Here’s a cold, bitter pill of truth U.S. citizens will soon be forced to swallow. Nobody wants to hear it, but…
We’ve become a nation of spoiled children when it comes to energy.
Don’t take it personally. I catch myself acting that way more often than I care to admit.
This is particularly true for those of us living in the Lower 48, where we’ve enjoyed a shale and tight oil boom. Of course, I say the “Lower 48” because field output in states like Alaska has actually declined 74% since 1988!
Sadly, you’ll find that fact glossed over in the mainstream media due to the fact that our domestic production has risen to nearly 8 million barrels per day today.
But our pampered overconfidence in U.S. energy goes far beyond the impressive addition of shale and tight oil.
This air of immunity we feel we have to a future energy crisis is due to our proximity to vast energy supplies.
No, dear reader, I’m not referring to the massive oil fields littering the Saudi desert — rather the incredible wealth of resources our friendly neighbors to the north hold beneath Canadian soil.
Perhaps one of the most egregious assumptions made by too many Americans is that Canada’s resources belong to the U.S. Up until now, they were almost right — solely because we’re Canada’s only customer.
I don’t have to sugarcoat things one bit. Take a look for yourself: The proof is right there in the numbers, and you can see below that U.S. imports of Canadian crude have been piling higher nonstop since the early 1980s.
Click Chart to Enlarge
Call it a geographical blessing for both countries. We have a neighbor with a sizable amount of crude supply, and they have the pleasure of living north of the most oil-addicted nation on earth.
This symbiotic relationship, however, has been upset since 2008 considering the U.S. is flush (only for the time being, mind you) with new supply.
But our newfound love for all things shale has two very serious consequences.
First, it exacerbates our spoiled attitude towards energy. How many times in the last year have you seen the media tagline tout hundreds of years of natural gas supply?
Secondly, we become too comfortable in the belief that the United States will forever be the sole name on the list of Canada’s crude clientele.
The governmental red tape strangling the Keystone XL pipeline is a clear example of our energy hubris.
It is also far and away the most disgusting form of political theater I’ve seen coming out of the D.C. beltway… and I know I’m not alone in this line of thinking.
U.S. Cronies Bite Off More Than They Can Chu
Last week, former Energy Secretary Stephen Chu weighed in on the president and Secretary of State dragging their feet with the Keystone XL approval. His view of the matter cut down to the core problems that both you and I have had from the get-go:
“I don’t have a position on whether the Keystone Pipeline should be built. That is for the secretary of State and the president. But I will say that the decision on whether the construction should happen was a political one and not a scientific one.”
His sentiment echoed the Department of State’s environmental impact statement saying the pipeline will have minimal impact on the environment.
Now, it’s hard not to see the president approving the project.
As you know, the 1,700-mile pipeline proposed in 2008 from Hardisty, Alberta to Steele City, Nebraska would have the capacity to carry 830,000 barrels of oil per day to refineries in the Gulf Coast and Midwest.
Lifting the shroud of environmental catastrophe should finally lead to the long-awaited green light. And my veteran readers should be well aware of how profitable the North American pipeline trifecta has been over the years.
Even tossing aside the 3-7% dividend currently offered by three of the major infrastructure players in Canada and the United States, each one has performed well for individual investors.
The window of opportunity even extends beyond the oil industry, with British Columbia quickly becoming the main stage for Canada’s energy exports. It’s only a matter of time before Canadians realize we need them much more than they need us.
There are some mountains a man just can’t ride around, but it’s a sure bet someone will find a way to run a pipeline through them.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
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