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U.S. Energy Industry Is a Long-Term Bullish Story: David Kotok

Bernice Napach
Daily Ticker

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You may not notice it at the gas pump but if you heat your house with natural gas it's obvious--the U.S. energy market is changing dramatically. Natural gas production has surged, sending prices sharply lower to under $3 per thousand cubic feet, down from $10 just four years ago. Domestic oil production has also increased. This combination of rising gas and oil production has created a huge boom in U.S. energy output.

Pulitzer prize-winning energy researcher Dan Yergin says the increase in shale gas and shale oil production in the U.S., which is driving much of the new output, represents a "new energy reality." Ed Morse, head of global commodity research at Citigroup, says the production boom has the potential to make the U.S. and Canada the "new Middle East."

"The energy patch is a long-term bullish story for the U.S.," says David Kotok, chairman and chief investment officer of Cumberland Advisors. Development of U.S. energy resources means less dependence on foreign energy reserves, which some say increases U.S. security.

"Think about what the world would be like if we had less dependence on foreign oil and foreign energy," Kotok tells The Daily Ticker's Henry Blodget. "If we didn't have to send our dollars to despots…in Venezuela or the Middle East…the whole world would change for the better."

Increased U.S.energy production also means more good-paying jobs says Kotok. "When you create a new job in the energy patch it's a high-paying job; it's not an entry level wage," he notes. The average annual salary for U.S. energy jobs is $90,000, according to the Financial Times.

Kotok is bullish on energy stocks across the board. He's overweight companies that focus on energy exploration, production and infrastructure. Despite some opposition to further energy development, he says the "momentum is in place" to build out the U.S energy sector. One proposal that could help: a revenue sharing deal between the federal government and the states. Kotok says those additional funds could help states develop their own energy resources which "could be a big hit to the energy patch."