Pentagon Oil Prediction

Jeff Siegel

Written By Jeff Siegel

Posted February 28, 2011

On Wednesday, I sat impatiently as I watched oil prices climb.

Always playing the peaks and valleys of oil stocks, this is a trading game that continues to generate some serious cash…

Perhaps not as much as Ben Bernanke and his magical printing press, but there’s no doubt that the potential for serious supply disruptions always translates into a very profitable ride for us.

We saw proof of that last week after that nut job in Libya waved his rusty iron fist as his country burned.

Of course, last week’s spike in oil was the result of the much bigger picture of oil supply constraints.

And despite efforts to exploit our own domestic resources, we all know that no matter how you spin it, we’ll never be able to produce enough of the stuff to meet demand.

That’s not to say we won’t try.

Like a desperate junky breaking into a car to steal the change from an ashtray, just to get one more hit, we’ll lift every stone for just a little more.

But make no mistake: No matter how much we can get our hands on, it’ll never be enough.

And if you’re fired up about 87 Octane running you $3.30… boy, are you going to be pissed off next year.

$5 a gallon: Suck it up, sucker!

Last year, the former president of Shell Oil ruffled quite a few feathers after predicting $5 a gallon by 2012. But here we are today, and a ton of traders are predicting the exact same thing.

It’s amazing what a little chaos in a major oil-producing region will do to your estimates.

Of course, for the most part, I take a lot of this stuff with a grain of salt. After all, if $5 a gallon doesn’t come by 2012, no one’s going to publicly eat crow. In fact most folks will forget they even read about $5 gas by the time 2012 rolls around.

Either way, I’ve never felt comfortable with making those kinds of hard predictions when it comes to oil and gasoline prices.

But there are some who simply have no choice.

Like the military, for instance…

What’s another $900 million?

While we may bitch and moan about paying more to fill our tanks or paying more to keep the lights on, the military has a much bigger problem when it comes to its energy needs.

As you may already know, rising oil prices result in a major economic burden for our military. For every $10 increase in the price of a barrel of oil, another $300 million is added to the U.S. Navy’s fuel costs.

Based on the Pentagon’s latest fiscal 2012 budget, this means the Navy is already gearing up to spend another $900 million next year!

You see, the Pentagon report that was recently sent to Congress plans on the price of oil coming in at $131 a barrel.

Of course, the military has been preparing for these price hikes for some time now. The U.S. Navy already has a plan in place to ensure that half of all the energy it uses by 2020 comes from non-fossil fuel sources.

And don’t forget, there’s another, greater cost associated with the military’s reliance on fossil fuels. Last year we learned that one American was killed or wounded for every 24 convoys that moved fuel to military bases in Afghanistan.

Yes, the military has quite a bit at stake here.

And we do, too.

An uncomfortable glimpse of our future

Last week, we were reminded yet again as to just how fragile this whole oil game is.

The slightest disruption — even the mere threat of disruption — can send oil prices soaring.

And rest assured, last week was not a one-time event; it was just one more glimpse of our future.

So yes, as investors, we will continue to load up on oil. But we’re also loading up on all the things that will facilitate our transition to a transportation system that relies less and less on the black stuff.

No, we won’t be trading in our cars for hydrogen-powered landspeeders anytime soon.

But we will be producing — on a very large scale — electric vehicles

We will be pumping out trucks and buses that run on domestic natural gas…

We will be bolstering our mass transit systems and developing high-speed rail, even if a few partisan slaves reject the idea based on politics instead of good policy…

And we will be profiting from all of it!

If you’re not caught up yet, here are a few free reports to get you started:

The Electric Car Revolution Starts now!

High-Speed Rail: Getting Back on Track

A New Era in Battery Technology

To a new way of life, and a new generation of wealth…

jeff signature 

Editor, Energy and Capital

Angel Publishing Investor Club Discord - Chat Now

Jeff Siegel Premium


Hydrogen Fuel Cells: The Downfall of Tesla?

Lithium has been the front-runner in the battery technology market for years, but that is all coming to an end. Elon Musk is against them, but Jeff Bezos is investing heavily in them. Hydrogen Fuel Cells will turn the battery market upside down and we've discovered a tiny company that is going to make it happen...

Sign up to receive your free report. After signing up, you'll begin receiving the Energy and Capital e-letter daily.