Baltimore, MD--There are two words that you will never hear again in the same sentence-"cheap" and "oil." The reality is that peak oil isn't around the corner--it's already here. The fact is that oil prices have tripled in less than seven years. And you can expect oil to break record price levels again in a matter of months.
Lately I've been procrastinating when it comes to filling my car's gas tank. Turns out that's an expensive mistake to make. So winding through the horrific traffic this morning, I happened to glance at the gas needle.
Good thing, too, because the needle was way past "E." I figured it would be a good time to fill up.
About a quarter-mile from the John Hopkins Medical Center, my car actually started sputtering. When the car shut down a few seconds later, I had luckily rolled right into a local Shell station.
Friends, it doesn't get any closer than that.
But as I began fueling my car's gas addiction, I overheard the gentleman next to me complaining about gas prices. "Three bucks for gas? That's absolutely ridiculous!"
I smiled to myself, because I knew the truth.
Feeling obligated to enlighten the poor doctor (the white coat was a good indicator for me), I casually remarked, "Three bucks? Consider it a blessing. Wait till we're paying over five."
Seeing his incredulous look, I began, "Well, you know that oil prices are the biggest factor in the price of gas, right?" After seeing him nod slightly, I continued, "The fact is that oil prices are going to skyrocket. I'm talking way over $100 a barrel."
What companies are on the verge of cornering the new solar energy market?
There are a a few select companies that have developed a revolutionary way to "print" solar cells on nearly any surface... incorporating solar panels directly into the materials from which the buildings are made! To get the details on the companies behind this groundbreaking solar technology, act now and get a copy of our latest investment research report Investing In Next Generation Solar...absolutely FREE. Learn more.
His skeptic response was short, but to the point: "No way." Clearly I had another soul to convince.
And that's where my real story began.
Living in a Peak Oil Reality
Just like the gas pumping physician, the majority of people don't realize that peak oil isn't around the corner--we're living it right now! Many people have no idea exactly what peak oil is, or how it will affect their daily life.
Peak oil is the point when global oil production peaks, leading to a steep and irreversible decline. The moment when peak oil occurred, occurs or will occur is still under debate. But the effects are already being felt.
The signs are all around us, you just need to put the pieces together.
Nine out of ten of the largest oil fields in the world have entered into decline. One in particular--Mexico's Cantarell oilfield--has dropped by 20% in production so far.
Oil prices have tripled since 2000, and we're never going to see oil below $50 a barrel, ever again. We haven't even hit the summer yet, when oil prices are at their highest, yet oil is threatening last year's high of $78 a barrel.
Oil companies are fighting like hell not just to boost their production and reserves, but also to hide the fact that anything is wrong. But numbers don't lie. In 2006, Shell produced twice as much oil as it discovered. Not to mention that the oil boys are also grasping at unconventional sources like oil sands to increase reserves.
Now let's factor in the fact that three quarters of the world's oil reserves are controlled by OPEC. OPEC countries like Saudi Arabia refuse to disclose statistics on their oil fields, further complicating the calculation of peak oil's actual date.
Yet even if you believe peak oil won't happen for another few years, one thing has become apparent: the world hasn't collapsed from higher oil prices.
If people cringe at $3 for a gallon of gasoline, they'll look back fondly on that when gas hits $5. But where will that end? Sure, $5 gas is better than $10 gas.
This is what it comes down to: What is the breaking point for oil prices when people wake up and realize we're living in a world of peak oil? $100 a barrel? $200 a barrel? If you had asked someone that question ten years ago, they might've said $70 a barrel.
And amid the struggle to increase production, the shadow of our rising demand looms more ominously every year. By 2015, we will need to produce 13 million more barrels of oil every day compared to today's production! By 2030 we'll need an extra 33 million barrels per day. These numbers, taken from the Energy Information Agency's International Energy Outlook 2006, may even be too low, as some experts predict.
So where does that leave us?
Money for the Taking
Once you accept the reality of high oil prices, you can take one of two paths.
The first is to sit idle like my friend at the gas pump, sacrificing your hard-earned cash to your SUV's $80 thirst for unleaded every week.
Not the most attractive option, is it?
The other choice you have is to play your money off this surging commodity. Any investor--any smart investor, that is--will look to the future and jump on it in the present.
When was the last time you saw somebody making money by sitting on his thumbs?
It's no secret that the U.S. is growing tired of Middle Eastern antics, with the oil sheikhs driving prices up and never boosting production to meet the swelling demand. What did OPEC say? They are "comfortable" with the present oil market and see no need to boost production.
Very comforting, indeed.
This leads us to the alternatives. Granted, renewable sources are vital to meeting long-term energy needs. But our thirst for oil isn't going away anytime soon.
So where will we get our oil in the future?
The door is wide open for Canadian oil sands. The U.S. is trying to increase their Canadian oil imports to over five million barrels per day. The potential profits in these companies are staggering. If you're interested in checking some out for yourself, just click here.
Back to the Pump
After I finished talking, I realized I had gone on for over ten minutes.
But how could I not?
The look on someone's face when they understand just how cheap gasoline is at the moment is priceless. And now, every time that doctor fills up his car with $3 or even $4 gas, he'll smile to himself.
Until next time,
Keith Kohl
Digg this
Post to del.icio.us
Reddit
Subscribe to