What Happens After the Boom?

Net U.S. imports of energy in 2013 were at their lowest level in more than 20 years because of domestic oil and gas production from North Dakota and Texas. Policymakers say it's time to capitalize on those reserves, but the sustainability of the energy boom may present long-term risk.

Apr 3, 2014 at 11:01AM

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Net U.S. imports of energy in 2013 were at their lowest level in more than 20 years because of domestic oil and gas production from North Dakota and Texas. Policymakers say it's time to capitalize on those reserves, but the sustainability of the energy boom may present long-term risk.

The Energy Information Administration said the rate at which overall energy imports declined last year was faster than the previous year. At the same time, the rate of export growth slowed while crude oil production increased by 15 percent, the same pace for 2012.

North Dakota oil production in January increased 26 percent year-on-year to around 933,000 barrels per day. Analysis from Wood Mackenzie shows production from the Bakken and Three Forks reserve areas will average 1.1 million bpd in 2014 and reach 1.7 million bpd in 2020.

Last week, North Dakota Gov. Jack Dalrymple told delegates at an economic summit in Chicago that his state recorded the strongest personal income growth for any U.S. state. The national average was 2.6 percent growth while the state's average personal income increased 7.6 percent.

For Texas, EIA said oil production in January increased at the same rate year-on-year as North Dakota's, but reached 89 million bpd, the highest level since at least the 1980s.

The U.S. Department of Commerce said oil and gas extraction were the main contributors to earnings growth in states like North Dakota and Texas last year. Earnings growth rates in each of those states outpaced the national average not only in 2013, but in each of the four years since the onset of the recession.

proposal outlined this week by House Budget Committee Chairman Paul Ryan puts U.S. oil and gas production at the center of a plan he says will help balance the federal budget.  Rep. Doc Hastings, R-Wash., chairman of the House Natural Resources Committee, said the proposal capitalizes on what's already the second largest source of revenue for the U.S. Treasury.

"It prioritizes expanded American energy production and recognizes that new energy development is one of the best ways to raise new revenue, put Americans back to work, bolster the economy, lower gasoline prices, and create good-paying jobs," he said.

By next year, North Dakota and Texas oil production should help the national level reach 9.2 million bpd. That's nearly 10 percent more than the estimate for 2013, but 400,000 bpd less than the highest historical annual average of 9.6 million bpd set in 1970.

Former Federal Reserve Chairman Alan Greenspan warned of "irrational exuberance" before the so-called Dot-com bubble burst in the 1990s. By 2020, the International Energy Agency said Middle East oil producers will again dominate the global energy sector as the U.S. oil boom begins to fade. While President Obama's energy policy has its critics, an "all-of-the-above" policy may be the best bet to hedge.

America's energy boom is far from over
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Written by Daniel J. Graeber at Oilprice.com.

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." 

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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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