NEW YORK (TheStreet) -- I was talking to Jim Cramer today about the macro trends I see in energy. Understanding those trends will help us select profitable long-term investment ideas for 2014.
Of the many investable energy trends, the most important I see is the bifurcation between U.S. crude production and production in the rest of the world.
In the U.S., we have increased our crude production by two-thirds in the last five years, with an increase of more than 700,000 barrels a day this year alone. We are now using more domestically produced oil than we import for use, the first time that has happened in more than 40 years. The U.S. Energy Information Administration predicts our production will increase another 1.2 million barrels a day in the next 18 months.
That is in contrast to more traditional global production elsewhere, which is stagnating. Saudi Arabia, with its 10 million-barrel production, is at the limits of its capability. There is limited production in Iraq, Iran, Syria, Libya and Egypt. North Sea production is waning and Nigeria remains a powder keg.
These production difficulties in the Mideast will, I believe, continue to plague the global oil markets through 2014, making prices for U.S. crude oil continue to sharply lag prices elsewhere around the globe.
For investors, the best performance will be found in oil and gas companies that are producing outside the U.S. and capturing that strong global premium.
I talk more about this trend with Jim in the video above.
At the time of publication the author had no position in any of the stocks mentioned.