The Energy Crisis Is Ending

Tickers in this article: CP DD DOW SZYM UNP XOM
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 from Oilprice.com, which claims $1.2 billion in profits have been lost because increased production is exceeding pipeline capacity. Oil bulls insisted to me at SeekingAlpha.com that this is a short-term phenomenon, a chance for big companies like Exxon Mobil (XOM) 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) and Canadian Pacific (CP) , as Reuters reports.

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) and DuPont (DD) 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.

When they acknowledge a short-term glut of product, the oil bulls also assume this will kill other forms of burnable energy. (Heads I win, tails you lose.) Well, DuPont just broke ground on a new cellulosic ethanol refinery in Iowa, reports BioFuelsDigest, as part of a new boom in non-food biofeedstocks.

Biofuel companies that had been beaten down all year including Solazyme (SZYM) are proving they can deliver at scale, Seekingalpha.com reports, and start-ups are working on a whole new class of "electrofuels" that produce electricity directly from living matter, BiofuelsDigest adds. Biofuel producers say they can make money with today's prices, and that their costs are falling.

What about the sun?