Get Long on Bakken Oil Stocks: Same Day, Different Year. . .Same Fight


"Old industrial and agricultural states like Pennsylvania, Ohio and North Dakota are seeing their populations swell because of oil and natural gas drilling."

A lot of people don’t know this about me, but I have hillbilly blood running through my veins.

It’s true. My grandfather was a country bumpkin from the Smokey Mountains in Tennessee.

He grew up in a small town called Rockford.

If you don’t know where Rockford is, it’s not too far from the tourist attractions of Pigeon Forge, Dollywood and Gatlinburg.

Pop-pop was 6'4" and very thin. But even as a teenager, his wiry frame belied his strength. . .

The story goes he got his nickname “Buck,” as in a male deer, after a customer at the general store where he worked saw him carry a bunch of 75-pound bags of potatoes without straining or ever breaking a sweat.

For the most part, he lived a quiet and comfortable life of a young country boy.

But that ended on Dec. 7, 1941. . .

The day after the Japanese attacked Pearl Harbor, my grandfather joined the Army.

Naturally, because of his strength, he was chosen to haul and operate the .30-caliber machine gun for his platoon, which was part of the Red Bull Division.

He fought in North Africa and Sicily, and then went to Anzio, where he was wounded by German artillery. He visited more nations in three years than I probably ever will in my lifetime.

Although he never served in the Pacific Theater, the attack on Pearl Harbor resonates with me because it was the official start of America’s involvement in World War II.

The Japanese raid on Pearl Harbor was one of the great defining moments in history, a watershed event for America.

A single, carefully planned and well executed stroke removed the United States Navy's battleship force as a possible threat to the Japanese empire's southward expansion.

America, unprepared and considerably weakened, was abruptly brought into World War II as a full combatant.

Eighteen months earlier, President Franklin D. Roosevelt had transferred the United States Fleet to Pearl Harbor as a presumed deterrent to Japanese aggression, as they badly needed oil and other raw materials to continue their imperial ambitions.

Japanese access to oil was gradually hampered as its conquests continued. . .

In July 1941, the Western powers effectively halted trade with Japan. From then on, as the desperate Japanese schemed to seize the oil and mineral-rich East Indies and Southeast Asia, a Pacific war was virtually inevitable.

By late November 1941—with peace negotiations clearly approaching an end—U.S. officials fully expected a Japanese attack into the Indies, Malaya and probably the Philippines.

On Dec. 7, Japan attacked Pearl Harbor.

And 70 years later, the world is still fighting over oil.

Whatever happened to my grandfather?

Well, he came back from the war, married his high school sweetheart, and promptly had a son—my father.

Life wasn’t easy, not even for a WWII veteran. You see, back in those days, unemployment was super high in Tennessee.

But my grandfather was never one to bitch and moan about his predicament. He was proactive.

He packed up his family and moved to Baltimore, where he worked for the next three decades in a textile mill.

He wasn’t alone. Many people from Tennessee, Kentucky, West Virginia and Virginia migrated to Baltimore.

Why? Because that’s where the jobs were.

Today we are seeing the same phenomenon. Old industrial and agricultural states like Pennsylvania, Ohio and North Dakota are seeing their populations swell because of oil and natural gas drilling.

In fact, a report published yesterday by IHS Global Insight says the oil and gas shale boom in the U.S. will produce "870,000 jobs and $118B in economic growth in the next four years."

The report further states:

Gas from shale, which accounts for 34% of U.S. output, also will contribute $57B in federal, state and local taxes by 2035, or $933B in the next 25 years. . .

The forecast excluded potential drilling in New York, which has placed a moratorium on fracking while it develops drilling regulations, or the impact of U.S. service companies supplying drilling in Canada, Larson said.

Given those sorts of factors, we feel that what we’ve presented here is a very conservative estimate. . .

The shale-gas contribution to U.S. gross domestic product will triple to $231B in 2036 from $76B last year, the report found. Lower natural gas prices, as shale boosts supply, will cut U.S. electricity costs by an average of 10%, the report found. Lower prices will raise industrial production 2.9% by 2017 and 4.7% by 2035.

Now, on the same day this report was released, Obama (who I now call Obummer) told an audience in Kansas this about jobs:

"This isn't just another political debate. This is the defining issue of our time. This is a make-or-break moment for the middle class, and all those who are fighting to get into the middle class. Because at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, and secure their retirement."

Just remember that Obummer delayed the approval (or disapproval) on the construction of the Keystone XL Pipeline for a year.

The Keystone is estimated to create tens of thousands of high-paying union jobs.

How’s that for a Merry Christmas.

Regardless of Obummer’s decision, America is moving ahead.

Last month, North Dakota passed legislation and set aside money to sue the EPA if the EPA tried to regulate or halt hydraulic fracturing in the Bakken.

I love the way North Dakota thinks: "Screw the Federal Government—Stay out of our way, we can take care of ourselves, thank you very much. . ."

North Dakota has the fastest income growth of any state over the past five years. Almost all the gains are due to the boom sparked by drilling into the Bakken shale.

As I reported in these very pages, even the most liberal governor in the Union has gotten the message. California Governor Jerry Brown recently fired the state’s top two environmental regulators because California’s drilling permits have dropped more than 70% over the last few years.

Every state with oil or gas shale will follow the Bakken model, because they know more drilling means more jobs and more tax revenue.

Moreover, oil stocks involved in the Bakken are seeing their net income and per-share price rise dramatically. Some are experiencing record profits and all-time highs in their stocks.

Continental Resources (NYSE:CLR), the largest landowner in the Bakken, has seen its revenue skyrocket: In 2006, Continental did $484 million in revenue. . .in 2009, $626 million in revenue. . .for the last 12 months. . ?

$1.6 billion in revenue!

This is a long-term trend that will provide many investors like you with a steady stream of capital appreciation and dividends.

Stay tuned for more Bakken profit opportunities.

In memory of the Americans who fought and died in World War II.

Brian Hicks, Energy & Capital

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe