**Editor’s Note Update: Be sure to read Energy and Capital’s up-to-date resource page on the difference between WTI and Brent crude oil.
The Saudis have pledged to bring oil prices back down to a “fair” level…
But let’s not confuse their motivations here — the 12 members of OPEC have just one thing on their minds: money.
No matter how generous and charitable they decide to be in raising oil exports going forward, the Saudis don’t care how much you and I are shelling out to fill up our gas tanks.
OPEC’s political game of seesaw has been playing in the media for decades.
What reason do we have to believe they’ll ever grow a conscience?
Years ago, they were adamant that $60 per barrel was the right price. A little later, that changed to $80 per barrel. Today $100/barrel is the right price for them.
Tomorrow — who knows?
OPEC members raked in more than a trillion dollars in export revenues during 2011, when Brent crude averaged about $111.
It’s only March and a barrel of Brent crude costs more than $123. Here in the States, our WTI crude is north of $100/bbl.
But let’s get back to their concern over our gas-guzzling woes…
The Saudis have contracted 11 supertankers (these hold about two million barrels each) to ship to U.S. shores during the next few weeks as a means of lending a hand.
Why are we the lucky recipients of their 22 million barrels of crude? Judging by the rhetoric coming from our Commander in Chief, we may not need their crude for much longer…
Taking the Credit
This, my friends, is election-year politics at its best — or perhaps its worst.
While taking credit for the domestic drilling boom happening in the lower 48 states, Obama is also taking the opposite position.
In one breath, the president is touting the fact that oil production has hit its highest point in eight years — that more drilling rigs are operating on U.S. soil than anywhere else in the world. In the next, he’s insisting we can’t drill ourselves out of the problem.
Of course, there’s no better time to do this than during an election year.
And to be fair, our imports of foreign oil haven’t been this low in a decade…
Last year, U.S. oil imports averaged approximately 8.9 million barrels per day, 3.2% lower than 2010’s average.
But this picture is slightly skewed when it’s played out on the campaign trail, so let’s ignore the political theater for a moment and break things down a little further.
Let’s give credit where credit is due…
Sales from production of oil, natural gas, and coal on Federal lands actually declined by 12% since 2004:
The increase in our production of oil, as our Energy and Capital readers know full well, is coming from the unconventional boost from privately-held lands in Texas and North Dakota.
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But let’s take Obama’s share in the credit a step further.
Below, you can see that about 80% of total producing and non-producing Federal leases are located onshore…
Yet the majority of the oil production on Federal land is coming from one place:
The Lost Oil Investment Resurfaces in 2012
It’s best to take all the political banter with a grain of salt.
Forget the false sense of security the Saudis are promising; look for the right opportunities instead.
The ‘Drill, Baby, Drill’ sentiment is growing. While onshore activity is undoubtedly stealing the spotlight, the offshore sector is making a quiet comeback…
Without question, no industry has been more vilified in the media than offshore oil drillers.
Ever since the incident at BP’s Macondo well on April 20, 2010, offshore companies have taken a beating. Even the anti-hydraulic fracturing contingent would be hard-pressed to find a bigger target right now than BP.
Despite all this, support for drilling more offshore targets has returned to pre-Macondo levels.
Some of the stronger offshore players have been performing for individual investors:
Look, anyone who buys into the notion that we’ll be energy independent at any future point should know that it won’t happen without a significant boost in offshore production.
What’s more, oil- and gas-rich shale plays can only add so much to our domestic production…
There are still a few of these flying below Wall Street’s radar — and we’ll dig deeper into one of those areas later this week.
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.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
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