripped off even moreso than we currently are? I'm sure there are ways to do this that are on drawing boards already. How to screw the consumer and make even more profit off their backs. We don't need OPEC to screw us, our own PEOPLE are doing it!!

  • Report this Comment On May 27, 2013, at 6:58 PM, omckinn1 wrote:

    I will believe it when I see gas prices dip below two dollars a gallon.

  • Report this Comment On May 27, 2013, at 7:42 PM, Dadw5boys wrote:

    Not one word of the U.S. Oil Exports !!!

  • Report this Comment On May 27, 2013, at 8:20 PM, wcread wrote:

    Good articles, it is a welcoming news..

    There aren't many things the U.S. and China have in common, but there is one thing these two economic giants share: They rely greatly on foreign energy sources to keep their economic engines running.

    US and China to work together, less depandent on oil, less CO2 release, less pollution, less burning coat..cleaner earth, Improved U.S.-China relationship. world peace.

    win win for all

  • Report this Comment On May 27, 2013, at 8:39 PM, pepelay wrote:

    Propaganda nonsense! Keystone pipeline, fracking, shale oil & tar sand! First of all we need to return this land back to rightful owners Native American people;Holy bible clearly states that 'Thou shall not Steal'.In North America alone where USA & Canada is plundering more oil than SaudiArabia & Kuwait output, over $3 BILLION daily, as native people remain poorest citizens on their own beloved motherland.Before Europeans came,Native population in North&South America Continent was 15 millions; European population in Europe was 30 millions.Today, native population at 30 million and Europeans at 1 BILLION! [Google 'sicko uncle Sam' at forum]

  • Report this Comment On May 28, 2013, at 1:21 AM, EllenBrandtPhD wrote:

    One either believes that "American Empire" policies based primarily on distortions in currency and commodity valuations are GOOD for the US, American citizens, and the World Economy - or one believes that they are very, very bad.

    Re Brent and the Brent stocks: EU's Silly Season investigation is extremely silly, as far as the companies are concerned. They don't like the Platt's protocol, get Platt's to change their protocol. BP, Shell. and STO are following the Platt's protocol - they didn't invent it.

    This is happening, as I have said elsewhere, because:

    *** Da Boyz, European Edition, have been trying very hard to reduce the Brent-WTI spread further before the summer high season and haven't been able to do so.

    *** Geopolitics is very strongly working against them, as they well know.

    *** OPEC is once again restless before its meeting as few days from now.

    *** Turkey, our new best friend, is among those calling for a new Petrochemical OPEC - another headache.

    *** A lot of the Brent-WTI spread coming in at all has been due to the Yen Short of the Ages and its rippling effect throughout all currency and commodity markets.

    Quite a large percentage of the World's countries and populations are now really, really angry about the Yen Short of the Ages, and want steps to be taken pretty much immediately to rein it in.

    *** Leading worldwide Hedgies, smelling blood in the water, have been greatly boosting Brent Longs the past three weeks.

    And re the Brent stock charts accompanying versions of this story:

    This group always tapers off to yearly lows after doling out extremely hefty dividends, most of which are granted on an annual or twice a year basis, rather than quarterly. The companies, especially STO, which is the major once a year dividend company, take advantage of the lows to buy shares for their various employee pension and other accounts.

    STO announced this was done midweek last week.

    Some years, the Brent group stays down for a few more weeks, before beginning to rise strongly midsummer. Some years, if Brent takes off early, their dips are just about over now, and they start to rise in June.

    This COULD be the latter kind of year - but the jury is still out.

  • Report this Comment On May 28, 2013, at 1:39 AM, snjpage1 wrote:

    The biggest problem is we are shipping oil out of the country and then importing it from other countries. Now they want to start exporting natural gas because they say they can get a higher price for it over seas. Meanwhile the cost goes up here in our country because the supply will drop.

  • Report this Comment On May 28, 2013, at 3:53 AM, Lexloeb wrote:

    Those four ways are already old news. A larger percentage of Americans are still clueless believing nonsense like peak oil and global warming indoctrination made them experts on the energy subject. It also has huge impact in that only 25 % of American get it at most. The Rust Best will become competitive again. Energy intensive commodities can fall in price...blah blah blah. It is the fourth consequence of all this that takes you to the next phase beyond the demise of OPEC to the demise and consolidation of the oil and natural gas industry as we now know it. That only begins to happen once the Chinese, The Poles , the Brazilians and in Parts of Africa realize that Fracking gas is overly abundant to them to once the technology starts to spread in use. New Oil technologies reopen low producing Saudi and Iraqi fields too. We are talking about an impending glut of energy world wide that is very transformative for most economies. Energy resources like 20 different Saudi Arabia's could come on line at once. You have to understand the nature of the geological origins of the formations that contain fracking gas and oil and that they are more extensive than more traditional oil fields. Oil companies may in the future prefer that OPEC survives to limit the extent of the glut. Just as the US will become a potential exporter so can China. Inexpensive energy is interchangeable with labor will be interesting how it all ends up. As we see diesel and gasoline prices creeping up to $5 a gallon these days that is inspiration to drillers to go crazy doing it. with the dollar exchange rate high in terms of favoring the dollar it means energy costs can be more overseas as gas and oil is priced in dollars so even more production will come on line. The real glut will phase in in stages probably after China announces it is oil and gas self sufficient from the same technology around 2019.

  • Report this Comment On May 28, 2013, at 8:02 AM, savage393 wrote:

    The Canadians export oil to us, but the Canadian citizens who live in proximity to the border, come to the U.S. to buy gas, because the price is up to a dollar a gallon less here. The whiners can continue to whine, but the price of oil?gas will not become significantly lower anytime in the future. There is still enough control by OPEC that global supply and therefor global prices will not go down. The current practice of QE also impacts the price, as the dollar is worth less around the world, but then oil around the world is always priced in dollars. It is a conundrum that many oil producing countries have had to start dealing with.

  • Report this Comment On May 28, 2013, at 5:41 PM, zgriner wrote:

    "Now we have a near monopoly on the technology."

    Yeah, sure, not for long. China will either set up contracts that force foreign oil companies to give China the technology, if they want to do business in China. Or, China will do it the old-fashioned way and steal it.

  • Report this Comment On May 28, 2013, at 5:45 PM, zgriner wrote:

    This article implies that if the US does stop importing oil, then oil prices will be much more connected to cost of production than the arbitrary whims of the Arabs and Russia, or the political fallout of the Straits of Hormuz, or Russia's stranglehold on Europe.

  • Report this Comment On May 28, 2013, at 6:24 PM, mergerman wrote:

    Since we are now an oil exporting country, why don't we join OPEC?

  • Report this Comment On May 28, 2013, at 6:51 PM, Mickey98 wrote:

    Beware of Premium reports. When Tesla was at $41.00 I read the Fools Premium Report on Tesla which said it was a very risky investment. So I sold my shares and it's up 170% since then. I don't believe these reports are official Fool positions so reader beware!!!

    Others have similar issues?

  • Report this Comment On May 28, 2013, at 7:02 PM, Jarmbru wrote:

    This has the potential to be an environmental disaster, and my bet is that it will be. You can kiss your atmosphere goodbye.

  • Report this Comment On May 28, 2013, at 7:24 PM, Alg0rhythm wrote:

    The US is going to move quickly toward energy independence. Obama gave the greenest State of the Union speech we've heard in a while, did I hear electic cars? Bloomberg's Greener, Greater New York, aka US business and capital capital nation's is requiring energy audits of all buildings over 50,000 square feet, is only the beginning. The mayoral front runners compete on how much further to take the proposals, and for the businesses the numbers on conservation are a no brainer 30-50% with a 5-7 year payoff. Financed right it's nothing out of pocket. Businesess spend 200 billion on electricity The conservation is appropriately, conservatively a $500 billion market which followed by housing vaued in the trillions. Just waiting on some really government friendly programs. (Full disclosure, I am pitching those programs)

  • Report this Comment On May 28, 2013, at 8:33 PM, NOTvuffett wrote:

    I will just point out a couple of facts:

    The crude oil price quoted in the USA is for West Texas Intermediate grade crude. Since a large number of the refineries in the USA are concentrated on the gulf coast (and the eco-weinies have made it almost impossible to build a new refinery, or put in a new pipeline to one), more expensive oil is imported to these refineries (for example, Brent crude).

    What many people may be ignorant of is that a refinery doesn't just make gasoline- they make a wide range of chemicals used for all kinds of purposes. This is why they can bring in more expensive foreign oil- because they can convert it into more valuable products either for domestic use or export. So, by logical extension, the USA has almost no chance of ever being a net crude oil exporter.

    As far as nat. gas goes, CNG (compressed nat. gas) fleet vehicles that operate in a metropolitan area make sense right now because of the superior btu/$. Because nat. gas is a largely regional commodity, and its higher relative proportion to liquid petroleum, that cost advantage shouldn't change anytime soon.

    Some here on MF have argued that authorizing LNG (liquefied nat. gas) export facilities would drive up domestic nat. gas prices. I don't think these people understand the hurdles involved. Ok, I was trying to be nice. I think these are the dumb-asses that think food comes from the grocery store, and gasoline comes from the gas station. Maybe they should look up the word "cryogenic", lol.

    Stick a fork in me, I'm done. Nobody will probably read this anyway.

  • Report this Comment On May 28, 2013, at 10:49 PM, wayoutie wrote:

    The forums are the greatest in the world but could be more productive if the participants would stop criticizing what is and contributing to what could be:

    I want this to belong to the whole word. You are a part of the whole world.

    In the long term, wiki-create-all-world-net, is at the forefront of a technological revolution that has the potential to be as important and disruptive as the development of the personal computer.

    The awesome potential of wiki-create-all-world-net technology makes this forward-thinking innovator a highly attractive game changer.


    Right up front.

    I do not want your money.

    I just want you to read this with some of the vision we were all born with, INCLUDE YOUR BRIGHT ASSOCIATES.


    Most every one has a great idea or invention which may be a mile long, but they only have the knowledge of a half inch volume long of how to create it. With the internet wrapped around the world, such should be able to send us a hundred years ahead. WIKI-CREATE-ALL is heading that way in their fields.

    I know you are a busy person, but scan this. I need about two thousand volunteers. This should be 10 times as big as Wikipedia and operate in the same fashion within no time, but very, very different.

    Everything in the future should belong to mankind, no need to wait 300 years.

    Move two thousand years ahead in one year it is all done with technology.



    The brain is based upon:

    The galaxy and universe is based upon billions of stars, planets, black holes, comets and other fillers. This takes up about twenty six percent of all space. The other eighty four percent is made up of dark material. We do not know what is in the dark area, except maybe light and magnetism and gravity, but we are not sure of that.

    The brain is a miniature copy of this universe with billions of connectors to memory spots. These are somehow connected to each other. The rest is filed up with galleries and dark space like the universe is dark space, which is unknown space.

    Now we have a quick view of the universe and a quick view of the brain. I would like to view the internet as quite similar, only it circles the world with millions of connections of live intelligent people and connecting at these bright active spots, not just numbers. The purpose of this explanation and comparison is power of this world brain called the internet. It should be able to solve any problem existing or created, and not take a million years to do so.

    We need to set up world sites that could reach all creative minds and have a space for them to put their ideas or part ideas down as a response to the creation of “WORLD FREE ENERGY AND EVERYTHING ELSE." Since this is such a great forum we would not want to limit it to any narrow subject. There would be no advertising to clutter up great brains with great ideas on these sights.

    Man only has part ideas and imagination, then you circle them around the world in all directions and all languages, you now have a thousand years of knowledge in a few hours.

    I know, I tried it a few years ago and got massive response, but did not sell advertising so ran out of money. This time around it needs to be done with volunteers and later from donations by people and companies it has helped by revolutionize their doings.

    I need to raise hundreds of volunteers and accumulate several thousand volunteers from all parts of the world and from every type of language and expertise. As this creates what now can be a world brain with endless power and results.

    What ever, (we, or machine can conceive,) man can achieve without waiting a thousand years or so.

    The other one is,"man can achieve any thing he can conceive." Including free energy.

    The universe, has billions upon billions of bodies, connected by at least gravity and 86% dark material.

    Nothing new, the brain reflects the universe, it is a copy. Now the internet spans the world with millions of connections. The brain power is endless. connecting all this brain power to each other. Man or machine can create anything they can conceive including free energy with the global internet..

    This can be created on the world internet similar to the massive model of Wikipedia.

    Ideas breed ideas. A man has a mule pull with a load made up of a single cylinder gas engine, held down by a conveyor chain. The mules become stubborn and balked, the man along has an idea. Bolt the motor down, Put the chain from the motor to the wheel and do away with the donkeys. Bend the tong back to steer. The ideas reproduced, we will call it a truck. The ideas had a reproduction encounter, maybe called. These were a few people with a few ideas. Great ideas come from one part idea and the rest is usually made up of a dream, it may take dozens with partial ideas to fill inn the rest of the parts.

    This and much greater things should not have taken 2,000 years, but it did and will not take very long to do much greater things beyond our imagination once this network is in operation.

    Your real in debt visionary.

    I have learned from my past experiences with WIKI-CREATE-All-WORLD-NET that we synthetic many metals and attempt all types of energy and do every type of trying to separate salt from water. What we should do is with nan o technology and other great methods expend our energy and work on creating synthetic water.

    Time travel! I did not include this in the text earlier because such a far fetched thought may run you off, but it could be done with the combination of enough time and accumulated brain effort.

    They build Hugh computers any more as big as some warehouses, the problem remains, they deal with numbers conceived and not visions and ideas from the mind of millions of thinking and visionary thinking minds around the world. What resources.

    I am open to your and your associates thoughts.

    William D. Stott

  • Report this Comment On May 28, 2013, at 11:43 PM, sibshkr wrote:

    I read it, NOTvuffet.

  • Report this Comment On May 29, 2013, at 12:20 AM, NOTvuffett wrote:

    well thanks, sibshkr

    i really wanted to educate people about these factors, not to just sound pedantic. and for what it is worth wayoutie, i have thought about crazy shiite like this also, lol.

  • Report this Comment On May 29, 2013, at 2:08 AM, riverpickers wrote:

    If the US of A becomes "energy independent", it will be because the concept of "world price" for oil, produced in the US and delivered to our refineries, is outlawed! US producers must price oil competitively in the domestic US market . . . without reference or regard to what OPEC is charging Europeans. Supply and Demand must dictate the domestic US oil markets - we are not ramping up production domestically so that producers can sell those increased barrels to foreign markets at OPEC manipulated prices! Export controls must prohibit crude exports, and certainly gasoline exports. The only way gasoline will ever become stabilized is by supply adequately meeting and, at times, exceeding the domestic US demand. We need to get back to the good old days of "gas wars" every now and then . . . all due to domestic supply/demand forces. A true "Fools Rule" would be to encourage peak domestic US oil production, with no strings on exports - applying "world market pricing" theories to US production to enable greater prices from foreign sales. Oil "pundits" who preach "world market pricing" as justification for high crude cost to US refineries, and resulting high and higher gasoline pricing, are hoping supply and demand forces will never come to US energy production! And those "pundits" need to take a flying leap at an empty tanker heading back to Saudi Arabia, Iran, Yemen, Iraq, or other OPEC playing countries. Remember, OPEC is a cartel, whose sole objective is to manipulate and control crude oil prices. US companies are forbidden by US Anti Trust laws from consorting with OPEC. To say that "we'll just wait 'til OPEC has their price fixing meeting and sets the world price for oil, and then we'll meet it" should be held to be anti competitive conduct under US Anti Trust laws.

  • Report this Comment On May 29, 2013, at 2:15 AM, beastofbodmin wrote:

    The article did not even hint at a consideration of what the supply rates might be over a period of time. Was the assumption unlimited supply for ever?

  • Report this Comment On May 29, 2013, at 7:40 AM, gkirkmf wrote:

    To Quote James Howard Kunstler:

    " This is very misleading. The US consumes roughly 19 million barrels a day. The Bakken and Eagle Ford shale formations produce about a million barrels a day combined now, and guaranteed to get a whole lot lower within the next five years. Today's near-peak production is based on furious drilling and fracking of extremely expensive wells -- known as "the Red Queen syndrome" because they are running as fast as they can to keep production up. Meanwhile, the depletion curve on shale oil is a reverse "hockey stick."

    The situation is similar for shale gas, the difference being that the temporary glut of 2005 - 2012 happened because we didn't have the means to export surplus gas from the initial burst of development and it briefly flooded the domestic market. The price of shale gas is still below the level that makes it economic to produce and when it eventually rises to that level, and beyond, it will be too expensive for its customers to buy. Shale gas is also subject to the Red Queen Syndrome. "

    For those who wish to see a logical presentation of our current energy predicament, read this entire article, or his entire blog if you want to get a real education.

    I am long on energy, and will stay that way.

  • Report this Comment On May 29, 2013, at 8:33 AM, Jamesband wrote:

    It’s still companies like Capstone Turbine CPST that will change the energy grid by providing distributed power generation on site. We know, and have known for a very long long time that the US energy grid is fraught with inefficiencies. It’s time to correct the energy company monopoly and go distributed power generation. Capstone will be one of the leading companies to do so. The last news report on Capstone and the large REIT company is proof of that!

  • Report this Comment On May 29, 2013, at 3:21 PM, interdependent wrote:

    It's physics.

    If we reduce our consumption of fossil fuels by 6%-8% a year, each year, and we plant 1,000 billion trees by 2020, we might have a chance at getting the world's CO2 levels back down to 350ppm one hundred years from now.

    The world's leading climate scientists are clear that we must reach the "human tipping point" this decade if we are to have a chance at preserving "a planet similar to that on which civilization developed and to which life is adapted".

    Dr James Hansen who headed NASA and those research projects, retired last month after 40 years in part because, "As a federal employee, you can't testify against your employer." He has been arrested at the White House twice trying to stop the Keystone XL pipeline because in the words of the man who has launched the field of climate modeling, the pipeline will increase the rate of emissions so quickly, that it will be "game over for the planet."

    60,000 Americans have signed a pledge of non-violent civil disobedience if the president approves the pipeline. These are not tin-foil-hat wearing political junkies. These are professors and ministers, lawyers, and yes, investors who understand that getting back down to 350 is non-negotiable. It's impossible to negotiate with the laws of physics.

    We must stop burning fossil fuels. To pretend that it is not up to us, it's the invisible hand of the market, it's all up to China, or the president, these are all mental traps that will prevent us from doing the one thing that will change the history of the world, "leave it in the ground".

    Prices may go up or down, but demand keeps moving in the wrong direction. For my children and yours, we must stop using it, selling it, pumping it, and exploring for more of it.

    Halliburton is the perfect example of what we must not do any more.

    I call on all Motley Fools to Divest from Fossil Fuels entirely as soon as possible.

    Join the Fossil Free campaign, at, and get your schools, cities, and churches to join the hundreds of institutions who are already divesting.

    "If it's wrong to wreck the climate. It's wrong to profit from that wreckage." -- Bill McKibben

  • Report this Comment On May 30, 2013, at 12:45 AM, The1MAGE wrote:

    Do the nutbags have to come out whenever energy is mentioned?

    It's physics? No it's bad math, and the destruction of the economy based on an overreaction, misunderstanding, and completely blown out of proportion load of crap.

    415.6 million trees planted a day to get the 1 trillion trees you suggest by 2020. Who exactly is going to plant all those trees? How are we going to pay for all those trees? Also where are they going to come from, and where are they going to be planted?

    Block the Keystone pipeline? Does anyone realize the oil is going to move no matter what? If you are really an environmentalist wouldn't you prefer it move by gravity then by... how many trucks? We already have hundreds of pipelines, why is this one so important?

    You want to talk science? How would a doubling of CO2 affect global warming? About the same as a 2-4% increase in humidity.

    CO2 increases temperature by absorbing the heat of a small portion of the spectrum. That spectrum is fairly static, but with the CO2 rising, it has less and less of that spectrum to absorb. What that means is it will take 3,500 years to get the same warming we caused in the 1900's. And we were only responsible for a part of that warming.

    I don't mind moving away from fossil fuels, but there is no rush to do it overnight. The fears of CO2 are so way overblown that it is ridiculous. CO2 has been higher in the past, it has been hotter in the past.

    The oceans are getting higher, but no any faster then they have over the previous century. Worrying about this is like worrying about running from a zombie without arms or legs. We are talking 3.5mm a year. Less then an inch every 7 years.

    It also gets annoying how what used to be normal weather is suddenly caused by global warming. As if there was never a hurricane, drought, or flood in the past. Now any weather event, no matter what it is, is now attributable to global warming, or climate change.

    Funny part is climate change is actually a perfectly normal part of the Earths existence, any real scientist knows this.

    The same people complaining about fossil fuels are the same people fighting against nuclear power. Without all of those fears, nuclear power would be more prevalent, and CO2 levels would be lower then they are.

    How safe are they? Orders of magnitude safer then they were. Just like planes have become safer over the years. Recently a teenager developed his own design that people thought was so important they gave him a Ted Talk about it. No chance of meltdown, no chance of radioactivity leaking into the atmosphere, produces much more power then current plants, and the waste never leaves the plant. (Though I prefer recycling it myself.)

    All the stupid actions by the "environmentalists" raise the price of energy, and does nothing but hurt the poor.

  • Report this Comment On May 30, 2013, at 12:45 AM, NOTvuffett wrote:

    interdependent, did you ride the 'short bus' to school? did people call you 'special' when you were growing up?

    look, i don't care if you want to ride your bicycle to work- adopt an ovo-lacto-vegan diet of only locally grown produce, etc. just leave the rest of us the hell alone.

    it really amuses me when you guys talk about climate modeling and science, lol. science's a hint: dicking around with a computer model is not science. especially if you refuse to disclose your raw data or even the algorithm you used.

    i love telling left-tarded people like you that halliburton is one of my customers just to watch their heads explode, lol. i would tell them that schlumberger is another one, but the reference escapes them- science!

    interdependent, you said that there were 60,000 people that signed a pledge of non-violent civil disobedience against the keystone pipeline. i bet i could get twice that many calling for non-civil violent disobedience in support of the pipeline, lol,

    now i am imagining a large demonstration against the keystone pipeline- then a fleet of monster trucks comes and mows them down. it ends with many tears, and even more laughter, lol.

    haven't one of you special geniuses figured out that the oil will be sold regardless. it would be better to sell it to the country with the tightest air and water pollution controls and that is proximate to its extraction point? science!

  • Report this Comment On May 30, 2013, at 8:18 AM, mikecart1 wrote:

    Good article but just being picky I saw the first 4 words are grammatically incorrect "Ever since the 1958".

  • Report this Comment On May 30, 2013, at 8:32 AM, NOTvuffett wrote:

    oh fantastic, this site is now infested with grammar nazis, lol.

  • Report this Comment On May 30, 2013, at 10:24 AM, steelsnort wrote:

    The world has been using oil and natural gas for a long time. Increased domestic production and lower prices will not fundamentally change the world.

    Energy sources that have potential to fundamentally change the way we produce and consume energy are wind, solar, hydro, and specific types of nuclear. Switching primarily to renewable energy sources would truly allow countries to become energy independent.

  • Report this Comment On May 31, 2013, at 4:29 PM, H2Ofan wrote:

    The article doesn't mention fracking and its danger to groundwater supply. Will we drink LNG?

  • Report this Comment On May 31, 2013, at 10:46 PM, jpmj wrote:

    Thanks for the good read, Tyler. UNLIKELY..... INDEES... but small steps will star to shift, I agree. The Natural Gas Boom heard around the world.... but as you pointed out is just a small echo in the bigger pictures...If no one wants to hear even smaller. HAL is doing their part very well and I my opinion plays a key role in our future independent and my retirement. Looong and adding. Thanks again and Fool on. jpmj4847

  • Report this Comment On June 01, 2013, at 3:54 AM, esotericevets wrote:

    Will there be a convergence of human disasters precipitated by a Gaian rejection of the nature of our earth husbandry? Or perhaps a matrix like subduction into e tertainment where e ach of us is but a user of micro amounts of e lectronic e nergy in our happiness dominated, psychologically sound e thos ? Or perhaps just a continuation of our patchwork capitalist creative solutions and re solutions that will dig us out of the next mess and into the next great new world?.... Oodles of scenarios of existence await us .

    Just today I was hanging out with a determinist who believes that we have no free will.As he would have it, we are set up from birth to do certain things and need to play act out our lives according to plan. This character is quite amusing as he is likely to say the most unexpected things because he can because all that he does and says has been predetermined.

    I would say that it wouldn't hurt to be mindful of how much positive effect we can generate for any given btu consumption, especially defining "positive" in the sense of stabilizing or retracing our changes wrought upon the Earth. But that's undeniably some annoyingly valiant energy response.

  • Report this Comment On June 04, 2013, at 1:24 AM, NOTvuffett wrote:

    esotericevets, i know this will sound insane to you, but i thought about making piggy banks for the children of the people that work for me. the only problem is i was planning on a deterministic or probabilistic mechanism. the problem is like ocd, it is hard to decide.

    a deterministic machine is easy enough, just newtonian physics, boolean logic etc.

    it would probably be more entertaining to make a machine that used probabilities. It would be like Pachinko.

  • Report this Comment On June 04, 2013, at 5:12 PM, Johny205 wrote:

    The reason why oil isn't any cheaper is because it costs more money to frack than a traditional well costs. Where is all this extra money going? It is going to the ruffnecks drilling the oil, the carpenters building the houses and building in the mining areas, the people building the pipelines and all the truckers moving supplies. I live in MN and have drove to the Williston area to do carpentry work and make about 400% more than I can make in Minneapolis. You can make $200 per hour doing work out there and there is almost unlimited work out there. So instead of the money going in the pockets of Saudi's it is going into the pockets of everybody doing the labor around the oil fields and in return being cycled back into the local economy. So even though gas is not cheaper at the pumps it is still better for America.

  • Report this Comment On June 10, 2013, at 11:23 AM, esotericevets wrote:

    NOTvuffet, Having novel approaches creates creativity, so no, I don't think your approach is insane. However, you night have some personnel problems if you have meat and potatoes straight shooting, tell it as it is employees. They might think you are messing with them. If they are a gung ho bunch, however, the sky is the limit when a team can forge forward on all cylinders. I usually work or play alone and occasionally enlist as many as 100 on a worthy endeavor. I might rather find an exciting low budget helpful creative activity to involve my employees and their kids in to help them develop good leisure habits rather than concentrate on good thrift habits. It might serve them better to learn how to live than to learn how to save and in the process might garner some appreciation of you.

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