Murti's the Goldman Sachs guy that called for the unprecedented move above $100 just three years ago.

And how did Wall Street react?

They laughed at him, thinking it was nothing more than a Goldman publicity stunt. He first predicted a rise above $105 back in March 2005, as oil traded around $60.

Yep, for the better part of three years, his call was ridiculed. Even as oil made a pass at $70, $80, $90, $100, $105... even $110, all we heard was how the price of crude would soon collapse, as they laughed at Murti.

But Murti wasn't laughing. It was no joke. And he wasn't alone in his thinking. We called it, too, right here in Energy and Capital.

"...heck you can kiss $45 a barrel goodbye... maybe even $50! In fact, we're probably facing a price spike between $80 to $100 a barrel within the next 24 months," said Brian Hicks in January 18, 2006.

"Our resident energy expert, Mike Schaefer, believes that oil prices will continue its rise... heading to at least $80 near term... then to $105 a barrel in the next 3 years." -February 7, 2006

"...I think these estimates are a bit on the conservative side, and we should see $80 oil this year, no problem."- Chris Nelder, January 18, 2007.

But we don't expect Wall Street to recognize that. They're too embarrassed, as are the "experts."

What the "Experts" Said...

"I'll make a bold prediction... in 12 months, you're going to see oil down to 35-40 usd a barrel," said Steve Forbes in August 2005.... He was WRONG.

"It's a little hard to explain why the oil price is as high as it is at the moment, because there's plenty of oil and oil products around- it's not as if there's a shortage," said Shell UK Chairman James Smith in October 2007... He was WRONG.

"Veteran oil analyst Charles Maxwell of Weedon & Co. notes that there is also a fundamental reason to expect stagnant-to-lower prices. Demand in the biggest energy-consuming nation, the U.S., seems to be moderating," said BusinessWeek in August 2006... WRONG.

"If this market can continue going lower without OPEC disrupting it, it's very possible that by 2010 we could be substantially lower than anyone is imagining. Four to 8 years from now, we could come down and break $20 a barrel," said Peter Beutel, an old analyst at Cameron Hanover, in August 2007.

And he was embarrassingly WRONG.

In 2006, Cambridge Energy Research Associates, Inc. (CERA) said, "This is the fifth time that the world is said to be running out of oil," says CERA Chairman Daniel Yergin. "It is no longer sensible to allow the issues about future supplies to be clouded in a debate grounded in a flawed technical argument."

And they were WRONG.

We could go on... but I think you get the point.

They failed to take into account peak oil, rising demand, supply erosion, and the death of the dollar, despite strong dollar policies and a reactive Fed.

Fortunately, the likes of CERA are now seeing things our way.

They now believe the price of oil could rise to $150 this year. "The world's diminished spare production capacity remains the strongest single catalyst for high prices, Mr. Yergin says."

"The world's safety cushion — the amount of readily available oil that could be pumped in a moment of crisis — is now around two million barrels a day, according to most estimates. That's just 2.3% of daily demand, and nearly all of the safety cushion is in one country, Saudi Arabia. Everyone else is pretty much pumping all they can, which makes the world vulnerable to political or other shocks."

We're going above $200...

T. Boone Pickens sees $125. (We just hit it)

CIBC World Markets' chief economist Jeff Rubin is predicting $200 oil in the next five years.

Goldman is saying that the "possibility of $150-$200 per barrel seems increasingly likely."

Even OPEC President Chakib Khelil won't rule out $200.

And it'll happen as long as soaring oil prices do not put the breaks on oil demand.

While there's a need to reduce energy consumption, the economic doomsday scenario will happen as long as there is an absence of market-cooling excess production capacity.

And as long as supply can't keep up with demand, we'll continue to see higher prices. Growth in Russian production is slowing, for example, as it is in Mexico. But, at the same time, demand from emerging markets continues to spike.

When supply finally eclipses demand, which will happen when ordinary consumers can no longer afford energy costs, then we'll see a reversal.

Right now, production quotas cannot keep up with world demand of 82 million barrels a day. Worse, oil is still too cheap, says Dr. Colin Campbell, former executive VP of Total-Fina. "the only way to control demand is to price oil realistically, allowing for time to find fuels to fill the gap between an oil economy and a renewable fuel economy."

But how do you profit from rising oil?

There's always the domestic solution, Bakken, where up to 4.3 billion barrels of oil could be recovered - a 25 fold increase compared to original 1995 assessments.

There's even a way to buy oil at $71. Pure Energy Trader will have more on this trade next week. The team is still doing its due diligence.

Oh, and if you're still hesitant and don't think $200 is realistic, ask yourself this.

In 2000, who'd have thought we'd see $125 oil?

Good Investing,

Ian L. Cooper

P.S. "Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century" co-author Chris Nelder can be seen here discussing Oil Company Profits.

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In case you missed our other investment opportunity highlights, here's what we covered in Wealth Daily, Gold World, Energy and Capital, and your free blogs for the week of May 5, 2008.

The Marcellus Shale Formation: The Rush to Big Natural Gas Profits
That's why 175 landowners showed up in a meeting yesterday in Whitney Point, New York to discuss exactly how to deal with the energy companies that have suddenly shown up on their doorsteps looking to lock up their land in search of natural gas. The message at the meeting, however, was quite simple...

Wave Energy Stocks: How to Harness the Wave Energy Revolution
Since the passage of Washington State's renewable portfolio standard, requiring 15% renewable energy in the mix by 2020, there has been what some are calling a 'land rush' on the Puget's waters.

Rockefeller vs. ExxonMobil: Peak Oil: A Turning Point for Big Oil
Last Thursday, in my second appearance on Fox Business, Neil Cavuto asked me whether or not I thought it was a good idea to tax the "windfall" profits of Big Oil, and let Congress spend them on alternative energy.

Organic Photovoltaics: The Next Evolution Of Solar
In the past, we've discussed potential moves in the field of organic photovoltaics. This is what many researchers are looking to as the next evolution of solar. But after attending the Organic Photovoltaics conference in Philadelphia last week, I suspect it might be some time before we see any solid plays in this area.

The Media is To Blame for Housing: Why buy a house now?
"The financial press is worried that they might have gone too far - paralyzing the nation into recession by piling on housing. So they're finally beginning to question the indexes where they get their data, and whether the news is really as bad as it seems. Slowly but surely, headlines are changing from Don't Buy A Home Now to Is It Time To Buy? Stop listening to the media. Go buy a home."

David Lereah Comes Clean: Ex-Shill Calls for More Pain
Lawrence, by the way, has done a marvelous job in Lereah's absence, promising on every occasion that now is the right time to buy real estate. Go figure.

Emerging Market ETFs: 2 "Must Own" ETFs Right Now
Eight years into Chen Shui-ban's Taiwanese tenure, the benchmark index barely moved, even as Hong Kong's market rallied 75%, and as Shanghai's nearly doubled. But things are about to change, in a big way as we get close to May 20, 2008.

Copper and Gold Stocks: Exeter Resources Returns 719 Meters Grading 1.0 g/t Gold and 0.38% Copper
Many investors are surprised to learn that large copper mines often recover considerable amounts of gold and other metals as a byproduct of operations. This gold often generates hundreds of thousands of dollars per day in gross cash-flow for public copper production companies, making them copper and gold mining stocks.

Visa at $87.60
Six days after buying Visa (V), we're up more than $11 on the underlying stock, and up more than 130% on the Visa June 80 call...

89% and 35% in 55 Trading Days... Bank Half.
Even though we're bullish heading into the May 12 extension date, we're playing this one safe.

Russian Renewable Energy: Russia: The "Sleeping Giant" of Renewable Energy
You may know that Russia is the kingpin of the international natural gas trade. But did you know that with over 10 million residents still off the grid and leaders aiming to maximize gas exports, Russian renewable energy could be a huge boon to the country? Now we have to convince the Russians-starting with their new president.

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