Welcome to the Energy and Capital Weekend Edition — our insights from the week in investing and links to our most-read Energy and Capital and sister publication articles.
Last Sunday, when the grills went cold and the scorching sun finally set, there was only one thing left to complete my July 4th weekend…
The grueling ride home through traffic.
This year was no different.
The six to eight hour grind through stop-and-go traffic has become a part of the ritual. I’ve come to accept it.
Yet, as I noticed more Hummers showing their gas guzzling faces than usual, I couldn’t help but shake my head and wonder whether or not the American public has forgotten about $150/bbl oil.
After all, it’s only been two years…
But the re-emergence of Hummers aside, there was something else that captured my attention.
The public is about to get blind-sided by the upcoming peak oil crunch.
The long road to energy independence
I know a lot of you may believe in Obama’s pledge to help the U.S. eliminate our overwhelming dependence on foreign oil.
At times, I find myself hopeful. I want to believe that people finally get it.
But it doesn’t matter how optimistic we are.
The future of U.S. energy security is a dark, gloomy picture. The cold, hard truth is that peak oil is nothing more than a talking point for politicians.
Please don’t think for a second that Obama is the first president to make that pledge.
Here’s a little-known fact that people tend to forget every four years: Every president since President Nixon has, at one point, stated the U.S. needs to focus on energy security — specifically, that the issue of energy security revolves around our dependence on foreign oil.
That’s 35 years and counting…
Is it finally about to happen?
Take a look how things are going so far:
Remember, it took a massive global recession to slow our runaway oil consumption. Unless you’re a fool, you know the recession won’t last forever.
What do you think will happen when the world’s economy is back on its feet?
Peak oil: closer than you think
Over the next few weeks, I’ll be talking a lot more on peak oil, so don’t worry too much if you’re new to the subject.
You see, an oil crunch is a lot closer than you think.
Since April, the fate of offshore drilling has been in jeopardy. Politicians have been demonizing deepwater drilling ever since.
Now the chances of them having any knowledge on offshore drilling are slim… But that’s okay; I don’t expect them to look beyond their own re-election campaign.
I won’t speculate much more because the White House is expected to hand down its decision on the drilling ban this week.
What I do know right now is that if deepwater exploration is pushed back any more, there will be a drilling frenzy for onshore oil.
I’ve laid out all of the details for you in this free report.
Prayers won’t save the Saudis from peak oil
I’d love nothing more than to sit here and tell you that we’ll be fine.
I can’t do that.
Giving the public a false sense of security will make matter worse — much worse. It should be clear that an oil crunch is about to take center stage… again. This time, however, it will make $150/bbl oil look like pennies.
While most of us were enjoying our Independence Day festivities, Saudi Arabia’s King Abdullah dropped a bombshell….
According to the Saudi press, the Saudi King ordered a complete halt to oil exploration operations.
You read that correctly.
Takes your mind off of the BP drilling ban, doesn’t it?
As you know, Saudi Arabia is the world’s largest oil producer, pumping out 8.26 million barrels per day just last month. The country holds reserves of more than 260 billion barrels of crude oil and condensate.
Why are they halting exploration?
According to King Abdullah: “… I have ordered a halt to all oil explorations so part of this wealth is left for our sons and successors, God willing.”
Could this finally be the nail on the peak oil coffin? Is the mighty Ghawar oil field about to follow the same path as Mexico’s Cantarell oil field?
At this point, only time will tell. The Saudis closely guard their oil field data, so it’s impossible to know for certain.
And don’t forget that OPEC members are masters of deception. OPEC members magically doubled their reserves in 1980s; Iraq did it twice in five years.
Either way, it’s a strong message from Saudi Arabia to the world — one that says, “Don’t expect us to keep the taps open for long.”
Peak oil profits
For us, it’s a different story.
This latest announcement by the Saudis doesn’t come as a surprise. If anything, it re-affirms our belief in peak oil.
Right now, there’s an unprecedented buying opportunity in the markets. And every time I see the market get beaten back down, that feeling gets even stronger. We’ve witnessed the bottom for oil prices back in December 2008, when a barrel of crude cost $33.
For the last two weeks, I’ve mentioned that the U.S. has only one place to turn to feed its 18.6 million barrel per day addiction: Canada.
In fact our Canadian imports are now more than double our imports from Saudi Arabia. The U.S. currently imports about 2.46 million barrels of Canadian oil ever day.
With the Saudis out of the picture — and Mexican production dropping like a stone — looking to those Canadian drillers is a no-brainer.
I’ve actually found a tiny unknown Canadian oil stock that’s stands to make investors 1239% by 2012.
You can learn more about this opportunity by clicking here.
Until next time,
Editor, Energy and Capital
P.S. In case your work week was as hectic and unforgiving as mine, feel free to kick back and catch up on the week’s top investing stories from Energy and Capital and our sister publications.
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