Taking Full Advantage of Energy Abundance

NEW YORK ( TheStreet) -- Let's talk about the big economic story of 2013, energy independence.

U.S. oil production is now over seven million barrels a day, Bloomberg reports, up 1.13 million barrels/day from just last year.

The "spread" in price between West Texas oil and Brent is now over $23/barrel, notes MarketWatch, the reason being the cost of transporting oil from where it's produced -- often in North Dakota -- to where it's consumed by refineries.

The good news is Bakken oil is now starting to reach East Coast markets, which should show up at gas pumps this summer. The better news is that thanks, in part, to the natural gas glut that preceded today's oil boom, the U.S. is actually throwing less carbon into the atmosphere than before.

Even better news is the continuing price spread and the gas glut combine to give U.S. manufacturers a huge price advantage over their Chinese competitors, partly offsetting labor cost differences. (Automation may help make up the rest.)

But the best news is yet to come. The U.S. trade deficit is going down, Bloomberg reports, as some of that excess oil is exported.

Wait, there's more. Vehicle miles traveled are leveling off due to higher prices, and gasoline consumption has resumed its downward slope from the Great Recession, thanks to higher-mileage cars. Only 7% of current savings come from better mileage, the Oil Drum writes, but that will rise as more high-mileage cars are sold. Detroit is rising on a wave of energy efficiency.

Taking full advantage of this abundance, however, may mean going against the interests of the people who first brought it to us. Bloomberg is editorializing this week for higher oil taxes, saying it would not push production down and could help with deficit reduction.

But all this ignores the real elephant in the room. I know, you're going to say climate change. I'm talking about the other elephant, renewable energy.

Countries that don't enjoy our oil abundance, like Australia, are now finding that wind energy actually costs less to produce than electricity from either natural gas or coal, as Alternet reports. Germans are fully supportive of that country's move to renewable energy, CleanTechnica adds, so oil export markets are becoming more competitive.

But here's the biggest news of all.

The key biomass technology pursued by KiOR ( KIOR) in Mississippi, called Biomass Fluid Catalytic Cracking, or BFCC, could soon produce usable refinery inputs for less than the marginal cost of production for fracked oil, BiofuelsDigest writes.

It's this "compression spread" that has scientists at Texas A&M predicting East Texas will soon become "the Saudi Arabia for biofuels crop production," as reported in the Liberty County Vindicator. The process for turning biomass of all kinds into usable refinery feedstocks is coming into view.

All of this means that real energy abundance is here, it's growing and the link between oil prices and economic growth may finally be broken. The oil business won't be replaced, only its feedstocks, while the price of hydrocarbons is going to have to match the cost of getting energy from the wind or the sun, or what we can plant in the ground.

We need to get on the right side of this global trade. That means putting money into infrastructure to get current production the best price. But it also means finding a way to account for the external costs of that production in order to make sure the benefits of growing renewable abundance also come to America.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.