Volatility in the global economy creates opportunities for investors to take advantage of emerging trends in the marketplace. The rise of a powerful middle class, coupled with a growing need for essential resources, is driving the demand for energy throughout the world. Consequently, the United States is making strides toward becoming energy independent through various business and technological innovations. This newfound independence opens up investment prospects in the financial market.
The United States is now on course to become energy independent with our oil supply being the fastest growing out of any country in the world in 2012. Although the country still imports roughly 25 percent of its energy, certain catalysts have come together recently to make self-reliance come forward as a true possibility. The stimulus for this began with the boom in extracting natural gas and oil from shale rock formations via fracking.
All of this has been made economically feasible due to technological innovation. New tools such as 3-D seismic mapping and horizontal drilling made natural gas and oil not only discoverable, but also recoverable. Solar panels are becoming cheaper and more effective today in the renewable energy sector. Moreover, the growing popularity of hybrid cars is also an important factor in our progress.
With the United States becoming energy independent, one must take a look at the financial implications emerging as a result. The shift in the energy industry will have a major impact on the U.S. economy ”” changes in manufacturing, a potential increase in consumer spending and the creation of more jobs in infrastructure roles. These changes will also have an impact on the investing community.
The government”™s stated goal of an energy-independent U.S. generates investment potential across the oil and natural gas sectors. Looking a few years ahead, upgrades to the natural gas delivery network mean investment opportunities lie in companies who replace old pipelines or install new ones. The United States Energy Information Administration (EIA) estimates that 100 years of natural gas are recoverable, presenting an opening to invest in exploration and extraction. Fracking, while still controversial, is likely to increase, meaning that cleaner fracturing technologies will continue to develop. Therefore, as coal-fired power plants convert to natural gas plants, investing prospects arise. Additional investment opportunities are developing across the oil and natural gas industries in storage facilities, hydraulic fracturing, local distribution and energy companies.
Adapting to a constantly transforming world is a challenge for any investor, but what one must always remember is that it is also a potential opportunity. As the U.S. continues to be more and more resourceful, now is the time to consider the energy sector as a crucial investment strategy.
Andy McGrade is managing director and market investment director at U.S. Trust in Fairfield County.
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