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Peak Oil Confusion

Energy and Capital's Weekend Edition

Written by Keith Kohl
Posted January 30, 2010

Welcome to Energy and Capital's Weekend Edition — our insights in investing, as well as the top stories this week from Energy and Capital and our sister publications.


Although the issue of peak oil has gained attention over the last several years (due mainly to oil prices skyrocketing to $147 per barrel in 2008), it's simply amazing that most opponents have no idea what "peak oil" means.

Even more stunning to my readers and I is that no matter how many times we try to explain it, the critics continue to repeat the same argument. No matter what you say or show them, they fall back on this excuse: "The world isn't running out of oil," followed by several denigrating remarks.

The only thing to do is to simply tell them that you agree. The world isn't running out of oil.

If nothing else, my readers know that peak oil doesn't come down to the world running out of oil. So, you can imagine our disappointment when the Saudis announce, "There is plenty of oil in the ground and the world should put aside fears about 'peak oil'."

I have yet to meet an advocate of peak oil that believes the world is running out of oil.

The latest slide in oil prices this week gives us hope that things will soon turn around. During trading on Friday, oil prices fell as low as $72.43 per barrel. If you've been following oil prices for the last six months, you know that oil prices have been stubbornly trading between $70 and $85 per barrel. So the latest move isn't a reason to panic.

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Even the draw on U.S. oil stocks this week wasn't enough to stop the drop. On Wednesday, the EIA reported a modest 3.3 million barrel draw on U.S. inventories. The real problems will come if oil is unable to hold the $65 a barrel mark. Any lower, and we'll see a lack of investment in the sector — something which would be devastating to meeting future supply issues.

Of course, the dollar rising to a six-month high against the euro on Friday didn't help matters much, contributing to the nearly 2% slide in oil prices.

Then again, we're focusing our attention on an upcoming recovery. A recent report from the Commerce Department showed a 5.7% increase in GDP during the fourth quarter, beating previous estimates.

So why is the GDP number so important? Simply put, a stronger GDP number could lead to better recovery and stronger fuel demand in the latter half of 2010.

In other words, there isn't a better buying opportunity than right now.

Enjoy your weekend,

keith kohl

Keith Kohl

Energy and Capital

P.S. In case you missed some of our top stories this week from Energy and Capital or our sister publications, I've included them below.

"China's Pantry": The Asian Nation Soon to be Beijing's Top Growth Partner
Energy & Capital reveals to readers a chance profit in the country that Reuters estimates "will generate the highest rate of GDP growth in the world" over the next decade. But this insider info is urgent... because in just two weeks, this deal might be subject to a legal "gray area" injunction - and you will have missed out on the world's last mega-boom profit opportunity.

How to Profit from Energy Efficiency: The NYSE: Itself is Bullish on this Tech
Energy and Capital Editor Nick Hodge continues his discussion on energy efficiency, showing investors how they can profit off of this new trend is starting to gain attention.

The Bakken Oil Formation: Being Wrong Never Felt So Good
Readers take a moment to reflect on how one simple error has made their Bakken investments wildly successful. In this free report from Energy & Capital, you can learn about one company that's moving into the Bakken spotlight.

Nuclear Energy Stocks: Helium-3: An Energy Solution Only 238,857 Miles Away
Have the Chinese finally lost their minds? Energy and Capital Editor Keith Kohl shows readers why China is traveling 238,857 miles to solve its looming energy crisis.

Greenland's Gift: Owning Your Share of this $273 Billion Chunk of Arctic Tundra
It's not often that you find a tiny piece of land worth so much. A few weeks ago, the Kingdom of Denmark lost the mineral rights to a 500-mile piece of Arctic bedrock that will play a critical role to the future of modern circuitry. Energy & Capital reveals the one company that stands to control it all.

2010 Commercial Real Estate Forecast: No Spin Zone: CRE Plunge is Inevitable
Wealth Daily's Steve Christ explains why commercial real estate is an absolute disaster for investors. Be sure to read Steve's take on why CRE is doomed to fail.

5 Reasons the iPad Will Fail: Apple's Latest is a Bust
Wealth Daily Analyst Adam Sharp gives you an in-depth look at Apple's latest iPad, offering 5 reasons why this device is headed straight for the trash.

China's Huge Oil Demand: The Middle Kingdom Secures Future Energy Needs while U.S. Sits on the Sidelines
While many oil investors are fixated on the U.S., Wealth Daily Editor Christian A. DeHaemer takes a different approach by focusing on the real problem — namely, China's growing thirst for oil.

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Hydrogen Fuel Cells: The Downfall of Tesla?