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Oil: Just One of the Reasons I’m Bullish the Overall Economy in 2012

All week on the show we’ve been talking about strategic cornerstones for 2012. We’ve looked at gold and real estate pretty extensively, and I hope to get to grains and softs next week. Today, we talked quite a bit about oil.

As I see it, one of the big surprises in the evolution of the global marketplace over the last few decades is the way that the United States is quietly but steadily moving toward energy independence. I know—some of you think I’m crazy to say that, but let’s put it into perspective. As a country, we import about 10 million barrels a day from foreign suppliers. Years ago, it was taken for granted that the overwhelming majority of that came from OPEC. But over the course of the last 5-7 years, our biggest supplier has shifted from Saudi Arabia to Canada. Today, we get about 1.4 million barrels a day from the Saudis. But from Canada, we get 2.8 million.

Before you start in on the comments section, I understand that Canada is a foreign country. But they’re also our closest ally, best trading partner and best friend. Plus, let’s not forget that what’s underneath Canada is, in many cases, underneath the United States as well. Look at what’s happening with that Bakken oil shale formation up in North Dakota for proof of that.

Five years ago, we imported 60% of our oil. Today, that number is closer to 40%. Of that 40%, 10% comes from Canada and less than 30% comes from OPEC and the rest of the world. I predict that our imports from OPEC and the rest of the world will continue get smaller and smaller over time as oil production increases domestically. Well, domestically and in Canada.

As imports drop, we’re also shipping oil overseas like never before. For much of the last 30-40 years, OPEC has had their boot on our throat when it came to supply. But that’s changed. What was once their biggest customer has turned into a major competitor. And that’s one of the reasons I’m bullish on the overall economy: lots and lots of dollars that would normally have gone overseas are staying right here in North America.

Energy independence equals more jobs and more dollars in the hands of U.S. consumers and corporations. It’s really just as simple as that.

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