The only justification I could see is the new shale discoveries in Louisiana and Texas along with Japan’s successful withdrawal of methane hydrate, of which we have huge deposits in the Gulf of Mexico.
If we could tap into all these sources, we’d not only be energy independent but capable of exporting fuel. IF we could use these resources, the economy would rebound and we’d be a world power again.
But I don’t think that’s why investors are investing here. I think it’s simply piling up into the least rickety life boat as the world economy sinks.
No don’t loose sight of what oil and gas are doing to the economy. They are reversing the four decades long slide in US oil production. They promise in a few short years to make the USA oil independent.
There are few oil independent countries with weak currencies.
The next big oil field is going to be in West Texas in the Permian Basin. There are a couple fields out there. I think the one that will make the news as bigger than bakken and Eagle Ford will be the Cline Shale formation. It will quickly add another million barrels @ day to US oil production when it starts to come onstream in 2014. You’ll start hearing much more about it later this year.
Here’s what it is.
The fed is printing fiat money. So they make a couple trillion dollars of fiat money. That’s bad.
However fracking has just added another 50-100 trillion dollars worth of oil backing the US dollar from nothing. That’s good.
The value of any currency like the dollar—just like stocks— is based on its perceived future and not its past.