The countdown has begun.

When you're sitting next to a television with the channel permanently set to CNBC, you'd be amazed how long your eyes fixate on the price for crude oil. Nothing gets by you-the dips, the peaks and the hours that pass where oil is seemingly glued at a single price.

Yet the number your longing to see-the psychological benchmark of $100 per barrel-has yet to appear.

I wasn't shocked to see another drop in U.S. oil stocks this week from the Energy Information Agency report. I wasn't even surprised when oil flew past $98 a barrel. But the first question I get from every phone call I make is, "When will it hit $100 a barrel?"

My answer is always the same, too, when it comes to peaking oil production.

"Well, let's put it this way," I typically start, "if we see another significant decline similar to the recent 3.9 million barrel drop, you'll get your $100 oil by the end of next week."

Does anyone else remember earlier this year when the Saudis said oil prices were "optimal" around $50?

Nine months later, oil prices have nearly doubled.

A few years ago, I couldn't find one out of a hundred people who've even heard of the term 'Peak Oil.' Mentioning peak oil in a crowded room would invite puzzled looks from anyone within earshot.

Fortunately, that has changed somewhat...

To think it only took about fifty years (since Hubbert's speech 1956 speech).

The End of Cheap Oil

I do need to apologize for any confusion over last Tuesday's article concerning what peak oil was about, so I'll try to be as clear as possible right now...

Peak oil is the point in time when the maximum oil production is reached, followed by an irreversible decline.

In other words, there will still be a large amount of oil in the ground. As I briefly mentioned last Tuesday, there's plenty of oil left in the ground.

In 2005, the Hirsch report was created for the U.S. Department of Energy. The first sentence was dead on, "The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem."

Those of you who were enjoyed reading Hubbert's original 1956 paper should take the time to read the Hirsch report. You can click here to find it.

The report came to several conclusions on peaking oil production...

• The peaking of world oil production will happen, and will most likely be abrupt.

• Peak oil will create a severe liquids problem in the transportation sector.

• Trillions of dollars will be spent to deal with the problem.

• Intervention by governments will be required.

• Mitigation efforts to avoid severe impacts of peak oil could take up to two decades.

• Both supply and demand will require attention.

The Hirsch report emphasizes the seriousness of the situation. The longer it takes to implement a mitigation strategy, the harsher the consequences.

Naturally, the first question to come to mind is: How soon until global oil production peaks?

Depending on who you ask, the answer is going to vary. In fact, I've had people tell me that production is secure until 2030...

I only hope they're right.

On the other hand, I've also talked to several analysts that feel global oil production has either already peaked, or won't be able to grow more than 88 million barrels a day. If that is true, we're going to be in a lot of trouble, considering our oil demand is projected to reach that level in 2008!

So where does that leave us?

Personally, I think it gives us the investment opportunity of a lifetime.

There's going to be a massive amount of money flowing into the oil infrastructure over the next few decades. And once you come to grips with the reality of peak oil, the next logical step is to figure out what's next.

After all, our future demand for energy is going to be met somehow.

Next week I'm going to show you exactly what to look for, and more importantly, where you can go when investing in this energy crisis.

Until next time,

Keith Kohl

"Energy stocks... The only way a human is going to make any money."

-- Matt Simmons, Peak Oil's first and most vocal proponent,
and founder of the country's last pure play energy investment banking firm.

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Excellent article. Let's have more.

Amazing how we can all fall for this Big Oil campaign which has so many times fooled the American and world public. Just watch what happens to oil when the American public get sick and tired of the gauging going on and we change our habits and also outr eergy sources. Yes oil has peaked but not do to production or consumtion but only because of the greed of the oil magnets in general.

If we can get the BUSHwhackers out of office, we could get completely off of OIL before 2030. OIL is a lousy investment. The longer we stay on OIL; the longer we will fight worthless wars in the middle east and give our enemies a billion dollars a day. That doesn't sound to Patriotic too me. Make a wise investment, invest in non-oil products.

The reality is that cheap conventional light and medium oil
has already likely peaked at the current rate of 85 million barrels per day. What is being replaced from this point on globally, is the much more expensive unconventional tar sands, oil sands, heavy oil and bitumen which generates up to three times the CO2 as a conventional barrel of oil does.

Unless we immediately start weaning ourselves from oil we will be in a lose-lose environment for which our grandchildren will curse us forever.

Do the math. When our current
rate of conventional oil
production is replaced by tar sands, oil sands, heavy oil
and bitumen, the world will produce
the equivalent CO2 of a quarter billion barrels of oil PER DAY. This will increase in lock step with population growth until the
world is at about 8 billion humans. At that point we will be at 500 ppm atmospheric CO2 which will trigger a new, but much warmer pre-stone age era.

Don't owners of Hummers, SUVs
big vans, pick-up trucks and other
gas guzzlers ever think of their
grandchildren and those of others ?
The answer is no, they don't and
prefer to "live" for the moment in an artificial mall-like life style,
hostage to advertising and
"market forces." End of story.

Great article...I can't wait for next week and your follow up on where to invest for the future..J

You like to keep people glued to their seats. We'll be waiting for your next article. An excellent commentary! Please don't keep us waiting longer than possible.

Just wondering what the resulting price of oil will be if the solar energy area becomes the focus of the government and some of the investment-wise pucblic?

Energy waste in America is omnipresent, sinful, horrendous, and fixable.
(1) We over heat and over cool our homes, businesses, offices, schools, churches, etc...
(2) 10's of millions of outdoor lights burn during the day.
(3) Most Americans do not minimize their driving.
(4) Over packaging is the norm. Recycling is inadequate. Our landfills are busier than ever.
(5) America's obsession with road construction is the ultimate contradiction.
The ONLY way to reduce energy waste and over demand is by using the economics of taxing energy in lieu of Federal Income Tax. Until the price of gas is $6 to $8 per gallon, America will not reduce over consumption and energy waste. Federal Gas Tax should be $4 to $6 per gallon and offset by making Federal Income Tax begin at $60k. Only with a tangible/dollar reward will Americans care to conserve. In the mean time the USA continues to give away its economic and political wealth to the Middle East, so we can continue our hedonistic energy waste. Know that the Islamic dominated OPEC cartel is eager to allow supply and demand market forces to drive gas prices to $8/gallon. $100+ barrel oil enables those who want to annihilate us, the money needed to buy the weapons to do so. Growing geopolitical unrest is linked to global competition for energy and natural resources. If global demand for energy is not dramatically reduced; World War is inevitable.

America can no longer continue to 'do business as usual'. Ford and General Motors must transition to the lucrative business of building solar and wind energy 'producers' for the world's 6,700,000,000 people reason$. Otherwise, Ford and GM are headed for bankruptcy, which will leave 100 million Americans unemployed, ruin our economy, and lead to anarchy. The world cannot continue to support all the automakers. We are running out of petroleum. Wake up !
Mass transit must reward those who reduce their driving and thereby become FREE, safe, clean, and convenient.
The ONLY way Americans will significantly reduce energy waste and over consumptions is by the economic incentive of taxing energy - not income!

So what's the link to this speech?

Why do you not comment on the oil under Gull Island? Or is that another urban myth?

I feel "world peaking" will happen sooner than later. If it hasen't already happened. I too will be looking at investment possibilities in this up coming crisis. I'm also kinda suprised at the people I talk to about this subject, for the most part, don't have a clue. Or they seem to think the govmt will bail us out. There need to be more media coverage on this topic before the majority of people take it seriously.....Thanks for your article and I'll be watching what happens.....