Baltimore, MD--Peak oil is just the beginning of our problems. The increased interest in Canadian oil is causing grave concerns over their natural gas production. And it may already be too late to act.

Peak oil has finally started making its way into the mainstream media. It only took fifty years to get there.

Since M. King Hubbert released his 1956 paper to the American Petroleum Institute in San Antonio, Texas, the theory of peak oil has become a global concern. We've also had two U.S. reports within the last two years (the Hirsch Report and the GAO's Peak Oil report) warning our government that a global peak in oil production will have dire consequences for our economy.

You don't need analysts or doomsayers to tell you what you already know: we are addicted to oil. The next time you go shopping, take a walk or even drive to work you'll get the overwhelming feeling of that addiction.

This morning, sitting for miles in hot, congested traffic, that realization came to me again. I wondered how many people will be driving to work when it costs us $200 to fill up our tanks every other week.

But let me tell you something . . .

Peak oil is just one part of our energy crisis.

Last Thursday, I told you that Canadian oil sands are our government's answer to foreign oil dependence. And when I say foreign oil, of course I mean Middle Eastern oil.

But I also mentioned another reason Canadian oil is experiencing a boom. The truth is that Canada's natural gas industry is gasping for breath.

I want you to ask yourself something: If you owned a drilling company, would you go after a declining resource? Or would you stake a claim in a market set to grow fivefold in the next few years?

Canada's natural gas production is struggling under the weight of demand. The truth is that production has passed its peak.

And they're quickly running out of reserves:

Consider this . . .

Over 98% of Canada's natural gas is produced in the Western Canadian Sedimentary Basin (WCSB). But this basin peaked in 2000 and is now in serious decline. And despite record drilling activity during the first half of 2006, companies realized that they were unable to significantly boost production. This was evident from the lack of activity in the latter half of the year, which resulted in the overall decline of new gas wells completed for the entire year.

This problem has been clear for years, though. Look at how the increased number of gas wells in the past compared to the recovery per well:

Natural gas prices peaked at over $15 per million cubic feet in 2005 from the effects of Hurricane Katrina. And as expected, drilling activity experienced a boom.

Think about that for a second.

When oil prices rose to over $78 a barrel last July, that meant they jumped to about four times the

price of 2002.

Natural gas, on the other hand, exploded over 650% in that time! Since then, it has settled between $7 and $8 per mmcf, but I think we're going to see that price reach Katrina levels again over the next five years.

Here's why . . .

We consume roughly a quarter of the world's natural gas. Our largest exporter is Canada. In 2001, Canada supplied us with over 94% of our natural gas imports. Last year, it sent us only 76% of our imports. That's a significant drop.

Unfortunately, natural gas is typically transported via pipeline in a regional market. This is forcing us to look elsewhere, such as doubling our liquefied natural gas imports within the last five years. These new sources are much costlier and will translate directly to higher prices.

So where does this leave you and me?

For starters, we've already profited big time from the first boom in oil sands. But I've known for a while now that Canada's natural gas crisis is going to cause investors to pour their money into developing the next big plays--Canadian oil sands.

For years, my Pure Energy readers have been taking advantage of Canada's rich natural resources. Just one of our Canadian oil plays has already given us a  300% return. Don't you think it's time for you to get in on this now while you still can?

Until Next time,

Keith Kohl