A Golden Age in the United States Is Here

Unconventional gas will rejuvenate the economy.

Feb 18, 2014 at 11:33AM

In 2008, the financial crisis in the United States caused the abrupt fall of many well-known companies and shook the U.S. economy to the core. As of last year, however, it appears this is all about to change, and the United States is primed to enter into a golden age of natural resources and manufacturing. Yes, you read that right: The manufacturing sector will be rejuvenated and the golden age will be driven by our wealth of natural gas -- the vast majority of which in the form of shale gas.

A natural gas production leap
As declines in production from conventional gas reservoirs in the U.S. continue, long-term efforts by the natural gas industry, combined with the U.S. Department of Energy, have instituted new technological strategies making use of hydraulic fracturing (or "fracking") and horizontal drilling to increase the amount of natural gas reserves that we have access to in the United States. Unconventional gas production accounted for 42% of total U.S. gas production in 2007, and as these techniques are refined and become more cost-effective, this is expected to rise to 64% of total U.S. gas production by 2020, as reported by the American Petroleum Institute.

In addition to the growth in the cut of the U.S. gas production pie that unconventional gas is providing for, the gross production of U.S. shale production has surged higher at a ridiculous rate year to year. The U.S. Energy Information Administration reports that in 2008, production increased 71% over 2007. In 2009, shale production increased 54%. On top of this, the amount of proven reserves are also increasing at a rate of leaps and bounds, by 76% in 2009 and by over 100% in 2011!

This explosion in shale gas discovery and adaptation for use, combined with the low prices due to efficient recovery operations, will affect the manufacturing industry in overarching ways. The industry expects to employ roughly one million new workers by 2025. The decrease in energy costs caused by an expected overabundance of this resource will have a two-fold affect on the economy, allowing more competitive pricing across all industries from more affordable energy prices and those energy costs driving down the costs of raw materials. These changes will rejuvenate the manufacturing industry, as well as other industries largely driven by fixed costs such as the chemical and steel businesses.

It'll affect you, too
This booming natural resource production will affect us in our daily lives, through the aforementioned lower energy costs. Lower costs will put more money in your pocket, an estimated $926 of disposable income by the end of 2015 for the average U.S. household, and an increase to $2,000 by 2035, as calculated by the American Natural Gas Alliance. In addition, this expected oversupply of cheap energy is encouraging the prospects of replacing coal plants with natural gas supplied plants as a more green-friendly option, as well as building them as backups to the wind power that is becoming more prevalent across the country. However, the commentary is split on how green-friendly this is, as the process of the release of wastewater from the fracking operation that so inexpensively extracts this energy has come under fire for damaging consumption resources.

While you would think that the large oil companies like ExxonMobil or Royal Dutch Shell are the companies most poised to profit from this boom, many of them were actually late to the game, buying up smaller companies rather than establishing their own holdings. Smaller companies, such as EOG Resources (NYSE:EOG) and Chesapeake Energy Corp (NYSE:CHK), which specialize in the horizontal drilling method that has made this process so inexpensive will be the winners in this modern day "gold rush."

Whatever your feelings on the environmental ramifications of these new technologies for natural gas capture, the benefits will likely be too much for citizens of the U.S. to resist, both in the home and at the national level. The idea of rejuvenating the economy, specifically those sectors such as manufacturing and natural resource that have so blatantly lagged because of cheaper costs abroad, appeals to our desire to be on top. Thus, this golden age is already here, and all of us would be wise to jump aboard this train and ride it as far as it will take us.

How you can profit from this surging natural gas production
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don’t miss out on this timely opportunity; click here to access your report -- it’s absolutely free. 


Karl Avard has no position in any stocks mentioned. The Motley Fool owns shares of EOG Resources. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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