Watch It Now: Kent Talks Energy Policy
North America can be energy independent in the next 15 to 20 years.
That's what Kent told Fox Business last Friday when he sat down with Shibani Joshi and Charles Payne to discuss changes to the U.S. energy market.
It's welcome news to energy investors, particularly those of you who have followed our advice on how to invest in midstream companies poised to transport the massive quantities of oil and gas out of the American shale fields and Canadian oil sands.
There is one major sticking point, however.
The United States lacks a cohesive, long-term energy plan to take advantage of the technological breakthroughs of the past few years.
As Kent said during the interview, significant rises in global demand have altered the way Americans buy energy today. And, there's nothing the United States can do in the short term to confront rising prices at the pump.
But over the long term, changes to the North American markets will ensure greater domestic supplies.
And investors will have many new ways to profit.
Why Washington Can't Get It Right
As I've pointed out before, every single U.S. president dating back to Richard Nixon has proposed his own “silver bullet” to create American energy independence.
Energy independence has been a successful selling point on the campaign trail.
But once elected, few leaders seem willing to explain to Americans how this will happen, and the required costs and sacrifices.
Currently, we purchase oil from foreign sources because it is still economically reasonable to do so.
However, as supply concerns become greater, and conventional sources of crude grow more scarce, the United States and its North American trading partners stand to benefit from the technological breakthroughs we have uncovered in recent years.
Shifting forward, the United States can drill its shale fields and obtain a greater share of resources from the oil sands of Canada. But we need to make these sources a priority over the medium to long term.
And Washington doesn't seem to be making that happen; quite the opposite, in fact.
Canadian Prime Minister Stephen Harper stated this week that the United States' reluctance to build the Keystone Pipeline influenced his nation's decision to increase the flow of oil to other export markets, namely China.
“Look, the very fact that a 'no' could even be said underscores to our country that we must diversify our energy export markets,” Harper said on April 2.
“We cannot be, as a country, in a situation where our one and, in many cases, only energy partner could say no to our energy products. We just cannot be in that position.”
Considering that Canada is our No. 1 source of oil, if that scares you, well, it should.
But no matter what Canada decides to do, there are still great ways to profit over the long term.
Profit on China from Home
China has ironically adopted a similar energy policy to ours in the past. One the centers on securing as much oil as possible, from whatever source possible. But that has significant drawbacks, too. They expose themselves to the perils of international diplomacy in unstable parts of the world, particularly Africa.
What raises the stakes in Canada is the fact that our neighbor to the north offers one of the most important characteristics one could seek from a trading partner: long-term political and economic stability. Canada's business-friendly climate, resource-rich environment, and willingness to build infrastructure for its export markets are vital socioeconomic indicators of future success.
That may be why Chinese companies have already invested Canada's energy sector.
China's Sinopec made headlines in October when it agreed to buy Canadian oil and gas company Daylight Energy for a little more than $2 billion. Other companies, like Encana (NYSE: ECA) and Progress Energy (NYSE: PGN) , are considered potential buyout targets in the near term.
But speculation on potential M&A activity isn't the best bang for your buck as an investor.
We have to examine the companies that are poised for long-term growth, increased cash flows, and rising demand for the services.
Which takes us back to our favorite part of the energy value chain. The midstream.
Recall that midstream companies are the ones that connect the upstream companies (exploration and production) to the downstream markets (retail, refining and marketing). And companies that own pipeline that will transport oil from the Canadian oil sands to new export terminals in British Columbia, or down to the United States, will see a steady increase in service demand over the long term.
We are still just entering the most profitable time in history for the energy sector, and investors who pay attention to these growing shifts in policy, technology, and supply constraints are well positioned to enjoy very happy returns.
[Editor's Note: In his Fox Business visit, Kent highlighted the biggest trend in the oil markets right now. And that trend is exactly why people all over the world are turning to Kent.
He's identified an opportunity that stems from it – and it happens to be the biggest investment opportunity in the energy markets right now.
To hear all about it, go here now.]