Since Thursday, I've had a number of conversations about the Alberta oil sands. A few readers were skeptical that the oil sands industry would ever be able to produce five million barrels per day.

First I was told that projects would cost too much. Then it was about how technology would never be able to increase production. And, of course, I heard all about the government digging its taxes into future projects.

Like I said, they were skeptical, but there was something none of them could deny...

With 174 billion barrels of oil, the Canadian oil sands are going to be developed, one way or another.. There's just too much oil to let go. The way companies look at it, “It's either them or us.”

And trust me, everyone is scrambling for a piece of the action.

Preparing for an Energy Crisis

I know I've said this before, but I'll reiterate it for the sake of my newer readers...

You can toss out the geopolitical mess in the Middle East, potentially damaging hurricanes or even governments sticking their tax hooks into oil companies. Certainly, any disruptions in those factors will drive oil prices higher, but that's not what we need to focus on.

The fundamental problem in the oil markets today boils down to supply and demand. Simply put, supplies will continue to tighten as the world's consumption levels grow. And the greater the gap is, the tighter the markets will become.

That's it.

Let's take a look at that growing consumption for a minute. Sure, I'd like to point my finger directly at China and India, but your reaction would be....

“That's nothing new. Everyone knows China and India's oil addiction is growing dramatically.”

I'll accept that.

For now, however, let's focus on the rising domestic consumption in our major exporting countries.

Take the king of OPEC, Saudi Arabia, for example. Last year, Saudi Arabia's oil consumption jumped 6.2%. They may be producing 9 million barrels per day (more than 10% of global production), but the truth is that they will have less oil available to export.

And don't think the Saudis are alone.

Iran's high energy consumption has caused the country to start rationing gasoline last June. As a result, they're forced to pay $0.34 a gallon for their gas. What an outrage! I can feel the indignation seething out of my European readers. The gasoline rationing is expected to end in March, 2009.

So how are the “smaller” oil producers facing the oil crisis?

We've all seen the heart-warming commercials that BP has floating around, touting their commitment to alternative energy. Personally, I can't keep a straight face when I see the the “Beyond Petroleum” slogan. Don't get me wrong, it isn't the green energy I'm laughing at, but rather BP. It appears the company is getting its hands into everything, even the “dirty tar sands” up in Alberta.

You heard that right.

Last week, the company announced it was moving into the oil sands business by acquiring a stake in the Sunrise field in Alberta. The field, operated by Husky Energy, is expected to begin bitumen production by 2012 and reach up to 200,000 barrels of oil a day.

Perhaps they're covering all the bases, just in case.

The Investment Opportunity of a Lifetime

Over the next few decades, the world is going to experience a major shift in its energy consumption. The fact is that we can't extract oil as easy (or as cheap) as before. And considering oil producers are struggling just to keep up with declining production, more investment dollars are pouring into unconventional resources and alternative energy stocks .

Are we supposed to sit on the sidelines while trillions of dollars is being spent on the world's energy infrastructure?

It's going to happen one way or another.

Last Thursday, I told you there was a place investors could go. Now, a lot of my readers know what I'm about to say, but I don't think it's fair if you don't have the same opportunity as them. If you're interested if finding out more, just click here.

Until next time,

Keith Kohl

www.energyandcapital.com