Record US Oil Production threatens the Existence of a once all-powerful Cartel. Learn how you can Profit from this Inevitable Power Shift
Domestic oil companies are set to shake up the global energy market.
Most of you are familiar with the story: oil production in the US has grown in leaps and bounds over the past decade – all thanks to the proliferation of hydraulic fracturing, or fracking, of shale formations.
So much so that domestic output, combined with Canadian imports, has reached its highest level in twenty years.
Not surprisingly, America’s reliance on Organization of Petroleum Exporting Countries (OPEC) oil has fallen dramatically.
Foreign OPEC oil to the US has dropped by 37 percent since January 2008.
With the US being the world’s largest consumer of oil, its reduction in imported energy is no doubt dealing a significant blow to OPEC members’ bottom lines.
And if the trend continues (which surely looks to be the case), this blow could prove fatal for OPEC as we know it.
Currently, OPEC still supplies nearly 40 percent of the world’s oil – but that number may be under serious threat.
According Citigroup Inc. commodities research head Ed Morse, “OPEC should find it challenging to survive another 60 years, let alone another decade.”
And he’s not alone.
The Energy Information Administration estimates that by the middle of 2013, the US will no longer need to import light, sweet crude from abroad.
Even sour crude that is typically brought in from the Middle East is expected to be replaced with Canadian oil by the end of 2014.
But you may be asking yourself: “Won’t a growing China offset this loss?”
If we’re comparing apples to apples, I would most certainly agree.
However, global oil trade is not a simple matter of supply and demand.
It’s a delicate chess match, where any onset of tension could easily lead to full-blown warfare over the black gold.
Here’s what I mean…
Germany’s infamous Bundesnachrichtendienst (BND) spy agency recently leaked a confidential report stating that the rise of US oil production could in turn threaten China’s access to Middle Eastern crude.
Most people take it for granted, but countries who rely on oil supplies from the Persian Gulf owe a debt of gratitude to the United States.
The volatile waters of the Persian Gulf, especially the narrow Strait of Hormuz, is heavily patrolled by US military forces to maintain the free flow of oil at market prices.
The Chinese have been able to obtain their OPEC oil supplies securely and consistently through the Gulf, all thanks to the US Navy and Air Force protecting the waterways.
Without American presence in the Gulf…let’s just say that oil won’t come as easily or safely to anybody who needs it.
Obviously, spending billions of US taxpayer dollars each year to keep OPEC oil flowing has been vital for our own energy needs – up until now.
You see, now that the US no longer needs to rely as much on imported oil, there’s little reason for our military to continue protecting the Gulf.
The BND report goes on to explain that China’s inept military and weak foreign policy cannot replace the US’ ability to secure the sea lanes.
Should the day come when the US decides to pull out of the Persian Gulf completely…it could spell danger for China’s insatiable thirst for Arab oil.
Now here’s the exciting part for investors…
With the pending shift in global oil trade, domestic companies will be seeing significant growth for the foreseeable future.
We’re talking millions of barrels of additional crude per day being generated here at home rather than being brought in from the Middle East or Western Africa.
And it’s not only domestic consumption that will boost demand – exports will as well.
If the oil trade falls into disorder in the Persian Gulf, you can bet that oil hungry nations will be looking elsewhere to get their steady supply.
North America would be a major target.
Already, the likes of China and Malaysia have shelled out billions to acquire producing assets in regions like the Alberta oil sands to help meet the growing demands of their economies.
That’s just the tip of the iceberg, folks.
With North America slated to become the new Middle East, OPEC will be left running on life support…scrambling to find new markets for their members.
Because of that…the future looks very bright (and profitable) for domestic explorers and producers.
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