Stock Ideas 
Stock Ideas Investors Daily Edge Oil Policy Change?There is substance to the “Peak Oil” claims
Stock Ideas Investors Daily Edge Oil Policy Change?There is substance to the “Peak Oil” claims 
Market Watch
|
World Natural Gas Consumption by Region, 2004-2030 Oil is doing a great job of taking all the headlines. Momentum recently caused oil to surge past $130 a barrel. But how much upside is really left? |
|
| More... |
Most Popular
Login Form
| Oil Policy Change?There is substance to the “Peak Oil” claims |
| Wednesday, 18 June 2008 | ||||||||
|
The recent oil spike mystifies almost all U.S. citizens. You can’t help but notice it because you watch the national news and you need a gas fill up every couple hundred miles. Let’s take a quick look at two key charts and then de-mystify what is happening to your wallet. I have set these charts to line up with each other starting in 2002. Since that time oil has soared and the US dollar has taken a beating. These charts show an uncanny inverse relationship during this period. What exactly are the key factors causing oil prices to explode? 1. Oil is primarily priced in dollars across the globe. It used to be that you absolutely had to buy dollars in order to purchase oil. That is changing as multiple countries rebel against ongoing dollar abuses. Even ‘foreigners’ catch on sooner or later. A weak dollar directly translates into corresponding higher oil prices. 2. The U.S. has not had an intelligent energy policy in my adult life. Our government learned nothing from the energy crisis of the 1970’s. The oil lobby has held sway. Citizens remain at the mercy of government and their lobbies. Expect no mercy. 3. There is substance to the “Peak Oil” claims (). The low hanging fruit has been picked. We are not running out of oil, but major wells are clearly in decline. 4. There is a degree of speculation behind recently spiking prices. 5. All commodities are the recipients of government sponsored monetary inflation. The wise and the wary escape from the dollar world to the real asset world. Unfortunately, we’re stuck with oil dependency for the near future. This problem isn’t turning around on a dime. Green energies like wind, solar, wave or geothermal won’t have significant impact for a decade or more. Nuclear energy is the one current and capable oil replacement, but it too will require some time. The French have long received about 75% of their power from nuclear sources. Zero accidents. What can be expected now that oil and gas prices have attracted national attention? Short of more international “adventures”, military or otherwise, oil is likely to head downward well before the end of the year. Still, the days of $30 to $40 oil are gone.
“High” oil prices will bring forth more product, especially with sustained elevated prices. The rapidly developing world will gobble it up. It would not be surprising to see oil fall back below $100 on a correction. At some point, $100 is set to be the floor under the price of oil.   There is lots of money to be made in the oil fields in the coming years and decades. You don’t have to be an oil victim. Live Resourcefully, Rusty P.S. To let me know what you thought of today's article, send an e-mail to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
This investment news is brought to you by Investor's Daily Edge. Investor's Daily Edge is a free daily investment newsletter that is delivered by email before the market opens. It's published by Fourth Avenue Financial, a subsidiary of Early To Rise (an affiliate company of Agora Publishing). In each weekday issue you'll receive practical strategies for protecting your portfolio and multiplying your money. You'll also learn about undiscovered opportunities in emerging sectors and markets, deeply discounted stocks, recommendations for bonds, cash, commodity and real estate investing, and top ETFs. To view archives or subscribe, visit Investor's Daily Edge .
|
||||||||
| < Prev | Next > |
|---|
