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NEW YORK ( TheStreet) -- The hard times of the 1970s became the good times of the 1980s after oil prices were pushed down under the Reagan Administration.
It was a demonstration of "soft power," aided by the oil exporters, that helped win the Cold War but also ushered in wars we're still fighting.
The "secret sauce" of the Obama Administration is that it's working on the same trick -- but not through foreign policy jawboning. Instead, it's being done through the liberal use of fracking technology, and the encouragment of renewable energy (especially efficiency).
The big business story of 2013 will be that the energy crisis is over.
In the last year we've seen the price of natural gas roll over. Flaring of gas in the oilpatch and a reduction in new gas production have gotten prices back to break-even. Now oil is in the process of doing the same thing.
Energy producers are starting to notice their boom times are ending, as in this story
Oilprice.com, which claims $1.2 billion in profits have been lost because increased production is exceeding pipeline capacity. Oil bulls insisted to me
SeekingAlpha.com that this is a short-term phenomenon, a chance for big companies like
Exxon Mobil(XOM - Get Report) to take out smaller players, and that growth in places like China and India will save the day.
Really? It's true that, in the near term, the best way to play this might be with railroads that serve the oilpatch such as
Union Pacific(UNP - Get Report) and
Canadian Pacific(CP - Get Report),
What the energy industry needs right now is infrastructure, not more holes in the ground but more pipelines along the ground, toward the booming production of West Texas and North Dakota. Chemical companies including
Dow(DOW - Get Report) and
DuPont(DD - Get Report) are also announcing plans to build plants in the U.S. Would they be doing this if lower prices were just a short-term phenomenon?
Production is only half the story. The U.S. is still the world's largest energy consumer. The gradual implementation of CAFE standards, mandating higher gas mileage, is starting to place a thumb down on domestic consumption while at the same time creating new export markets for American engines. Efficiency is the cheapest form of renewable energy, and it still delivers a payoff even with falling prices.