2012: A Year for Oil
As we prepare for the holidays, it's important to review the year and figure out how we can prepare for the future.

This Article Originally was Published here: http://www.energyandcapital.com/articles/2012-a-year-for-oil/2927

The holiday season is upon us. Lights and holly, big meals, and family get-togethers... and before you know it, we will be ringing in a new year.

Now might not be the time you want to think about what the New Year will bring. Fiscally, it's shaping up to be a real nightmare.

So in the holiday spirit, let's reflect on the year that's drawing to a close.

2012 actually hasn't been a bad year.

In fact, it was one of the first to show significant signs of recovery since the recession...

This year began with an unemployment rate of 8.3%. The rate dropped slightly and curved back up again, but it's been sub-8% since September — and we'll end the year with November's unemployment rate at 7.7%. Hopefully December's will be even lower.

While unemployment has been dropping, GDP has been growing — up 2% in the first quarter, with an expected annual rate of around 2%. In the third quarter, it increased 3.1%.

Even the housing market is rebounding. The Fed's stimulus will keep interest rates low for at least the next couple years, and that's sure to bolster home purchases.

But one market that's really loved 2012 has been the oil industry...

A Signal of Independence

This week, government data showed that overall output grew to reach 6.41 million barrels a day in 2012 — the highest level in 15 years.

And that's not even the most impressive part...

Domestic oil production grew by an average 766,000 barrels a day. That's the most U.S. oil production has grown since 1859, when the very first oil well was drilled.

It's the most growth domestic oil production has ever experienced — ever.

An article appeared in Bloomberg this week reporting on the subject entitled, “American Oil Growing Most Since First Well Signals Independence.” It pointed out that foreign oil is now 41% of demand, down from 60% in 2005.

“Signals Independence,” indeed.

Not only that, but it was just months ago that the International Energy Agency predicted the U.S. could rival Saudi Arabian oil production in as few as eight years.

This was the year natural gas prices fell to a ten-year low — and low prices began to revolutionize the industry: they were behind the Honda Civic Natural Gas 2012, the Clean Energy Fuels Corp. (NASDAQ: CLNE) Natural Gas Highway, and an initiative to convert diesel-powered state fleets to natural gas.

And 2012 was the year a federal report was published showing liquefied natural gas exports will have a long-term positive effect on the U.S. economy. Exports would likely boost natural gas prices, providing exploration and production companies with the resources to drill more wells and extract more gas.

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A Good Year in Store

That's the year we're coming off of.

Despite the many little bumps in the road, it really hasn't been a bad year.

And 2013 may prove to be pretty good as well...

If all goes well, unemployment will continue to drop as GDP rises.

The fiscal cliff is another issue. There are signs of progress from Washington, but right now "progress" is another way of saying “still no decision.” All we can do is hope there is a decision.

Either way, there are things you can do to prepare and ensure it's a good year for you.

As analyst Briton Ryle wrote this week, there are a few small oil companies that will be off to a good start next year as oil production continues to increase — just as it has this year and just as the IEA forecasts.

Wishing you happy holidays and a prosperous New Year,

brianna sig cropped

Brianna Panzica
for Energy and Capital

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This Article Originally was Published here: http://www.energyandcapital.com/articles/2012-a-year-for-oil/2927



2012: A Year for Oil originally appeared in Energy and Capital. Energy and Capital, a free daily newsletter, offers practical investment analysis in the new energy economy.
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