I’m sure that by now, you’ve noticed a very specific shift take place in U.S. energy.
It’s nearly impossible not to… especially after watching the United States climb to the top of the world’s leading energy producers in just a few short years.
Just think: The U.S. has officially busted out of a production slump that has plagued it since October of 1970, when our daily crude output topped out at 10.44 million barrels per day.
This year — in spite of incredibly low oil prices — the EIA is still expecting U.S. producers to average 9.3 million barrels per day.
Well, all I can say is that it’s about time, isn’t it?
A Shift is Coming
Look, we both know it isn’t just crude output that has taken off… and you and I aren’t the only ones to notice it, either.
As I passed one of my colleagues’ desks earlier this morning, I noticed he was fixated on a chart.
Now, it’s true that Chris DeHaemer and I have been known to get in a row on occasion over a particular trend or investment. I’ve lost more than my fair share of wagers betting against him.
But there was something different this time around.
The image that had captured his attention so intently was a simple chart of the United States’ natural gas production. Here it is:
Click Chart to Enlarge
I couldn’t help but prod him a little, asking what he saw.
Was it that, at best, natural gas production in the United States has been relatively flat over the last 40 years? Or was it the fact that it had broken that trend, increasing nearly 30% since 2005?
After all, in 2013, gross withdrawals of natural gas in the U.S. broke 30 trillion cubic feet, and production was on pace at the end of 2014 to top 34 trillion cubic feet!
“You know, there’s more going on there than most people think. You just have to know where to look,” he replied coolly. “But don’t take my word for it — we’re going to need it now more than ever!”
And for us, it all comes down to how we play it…
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Hammer Down Gains in the Gas Sector
Right now, power generation is front and center for natural gas investors. And one economist with the American Petroleum Institute recently reiterated this fact, suggesting that power generation is going to be the biggest catalyst for demand going forward.
As the war on coal intensifies on Capitol Hill, it’s clear that a transition to natural gas will occur. But we saw this shift taking place years ago, didn’t we?
Some of my veteran readers might remember me talking about this transition from coal to natural gas on several occasions.
It’s a good thing we took over as the world’s largest natural gas producer — just ask residents in New England. As it stands now, they rely on natural gas for 41% of their electrical generation.
That gap further widen as more nuclear and coal plants are retired, too.
Nearly a year ago, the Energy Information Administration reported that the U.S. will retire 60 gigawatts of coal-fired generating capacity by 2020.
As you can see above, the answer to this in New England is simple: either import more hydroelectric power from Quebec or find more natural gas.
Interestingly, it wasn’t necessarily this transition that had given my colleague a bullish sentiment over natural gas, nor was it the recent report that projected the number of natural gas vehicles on the road to reach 4 million within the next 10 years.
No, he was smiling because of a much more lucrative opportunity…
“Did you know that we consumed more than 29 trillion cubic feet of natural gas last year?” he told me. “That’s about how much gas is wasted worldwide from burning it off at the wellhead. When you add it up, it comes out to hundreds of billions of dollars in flared gas each year.”
Make no mistake, there is a way to harness that wasted natural gas.
Whether we’ll put this unused gas to good use, however, is the real question.
Chris and I believe we will.
In fact, what he told me next had me immediately dialing my broker.
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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