Lessons from the Past Seed Future Profits
"Those who cannot remember the past are condemned to repeat it."
This quote from George Santayana has been stuck in my head for weeks, perhaps months. It's hard to tell at this point.
Maybe I'm just getting paranoid in the pre-dawn hours here in Baltimore, or maybe my readers have noticed something peculiar taking place, as if they've seen it before.
And you can bet we're doomed to repeat our mistake... or are we?
Between 1985 and 2008, our reliance on OPEC swelled from under 2 million barrels per day to about 6 million barrels per day.
Yet it was more than simply rising imports from OPEC members that shackled us to foreign crude oil.
You see, driving those imports higher was the seemingly irreversible decline from U.S. oil fields.
During that same period, U.S. domestic oil production was nearly cut in half.
But the shale boom that turned our energy dependence on its heels wasn't a renaissance.
It's true.
Tapping into huge shale plays like the Bakken in North Dakota, which directly boosted production by more than 1,000% over the last 17 years, wasn't due to some revolutionary new drilling technology, nor was it because we suddenly discovered billions of barrels of oil.
U.S. oil companies have been hydraulically fracturing wells since 1949. Directional drilling has been around even longer.
It was more than simply putting two and two together, too.
Unlocking our vast tight oil resources by combining these two techniques took a painstaking amount of time.
George Mitchell was pioneering it back in the 1980s.
And the truth is, we've known about these oil resources for more than half a century. Oil companies were drilling into the Bakken as far back as the 1950s as a last resort in order to squeeze out any oil they could before abandoning a project.
All it took was for oil to reach $147 per barrel to create drilling frenzy.
Make no mistake; our tight oil production is the reason U.S. imports have declined so dramatically since.
It's also the reason the U.S. is poised to become a powerhouse for energy exports, from crude oil to LNG.
Without the shale boom, we can only speculate what would've happened.
U.S. oil output would've continued its death spiral, and our dependence on OPEC would have reached unthinkable heights.
We effectively drilled ourselves out of the hole.
Now, the same situation is taking place before your very eyes.
Except this time, it's not oil we have to worry about...
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Have you noticed anything unusual over the last few years?
Perhaps another rapidly growing dependence on vital commodities that could threaten our prosperity all over again?
If you understand how oil fueled our society over the last hundred years, then it should be clear today that a small group of metals and rare earth elements will drive us through the 21st century.
Right now, we import about $7 billion in minerals and metals per year.
How much, you ask?
Put it this way...
The USGS recently showed us just how far our dependence on foreign imports has grown for these commodities:
Click Image to Enlarge
Without these critical materials, we can forget preventing America from crumbling due to failing infrastructure; Trump's $1 trillion vision to repair our country's roads, dams, and bridges... we can forget that, too.
Take another glance at the full list above, and you might notice something else.
This time, it's not OPEC that is in control.
It's China.
Now, you and I both know full well that China won't hesitate to exploit our weakness if it suits its needs.
Just like we did when our oil dependence grew out of control, we'll turn to home for help.
That means tapping a $6 trillion fortune most Americans don't know exists.
We'll dive headfirst into this incredible resource wealth next week.
Until next time,
Keith Kohl
@KeithKohl1 on TwitterA trueinsider in the energy markets, Keith is one of few financialreporters to have visited the Alberta oil sands. His research has helpedthousands of investors capitalize from the rapidly changing face ofenergy. Keith connects with hundreds of thousands of readers as theManaging Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, theHaynesville Shale, and the Marcellus natural gas formations - all ahead of the mainstream media. For more onKeith, go to his editor's page.