The Shale Boom And How It Has Affected Energy Portfolios

In the last six years, United States oil production has soared by 70{10b93ead4726ac70ea2e661424a2f8093ac111fcf34c81f921af0060dcf3dcd6} over previous levels, and yet not a single new well has been drilled in all that time. And certain companies involved in the transport of all that oil has seen consistent market profitability in all that time. This is because, unlike drilling and refining operations, transport operations make money despite oil market fluctuations since oil has to be moved from one location to another.

But to get back to the first observation, oil production has dramatically increased due to the large scale exploitation of shale. And it’s not only oil which has become more bountiful from shale production but also natural gas as well. In fact, so much gas is locked up in shale that energy market analysts have projected a supply of cheap, abundant gas existing in the United States that will be good for decades to come. As a result, more than US $100 billion has been plowed into the domestic gas and chemical industries. Much of this has gone into construction of new petrochemical plants along the length of the U.S. Gulf Coast. Meanwhile, shale oil production has completely reversed declining trends in this activity which had prevailed through the first decade of the 21st century. Current production is outstripping projections of the U.S. Energy Information Administration.

The result of this explosion in production has created a big strain on oil and gas transportation. This is why there is such a huge push for new pipeline construction. But pipelines won’t be enough. Increasingly, the use of oil barges has proliferated to the point of transporting an extra 32 million barrels of oil throughout the inland waterways of the United States in just one year. Also, transport by rail car has similarly expanded, bringing oil to thirsty refineries along the West Coast and the Gulf.

Oil and gas transportation companies have seen their stocks double in the last six years, and that trend is pointing towards continuing growth as production increases. Gas production alone is projected to increase by one-third for the year 2017. And further advantage for investment accrues from a nearly century-old law, the Jones Act, which mandates that all goods shipped between U.S. ports are transported exclusively by U.S. built and owned vessels crewed by American citizens. See this report for special details of how to take full advantage of the opportunities available to investors.