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Weekend Edition

The most important economic force in America is on the verge of imploding...
Saturday, October 11, 2014

The Weekend Edition is pulled from the daily S&A Digest. The Digest comes free with a subscription to any of our premium products.
 
 "Hillary is going to win... I'll bet money on it."
 
One of the world's richest men, Warren Buffett, was speaking at Fortune's Most Powerful Women's Summit this week... He believes Hillary Clinton will take the presidency in 2016.
 
 S&A Resource Report editor Matt Badiali also believes Hillary will take the presidency... He made the prediction a few days before Buffett. And even though we don't agree with her politics, we know she's going to ride the wave of the most important economic force in America today. By simply riding this wave, Hillary could go down as one of the greatest presidents in history. We know a politician's only job is to get reelected... And getting in the way of this economic force is political suicide.
 
 We've been writing about the advent of hydraulic fracturing ("fracking") and the subsequent oil and gas production boom for years... well before the U.S. became the world's largest energy producer, pumping out 11 million barrels of oil per day (bpd) in the first quarter of 2014.
 
Despite the explosion in energy production across the U.S. shale plays, skeptics don't think this will last. It's true that production from shale wells typically falls 60%-70% in the first year, compared with a 50%-55% production drop from traditional wells in the first two years. But producers are working to make the wells more efficient.
 
 Still, some organizations say the boom won't last... The International Energy Administration (IEA) says production will peak at 13.5 million bpd in 2019. (While we think production will likely rise past then, that would still give Hillary three years of huge economic benefits.) The World Energy Outlook says the U.S. will hold its top spot until 2030.
 
Hillary knows the best way to make the country happy is to create jobs and line the country's coffers. And an energy-independent America means we don't have to rely on Saudi Arabia or Russia for our oil... we become a major supplier to China... and the U.S. gains a huge amount of political clout.
 
Plus, Hillary has already hinted that she is happy to work alongside the major oil producers. Soon after she was appointed Secretary of State, Hillary told a crowd at Georgetown University...
 
This is a moment of profound change. Countries that used to depend on others for their energy are now producers. How will this shape world events? Who will benefit, and who will not? The answers to these questions are being written right now, and we intend to play a major role.

 As Secretary of State, Hillary persuaded foreign governments to give U.S. oil majors exclusive exploration contracts... And she accepted money from our nation's largest oil companies for her 2008 presidential bid.
 
 We know U.S. oil production will change the global energy landscape and improve our domestic economic situation. But there's a major problem... We're actually producing too much oil. And eventually our refining, transport, and storage facilities will no longer be able to keep up with production... Industry experts call this American energy's "Reckoning Day." We could reach this point as early as next year.
 
Just consider what's happening in California...
 
Over the last decade, the U.S. as a whole has reduced oil imports by 30%. But it hasn't helped California... Over the same time period, oil imports to California rose more than 33%. The state is now importing more than half its oil supply, according to the Wall Street Journal.
 
It costs more to import oil than it does to move shale oil from Texas to the West Coast. That translates to higher fuel costs – among other costs – in California.
 
 So why is California importing more than half of its oil when we're in the middle of an energy renaissance across the U.S.? There aren't any pipelines connecting the major production areas to California.
 
We've also written about the increasing amount of shale oil being transported by rail...
 
As we wrote in the January 14, 2013 Digest...
 
As of August, railroads accounted for 46% of oil transportation out of the region of North Dakota and Montana where the Bakken Shale lies. That's up from 23% in November 2011... which was up from 18% in September 2011.

 Today, trains transport shale oil to the East and Gulf Coasts. The railroads run to California, but there aren't any terminals to unload the oil from tankers and transfer it to refineries (which happens via pipelines and trucks). So California is left out.
 
Currently, only 500,000 barrels of oil a month – or 1% of California's supply – enter the state by rail. But with new terminals, it could transport the same 500,000 barrels each day, says the Journal.
 
Oil from North Dakota's Bakken Shale is, on average, $15 a barrel cheaper than imported oil, according to energy-information provider Platts. Research firm Argus estimates it will cost $12 a barrel to transport the crude oil from North Dakota to California. The profit incentive is there.
 
 New oil-train terminals could be up and running by 2016 if proposals go through.
 
Already, oil refiner Alon USA Energy (ALJ) received clearance to build California's largest oil-train terminal in Bakersfield, which will be able to process 150,000 barrels a day.
 
 That's just one example of our country's desperate need for more infrastructure to harness the full potential of our energy boom.
 
And again... Matt believes Hillary will do everything in her power to make sure that happens.
 
 Matt has just published a full report explaining more about why he thinks Hillary Clinton is White House-bound... And he shares more details about our country's need for oil infrastructure (including the names of several companies currently working to plug that gap). You can view Matt's free presentation by clicking here.
 
Regards,
 
Sean Goldsmith




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