Reality is about to hit OPEC like a brick to the face.
Now, let me be clear here: There’s no doubt OPEC is in complete control of the global oil industry. Although Russia may give the Saudis a run for their money on future output, and the United States could as well (that is, if we manage to overcome a few hurdles in our domestic shale boom), at the end of the day, the 12-member oil cartel still reigns when it comes to crude production.
OPEC commands 81% of the world’s oil reserves, accounting for more than 30 million barrels in daily production.
Yes, OPEC will keep its seat on the oil throne for a long, long time.
However, they’re slowly succumbing to the same consumption dilemma that struck the United States…
In fact, this situation has been quietly building for two years — and could begin to snowball within the next ten.
Turning the Tables on OPEC
One story that has captured our attention over the past few years has been a growing oil crisis in Saudi Arabia. And though you aren’t likely to see it plastered in media headlines, the consequences should have Riyadh in full-blown panic mode.
The interesting part about this situation is it has nothing to do with actual oil production. The Saudis are safely holding in excess of 260 billion barrels of crude beneath their sand dunes.
Ghawar may be pumping more seawater than crude these days, but there’s still plenty of oil left.
The problem the Saudis are facing is one we are all too familiar with in the United States…
During the last four decades, this Middle Eastern nation has seen explosive growth. In the last ten years alone, population has shot up 20% — and is projected to top 40 million by 2025.
More people means more domestic demand for energy — a reality that threatens to unravel Saudi Arabia’s position as the world’s dominant oil producer.
And so it makes sense that the Saudi government desperately wants to curb the country’s oil consumption, burning billions of dollars to kick-start renewable energy development.
Consider that Saudi Arabia’s own oil demand accounts for approximately 25% (or more!) of their total production…
Since 2004, domestic oil demand grew 50%. That occurred during a period when the population increased by a mere 8%.
In other words, Saudi consumption is unsustainable.
This will cause a vicious uproar from citizens when they are no longer treated to $0.70 per gallon at the pump or the lavish social programs they enjoy now (or bribes, depending on how you look at it), all funded solely by the government’s oil revenues.
Sooner or later, the Kingdom will come crashing down around them, and exports will dry up.
After this crisis unfolds, how soon will it be until OPEC starts knocking on our door for more fuel?
Start Small, Invest Big
The turning point in the United States’ change of fortune took place in 2011.This was when the U.S. once again became a net exporter of gasoline, something that hasn’t occurred in half a century.
Until recently, nearly all of those exports have targeted our neighbors in Canada, Mexico, and even Brazil.
Our exports of petroleum products to each of those countries have more than doubled (even tripled, in the case of Brazil) during the last five years (click chart to enlarge):
And though we aren’t talking about massive export volumes right now, we’re at the beginning of what will soon become a very profitable venture for the U.S.
Think how sweet it will be when it comes time for the Saudis to join our client list for fossil fuels after many decades of having to rely on Saudi oil imports.
Shale Investments 2.0
By now, it’s nearly impossible to find an investor today who hasn’t heard about our unconventional oil boom.
If the Bakken is a perfect example of what investors can expect from new drilling technology unlocking old fields, things are about to get exciting. And fast.
Remember, companies used to think the billion of barrels beneath North Dakota soil were forever locked in the shale.
Imagine how profitable a field well over three times the size of the Bakken could play out for early investors…
I’m talking about another shale play about to breathe life back into a dying oil producer. I’ll tell you all about it on Friday.
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.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
