The economy is recovering, they say.
Really, it is.
Ignore the fact that applications for first-time unemployment benefits rose by 4,000 last week, bringing the four-week average increase to 3,750.
And don’t worry about the fact the unemployment rate — which started the year at 8.3% and dipped slightly — has swooped right back up to remain adamantly at 8.3%.
Oh yeah, and the median household income has fallen 4.8% in the last three years. That’s a bigger drop than during the actual recession… putting it 7.2% below December 2007 levels and 8.1% below January 2000 levels.
Put all that out of your mind, too.
Up Go the Prices
The price of oil is hovering dangerously close to $100 per barrel and some states are paying $4 a gallon for gasoline.
The national average for gasoline prices is currently $3.74, $0.16 higher than this time last year. Some of this has to do with Chevron’s refinery fire in San Francisco. Yes, California is one of those states paying $4 at the pump… but the average for the East Coast is $3.71.
That’s not a whole lot lower than the national average, and California sure doesn’t account for much of the $0.16 increase over last year.
The price of crude will continue to climb if the Fed decides to start printing more money, as many suspect it will.
It hasn’t even been following its natural trend this year…
Take a look at this EIA chart for the trend in oil prices in 2012 compared with the last five years:
The EIA says we should expect to see every dollar shift in oil prices reflected in a 2.4 cent-per-gallon increase in gasoline prices.
We have the Fed to thank for that.
They say the economy’s healing. But it’s also an election year, and changes to come will throw even more hills and valleys into the roller coaster of recovery.
Regardless of the outcome, we’ll need to hold on tight. And there’s something else we can hold on to. It’s the only thing that’s been able to stabilize oil prices that would have otherwise risen out of control — and it’s a major job creator, offering bigger paychecks to those involved…
I’m talking about the domestic oil boom.
Economic Shangri-La
North Dakota, home of the Bakken Shale, has the lowest unemployment rate in the nation (3%), with even lower rates in areas closer to shale production.
Bakken crude oil began trading at a discount to both WTI and Brent crude at the end of last year.
This trend is likely to continue, as the chart shows:
Last September, North Dakota oil production was at 460,000 barrels per day (bbl/d) — 4.5 times higher than it was in 2005.
By June of this year, this figure had already grown to almost 6.5 times higher to 660,000 bbl/d.
The state’s overall oil production increased 3% in June from a month before and 71% from a year before; Bakken production increased 85% from a year before.
The Bakken well count increased 4% in June. Rig counts were down, but drilling permit activity was up.
Drilling is only going to increase…
Oil companies in the Bakken are paying salaries between $70,000 and $100,000. Compare that to the mean household income in the U.S. of $50,964 this past June.
Williston, ND — the core of Bakken drilling — has an unemployment rate of around 1%.
North Dakota’s economy is all but sluggish.
In a nation where any economic improvements are constantly battling setbacks, this Midwest state seems like paradise.
And the Bakken isn’t the only area with potential like this; areas like the Eagle Ford and Marcellus Shales just haven’t caught up to its pace yet.
But in order to keep up this pace — a pace that has the potential to lead the U.S. to energy dependence — improvements in drilling must be made. After all, these wells can only extract between 10% and 20% of the actual oil content.
That’s right. North Dakota’s 660,000 bbl/d production rate is only a percentage of the crude that’s actually underneath the ground.
Fortunately, there’s a company that has developed a technology with the potential to increase well production tenfold.
We’re talking about the kind of technology that will continue to drive the economy — even if nothing else seems stable.
It’s this kind of technology you’ll want to get in on early, before everyone else finds out what it could do for domestic production… and the domestic economy.
Good Investing,
Brianna Panzica
@brianna_panzica on TwitterEnergy & Capital’s modern energy guru, Brianna digs deep into the industry with accurate and insightful updates into the biggest energy companies and events. She stays up to date with the latest market moves and industry finds, bringing readers a unique view of current energy trends.
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