The United States has historically struggled to be energy independent and eliminate of imports of energy from foreign sources. Ever since crude oil was first produced in Pennsylvania in 1859, the US has been subject to booms and busts in the energy market and reliant on oil from often hostile countries. Ever since the 1970s OPEC oil embargo, independence remains a popular and patriotic goal.
Matt Egan of CNN Money argues that the US could reach full independence by 2020. The shale oil and gas revolution and hydraulic fracturingfracking, in recent years has fueled the US's energy production. The US had 36.4 billion barrels in proven oil reserves at the end of 2014, in addition to yet undiscovered reserves. The consulting firm Rystad Energy has estimated total oil reserves at 264 billion barrels, with the US at first place in reserves. Egan writes that oil imports as a percentage of demand were 28% in 2015 and projected to be 11% in 2020. According to the investment services company Raymond James, the US will essentially reach independence by then if oil prices stabilize or rise and domestic production recovers. If that does occur, then American and foreign investors will be intrigued by the thought of rebalancing their portfolios.
Naturally, when the price of crude oil rises above around $50 and stays in an uptrend, the US oil majors will benefit. These stocks include ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), ConocoPhillips (NYSE: COP), and others. Oil majors have already been attractive since the start of 2016 due to their relatively high yields and strong commitment to steady if not increasing dividends. In addition, smaller petroleum industry companies and refiners will also benefit, including Valero (NYSE: VLO), Marathon (NYSE: MRO), Schlumberger (NYSE: SLB), and more. As a rise in crude oil conversely means a dip in the dollar, US companies that rely on exports, like Corning (NYSE: GLW), General Electric (NYSE: GE) and Boeing (NYSE: BA) will benefit too.
The other side of the coin of US energy independence is renewable energy like solar, wind, hydroelectric, and biomass. Renewable sources, despite the shale boom, have greatly contributed to US energy production and consumption and thus energy independence also. In 2015, renewable energy was the source for over 13% of domestic electricity production. If one trusts the federal government to make tax incentives permanent and continue the country on a greener energy plan to slow climate change, then stocks like Tesla (NYSE: TSLA), Vestas (CPH: VWS), and Berkshire Hathaway's energy unit (NYSE: BRK-A)(NYSE: BRK-B) will thrive. Smaller-cap stocks like Hannon Armstrong (NYSE: HASI), Enviva Partners (NYSE: EVA), and Pattern Energy (NASDAQ: PEGI) might also do well.
In general, energy independence on a foundation of nonrenewable and renewable sources is politically and economically beneficial to American citizens and investors. Although full independence might not be achieved in only four years, it is no longer just a dream.
The author holds a long position in GLW.