Why I'm Not Buying Oil's Recent 'Correction'

Turn on CNBC and you will see market commentators, traders, and analysts calling the current oil and natural gas pullback a “correction”. Sure it is a correction, but financial stocks started out as a “correction” just under a year ago, and let us not overlook the “correction” in technology stocks 7 years ago.

At 20.08 million barrels per day, total U.S. demand for crude oil is the lowest in five years. Also, the decline in gasoline demand over the past two quarters was the first significant decline in 17 years. It is clear that demand for energy is declining in the United States. This demand decline will not stop in the United States.

Currently the International Monetary Fund is predicting 3.73% global growth in 2008. This is 50 bps lower than in their forecast in January and 125 bps lower than the 4.94% growth witnessed in 2007. Given the slowing growth around the globe we are going to likely see demand for energy related commodities slow, which gives greater recognition to a longer term commodity slump.

Combine this evidence with historical sector return fluctuations; it becomes clear that the current commodity bull market may be ending. Historically, the sectors which led the market higher in the last bull market are not the sectors to lead the market higher in the next.

The graph below (click to enlarge) shows two bull markets, one ended in 2001 and the other ended in 2008. Notice the sector which led the first bull market, technology, still had yet to return its losses in the most recent bull market. In fact, a completely different sector led the next bull market, energy.

So my advice to fellow investors is to sell your energy related positions. No matter how well they have performed over the past 5 years, history is proof that it can not continue forever.

Disclosure: none

Comments

[Brian Pursley:]

Supply and demand.

Supply is infinite: oilismastery.blogspot..../

Hydrogen is the most common chemical element in the universe and carbon is the fourth most common chemical element in the universe.

2008 Jul 27 09:14 AM

[2008traveler:]

When it comes to fossil fuels you might be served better by a dipstick than a chart. I saw a TV news report of a local gas station that lowered it's price to $3.80. The lines of cars waiting for (cheap?) gas were tremendous. If the price dips in this CORRECTION I am sure you will see that demand destruction fade. Europe pays $9 a gallon. Can you spell buying opportunity?

2008 Jul 27 09:40 AM

[investor88:]

Mark's article is thought provoking ie that the bull market in oil and commodities is over. Jim Rogers and Matt Simmons of 'peak oil' fame certainly do not think so, sees this as just a correction like the previous sharp corrections of up to 40% only to see new highs a number of quarters later. It will be interesting to see how things unfold in the coming quarters.

2008 Jul 27 10:03 AM

[mysaug:]

The old truism that once everyone believes it is true and ends up on TIME magazine cover is time to get out is correct. I am kicking myself for not unloading all bank stocks like I did builders when "Flip this House" became a TV series. I did not know the extent of these complex CDO and SIVs, thought all sold to 3rd parties . Anyway, oil was too low before , a little too high now, so think will end up around $100 which is good for everyone.

2008 Jul 27 10:03 AM

[Nik in NC:]

The technology or "dot.com" boom which ended in '01 was a house of cards from the word go. The energy boom, created by actual demand, and relative shortage of supply, is REAL. The two "booms" are not comparable. Ergo. your article is worthless, or at best misleading.

2008 Jul 27 10:04 AM

[ari5000:]

If I had a nickel for every Home Prices have Bottomed, Oil Prices Have Topped article....

So far --- 100% of the articles have been dead wrong. Quite a track record over the past year.

2008 Jul 27 10:06 AM

[CLH:]

You are right on Mark. Of course most people will hang on until their money is gone. Thats good for rest of us in DUG.

2008 Jul 27 10:50 AM

[Brian Pursley:]

2008traveler: there is no such thing as fossil fuel. Fossils have nothing to do with fuel whatsoever.

2008 Jul 27 10:51 AM

[freefall51:]

The demography of the world runs against theme of the blog. Somebody elsewhere suggested that if China and India had the same per person consumption of oil like the Americans, the known oil reserves would last less than a year. Now that is scary.

I am not impressed by short term corrections.

2008 Jul 27 11:13 AM

[John Pseudonym:]

The oil chart went vertical and it's time for the price to come down; possibly a bunch...

After a short washout in price, the bull run in oil will begin again as the new "lower price" will increase demand as all those SUV's come off the blocks and back onto the road.

2008 Jul 27 11:19 AM

[drooyrich:]

oil left an open gap at 122 - will fill it probably in the next few weeks - truth is oil production has peaked in 2005 and is now starting to fall fast - Cantarell Mexico is down 14% y/y - all this nonse of oil correcting because it is getting too expensive does not take into account the issue that oil is FINITE and diminuishing - economists can not understand this since their reasoning is based on the classical demand-supply relationship - my bet ? Oil correct at 120 approx. and then goes up beyond 200 when Iran gets bombed by year end - anybody wants to bet ? [e-mail]

2008 Jul 27 11:35 AM

[SCovert:]

To Brian Pursley -
I agree there's good evidence oil came from biomass but not necessarily fossils (ie. dead dinosaurs), but I'm not sure if that'll help us find more of it - or help us to create it any more cheaply. After science proves something, it'll take 10 years before it hits the newspapers and another 10-20 years before it becomes common knowledge.
Now if it IS possible to use biomass, like fields of algae (?) to create oil somehow, that'd set the fuel industry on its ass. Or get the inventor killed by big oil.
The short and/or medium term outlook for oil may indeed be bullish, but in the long run it's dooowwwwnnnn. California already is basically forcing 16000 hauling trucks to switch from gas to natgas.
In another 10 years we'll have books about "Peak Natural Gas" and "Peak Coal".
And so it goes ...
Sunday morning after a big party - am I rambling?

2008 Jul 27 11:47 AM

[Tmalan:]

John
Pseudonym

Even if oil reaches to $100, you will not see cheap gas any time soon if ever again. Refineries have been eating a lot of the oil price on their side and the lower oil price will just bring their cost back in line. $3 + gas is probably here for a while. So, I do not see a mass return of gas guzzling SUV driving.

However, if oil reaches back down around $75 and STAY there, you may see gas drop to below the $3 mark.

2008 Jul 27 12:34 PM

[debtacid:]

Anyone notice that the spikes up in oil happen when the Fed lowers the interest rate? Everyone still talks about the price of oil as if the value of the dollar is constant. Historical charts and models are useless if they don’t take debasement in to account. For oil, anticipation is more important than history. If traders anticipate that the Fed will start raising interest rates to slow inflation, then oil will drop. If tensions in the middle east rise, oil spikes up. I think these are the two most important factors in oil right now.

2008 Jul 27 12:56 PM

[User 145883:]

Jim Rogers also said BUY CHINA again a month ago. It is down ANOTHER 15%. He's not a god.

2008 Jul 27 01:00 PM

[mixter:]

All of you idiot market timers sell your oil stocks. I am a fourth generation "oily" and the history of the oil industry has been boom and bust since the Spindel Top discovery. There were bad times in 1931, when oil prices dropped to $0.60 per barrel from $1.23 the year before, hard times in the 50's, and then again in the 80's. What goes up will come down, and vice versa.

However, the history of the market usually works out to two steps forward, one step backward, then two steps forward, etc.

Geopolitics being what they are, and the stupid "dim-wit-O-craps" trying to eliminate utilization of fossil fuels in order to support Al "Gork's" global warming hoax, will insure that the market will not be "awash" in excess supply for some time. Alternative fuels can never compete with opening up a choke and letting a well flow thousands of barrels of oil per day.

One thing is for sure, the "dim-wit-O- craps" will always put party ahead of country every time as long as jerks like Reid and Pelosi are running things.

2008 Jul 27 01:01 PM

[Brian Pursley:]

SCovert, what is the "good evidence oil came from biomass"?

"Natural petroleum has no connection with biological matter." -- Jack F. Kenney, 2001

2008 Jul 27 01:28 PM

[bearfund:]

Brian,

Seems like since supply is infinite, you should be cleaning up pumping as much oil as you care to pump at $150, $120, or $100 a barrel. After all, the oil companies clearly are wrong; they are spending hundreds of thousands of dollars a day on drill ships to find just a little more of the stuff. Here you're telling us there's no limit to supply and the rate of supply will never fall. I'd figure you'd be too busy counting your trillions to have time to comment.

2008 Jul 27 01:46 PM

[Sober Realist:]

Since we have no real alternative for oil anytime soon and world population keeps growing, the demand for oil will keep growing. It would seem to be common sense to me that if you have billions of people in the developing countries working to attain the "American lifestyle", then you continue to have massively more amounts of natural resources being consumed. Something on the order of 16 additional planet Earths would be required in order for everyone in the world to live like Americans. So it makes perfect sense to me that we have not seen the last of oil's upward march when I read reports from smart people like the following:
www.appgopo.org.uk/eve...

Oil is inextricably linked to every aspect of our modern world. For anyone to say that we can move away from it overnight is naive and misinformed:
www.motherjones.com/ne...

No overnight technology fix:
earth2tech.com/2008/07.../

And lastly, everyone should read the following by Dr. Scott Tinker
(www.beg.utexas.edu/sta...):

www.aapg.org/explorer/...

2008 Jul 27 01:47 PM

[User 202445:]

Mark you jump to some incorrect conclusions. But you also make valid points and some bracing data with respect to growth. But that growth is just that growth and w2hile the rate of growth is declining it is still growth. Energy did not lead the markets higher. Energy was led higher by the growth and by the markets/ Look at charts for the S&P. energy companies, and fertilizer companies. The ferts and energies went higher because of the growth in other areas. Perhaps energy will fall but as long as growth exists and their is not an over-supply of a particular commodity that commodity should rise in value/price. Again, look at the charts in the commodity sector didn't rise until well after growth in other areas. Also you need to start you graph in 2003 or 1993 rather than skew the data by starting at the end of the telecom/internet build out bubble. By your logic Goggle would have been a worthless investment.

2008 Jul 27 01:48 PM

[VSD:]

China inventories are opaque to the world. Olympics related lowering of oil consumption will last until August. We will be seeing $150 oil before end of the year.

2008 Jul 27 02:49 PM

[drbagel:]

Much of this bull market is inflationary. Energy, gold, silver, platinum, grains, base metals and foreign currencies dont all move together by accident. Everybody needs more of everything simultaneously all of the sudden??

Anyway we are extrapolating into the future on a linear basis without taking into account the inevitable but unforeseen technological breakthroughs that change the world. It wouldn't take much to change this whole equation.

2008 Jul 27 02:51 PM

[Dame Daxx:]

From the oil analysts I read, there seem to be two arguments: 1) Oil will not fall much below $120, or 2) Oil will fall to $85. So I would short it at about the $115 level. Abby Cohen said last week they consider the fair value for oil to be $130-$135.

I got demolished on my energy stocks in the past 2 weeks (especially CHK), so most of them are closed. However, I do believe that it will be Energy & Materials that leads the next bull market. The alternatives just seem to have too much going against them.

2008 Jul 27 03:34 PM

[lance sjogren:]

So demand may decline slightly? (very iffy considering China, etc., but let's humor him and assume this premise is valid)

What about supply? Supply is declining.

What about valuation? So what if energy stocks were wildly undervalued for many years. The question is are they good values now.

I would say when we are looking at PE's of 6-10, that yes we are.

In general those are based on conservative prices on oil & gas, not the recent high ones.

2008 Jul 27 04:16 PM

[lance sjogren:]

"Anyway we are extrapolating into the future on a linear basis without taking into account the inevitable but unforeseen technological breakthroughs that change the world."

There are a lot of things to worry about as an investor, but I would say that is down at the bottom of the list.

If we're lucky we will be able to switch over to electric vehicles within 5-10 years. Add another 5-10 years for fleet switchover to account for the fact that people can't afford to throw away their $30,000 or whatever investment in an internal combustion car until they have used up its useful life.

But what about the unexpected tech breakthroughs that Dr. Bagel suggests? Yes I would say if you are investing on a 50 year time horizon that is something you want to concern yourself with. I am confident that oil & gas will be much in demand over the next 5-10 years.

In fact, I believe alternative energy will be GREAT for the oil & gas business because at most they will help hold down oil & gas prices to tolerable levels where the oil & gas companies will make good profits but will not be vulnerable to demagogic politicians calling for nationalization.

2008 Jul 27 04:22 PM

[lance sjogren:]

"Now if it IS possible to use biomass, like fields of algae (?) to create oil somehow, that'd set the fuel industry on its ass. Or get the inventor killed by big oil."

So far biofuels are not a viable replacement for fossil fuels, however they probably can serve niche applications such as providing jet fuel for air travel for the rich (the only ones who will still be able to fly) plastics, military aircraft etc.

If plants can be engineered to convert solar energy a lot more efficiently, then biofuels may have a future as a large-scale energy supply. I am not aware of any even very preliminary achievements in that area so far, in fact I'm not sure there's even much research going on in it.

Otherwise, biofuels are way too inefficient, or, another way to put it, they take up too much land to be able to provide large-scale energy supplies.

2008 Jul 27 04:28 PM

[lance sjogren:]

Who needs Jack F. Kenney, we already have energy crackpots serving in congress.

2008 Jul 27 04:31 PM

[newtoapple:]

Supply and Demand pure and simple .. if oil persists in less usage , they will pump less . They will keep the price up to whatever the traffic will bear . That is the primary reason there is an OPEC and related groups out there. IMO there will be a small pullback in oil but long term up it stays . to a level the market dictates.
The comparison with the dot.com bubble is senseless . One was paper assets the other is a needed commodity .

2008 Jul 27 04:47 PM

[Michael Fit...:]

i hope the author and his readers do sell all their energy holdings so i can continue to pick them out at discount prices. worldwide oil supply is not going to keep up with worldwide oil demand. this can only mean one this wrt price of oil and for the currency of the country that has to import 70% of its oil. oil will keep going up, and the US dollar will keep going down. inflation will keep rising. all that said, how can one not own energy stocks? where else is there to invest? meanwhile, billions of chinese are trading in their bicycles for autos, and Tata Motors of India is producing the "Nano" car for $2500 for its millions of citizens who want to drive. meanwhile, the US has no energy policy. so, you guys go ahead and get scared out of this oil "correction" (it's still over $120 a barrel isn't it? not to long ago, this would have appeared to be outrageously high. now it's a steal?) and i'll stay the course based on the fundamentals of supply, demand, and the lack of a comprehensive long-term energy policy by the country that needs it most (US):

thefitzman.blogspot.co...

2008 Jul 27 05:28 PM

[Kunst:]

Dollars, oil. Oil is finite (Brian Pursley not withstanding), dollars are not. If you have a bunch of dollars because you sell lots of stuff to America, would you rather buy IOUs from the US Treasury or maybe stock up on oil?

2008 Jul 27 06:17 PM

[drbagel:]

Oil, like any commodity can destroy its own demand when prices skyrocket. For the last 30 years there has been little incentive to provide for an alternative. People underestimate just how much the US economy can adapt to higher oil prices. Demand is already down and this is just the beginning. Watch me vacation in Maine instead of Europe. Watch me drive less and wear more sweaters. I will buy a wood stove. Bottom feeder may be right that prices will remain high for 5-10 years or maybe even more. But I'm not a market timer and wouldnt know how to decide when to sell my energy stocks and futures. People will adapt to this, and in time we'll live on less. BTW, so will China and India. If bullish energy sentiments are showing up on Blogs, then they are already priced into the market, making Oil prices fragile and easily prone to a major correction.

2008 Jul 27 07:08 PM

[Capitalist Cow:]

I thank all of you for your responses, I have enjoyed reading all of them. This was my first Seeking Alpha post and after spur such a debate I look forward to posting more. Before I do, I feel the need to clarify a few items I believe some readers took out of context.

Many readers took the article to mean that I was calling for oil to go back down to $10 per barrel. In fact, I do agree with most of you that we will probably not see that level again. Instead I was simply pointing out that after the significant run that we have had, we are likely to see a pull back or stagnation in oil prices, mainly due to slowing growth concerns. We are already seeing this, or so I believe.

I do agree with User 202445 who said “growth is still growth”, but let's keep in mind that oil futures price in the expected future price of oil. If these current prices reflect 5% global growth and global economics change to expect 3% growth, do you not feel that oil will price in the lower 3% growth in demand?

But to restate my main point, prices don't rise forever. Although oil prices are very inelastic, consumer habits can changes, alternatives can be found, and more oil can be drilled.

2008 Jul 27 07:22 PM

[greeytop:]

I have to support the viewpoint of Fitzman. I have been investing in all kinds of energy for more than 30 years. The recent high price of motor fuel has, indeed, led to destruction of demand but the easiest consumption changes were made first. Further reduction in consumption is going to be harder. As long as economies in the rest of the world are roaring, our consumption cuts merely make more of a scarce resource available for "them" to consume. Most members of Congress are profoundly stupid but most of the people running the oil companies are very realistic.(note the comments of "4th.generation oily") Oil and gas men have seen real hardship before. One oil major I am invested in is also producing energy from solar, geo-thermal, and is researching producing liquid fuels from biological processes. The easy oil and gas has mostly been exploited.The recent price of energy stocks has had an element of speculation. Speculators are like vultures who show up when they see a dead or dying critter on the ground. They vanish when the body is gone. I believe there is even a modicum of "hot money" in something as pedestrian as an electric utility. The moment some rumor comes along, they cut and run and cause the price to drop. I would argue that we may be making serious amounts of motor fuel from coal to liquids before hydrogen or other esoteric solutions appear. Electric cars may own a fraction of the market ( think mail delivery, short range commuting etc.) But I don't see electrics allowing you to drive from Jacksonville, Florida to Detroit. Oil and gas will be with us as long as we can squeeze it from the Earth.

2008 Jul 27 08:06 PM

[longoil:]

Mark Barath said "But to restate my main point, prices don't rise forever. Although oil prices are very inelastic, consumer habits can changes, alternatives can be found, and more oil can be drilled."

Your statement is correct, but according to the BP Statistical Survey of World Energy 2007, 87% of the world's energy still comes from fossil fuels (i.e. oil, coal, gas, etc). There 500 million cars in world and most of them are either gasoline or diesel powered. A substantial conversion to alternative energy forms will take at least 30 years.

The current dip is oil prices is a buying opportunities for companies that are involved in exploration & production as well as oil field or deep sea drilling services. That's why I am long on oil.

2008 Jul 27 08:48 PM

[surgcare:]

I DARE "CLH " to hold his DUG for 3 years . If your so confident oil is going to keep going down , then back up your words with action .

2008 Jul 27 09:19 PM

[Brian Pursley:]

To bearfund in response to "the oil companies clearly are wrong; they are spending hundreds of thousands of dollars a day on drill ships to find just a little more of the stuff."

Why are the oil companies wrong? The $650,000 per day rate is paid for ultra-deep water drillships that drill past the mythological biogenic "oil window" at 15,000 feet true vertical depth.

2008 Jul 27 09:52 PM

[Kezorm:]

Quick comments:

Russia just increased export tariffs on crude to $70/bbl. Given the enormous output of Russian crude, this number has got to be part of the equation for calculating a new price floor. After all, $70 is just the tariff.... It does not include lifting, profit, or shipping.

Saudi Arabia and Libya have threatened or promised to slash production if oil fell too far, too fast. Although I do not recall a "strike price" being stated, I'd guess they would defend at $100/bbl or so.

The USA crude oil demand experiences very consistent seasonal variations and we are at the second of two predictable summer minima. From the fourth week of July, till the last week of September, demand traditionally builds. Expect this effect to exert itself, even if other political factors overlap.

Abiotic Oil? It is fascinating that the famous Brazilian prospect called Sugarloaf or Carioca will be the subject of exploratory drilling by Seadrill's West Polaris, on behalf of XOM, HES and PBR over the next year. The particular block being drilled is BM-S-22. The basement structure which is responsible from producing this particular hydrocarbon target is a failed spreading center related to earlier rifting tween SA and Africa. Two miles of salts overlie the old rifting center. See this site: www.searchanddiscovery...
Combine this especially attractive prospect with the recent news about abiotic hydrocarbons found at the Lost City Hydrothermal field, and one is forced to wonder if the massive Brazilian sub-salt reservoirs might be created by inorganic reactions between water and ultra-mafic rocks.

2008 Jul 28 12:36 AM

[longoil:]

Biogenic oil theory states that most oil will be found between 7500 and 15000 ft. The distribution of oil finds is a Gaussian curve centered at 11250 ft. Oil is still found (but less likely) on the tails of the Gaussian curve (i.e above 7500 ft and below 15000 ft.)

2008 Jul 28 07:30 AM

[john s. gordon:]

pursley - the technically unsupported assumption of abiotic oil is just a copout to justify the attitude that unlimited drilling in random locations will produce unlimited quantities of previously unknown oil. don't bet the ranch on it.
> jack

2008 Jul 28 09:11 AM

[Brian Pursley:]

Deep abiotic hydrocarbon origin is reality. Complex hydrocarbons can only be formed at pressures above 30 kilobar which corresponds to a depth of 100 kilometers deep in the mantle: www.pnas.org/content/9...

Deal with it.

"The suggestion that petroleum might have arisen from some transformation of squashed fish or biological detritus is surely the silliest notion to have been entertained by substantial numbers of persons over an extended period of time." -- Fred Hoyle, 1982

2008 Jul 28 09:32 AM

[longoil:]

Biogeneic oil and Peak oil theories have been peer reviewed and accepted by the vast majority of the world's scientists.

I have a hard time accepting Abiotic oil, a theory advanced by Stalin endorsed scientists.

Jean Laherrerre (a world famous petroleum geogolist) dismisses Abiotic oil point-by-point in the following article:

lawnorder.blogspot.com...

2008 Jul 28 11:28 AM

[Brian Pursley:]

Longoil, your claim that "biogenic oil and peak oil theories have been peer reviewed and accepted by the vast majority of the world's scientists" is laughable.

"Peak Oil theory is garbage as far as we're concerned" -- Robert W. Esser, geologist, CERA

2008 Jul 28 12:09 PM

[longoil:]

Brian,

The CERA bunch are "very credible" in regards to peak oil.
Let's see what they have predicted in the last few years:

2002 CERA predicts: Gas production up 15% by 2010
==> Reality: Gas Production is flat into 2008.

2003 CERA predicts oil will drop to low to mid $20
==> Reality: Oil = $31

2004: CERA predicts oil will hit high 20's or low 30's thru to 2005
==> Reality: Oil = $65

2005: CERA predicts oil will drop below $40 for 2007-2008
==> Reality: Oil = $57

2007: CERA predicts oil will drop to $60's by 2008
==> Reality: Oil peaks at $147 and is flat at $125 by mid-2008

Daniel Yergin and his gang at CERA should get a better crystal ball.

2008 Jul 28 12:25 PM

[fireball:]

FITZMAN hi, thanks. you voiced what i thought. seemed like a good time to acquire pbr. never hurts to have your best guess backed up by someone you find more astute. especially this last year. LONGOIL same goes for you. it will take a very dramatic innovative invention to make me drop pbr and bqi. i mean something that is so close to gasoline that in can go right into our autos and gas stations.

2008 Jul 28 12:45 PM

[Brian Pursley:]

You might also look at the many failed predictions of the peak oil cult.

Deffeyes: peakoildebunked.blogsp...

Simmons: peakoildebunked.blogsp...

Pickens: peakoildebunked.blogsp...

2008 Jul 28 05:14 PM

[henarl:]

To everyone who thinks oil is now a poor investment: What is your better alternative ? Maybe the financials, or possibly housing, maybe technology, or maybe you're willing to wait a few decades for alternative energy sources to pay off. You could invest in nuclear and fight the environmentalists and NIMBYs for awhile. Gold and silver have been real great lately. How about just sticking your dollars in the money market at under 3% when inflation is at least twice that. Maybe a trip to Vegas is your answer. How about lottery tickets ?

2008 Jul 28 05:46 PM

[Toeser:]

I agree. I sold all my energy stocks in mid-June (ALL lower now). I will buy back at some point, but we are not there yet. The only risk to my plan is the Middle East, Nancy Pelosi, and Harry Reid - all enemies of the state.

2008 Jul 29 04:15 PM

[2008traveler:]

My local gas station dropped the price of regular to $3.95 a gallon. The 40 pumps were all being used by SUV and trucks sucking up as much as they could. So much for demand destruction! Don't believe all that the talking heads tell you. Especially some government agency. Over $4 a gallon was just a way of getting the junky to think high $3 a gallon is a steal. Guess everybody who owned an SUV didn't trade it in for a Prius. I wouldn't go crazy dumping energy shares. Cheaper crude means better margins for some. How many tech stocks or financials have doubled earnings in a year. Until Petrobas cancels their orders to contract every available rig in existence, oil service companies will continue to perform.

2008 Jul 30 12:17 AM

[2008traveler:]

Brian Pursley: Fossil fuels or mineral fuels are fossil source fuels, that is, hydrocarbons found within the top layer of the Earth’s crust. It is generally accepted that they formed from the fossilized remains of dead plants and animals by exposure to heat and pressure in the Earth's crust over hundreds of millions of years. It was estimated by the Energy Information Administration that in 2005, 86% of primary energy production in the world came from burning fossil fuels. source Wikipedia

2008 Jul 30 12:41 AM

[henarl:]

Abiotic oil is right up there with the flat earth.

2008 Jul 30 12:56 PM

[popo:]

Your article is based on technical analysis, and utterly dodges the supply issue. You can't compare demand for dot-com stocks with demand for energy. Energy demand is relatively inelastic despite the academic economists' belief that demand destruction must occur. Furthermore, closed-system analysis of oil which doesn't account for Indian and Chinese growth is an exercise in silliness. There are only two points that are necessary to answer this issue: (1) Global demand for oil is growing exponentially. (2) Supply is not. Whether or not you believe supply is shrinking is irrelevant to this analysis. All that is necessary to agree on is that supply is *not* growing exponentially to keep up with demand. Oil will, and must go higher. And for those who believe in alternative fuels: Show me. And that includes planes, freight vehicles shipping.

2008 Jul 30 07:59 PM

[hisen1:]

You don't have a clue, take your charts and dump them. Petroleum is used everywhere, in products you have not even begun to imagine. The demand can only go up and the supply is finite. Think about it - no one has to buy a computer, but do you need plastic bag or insulated wire - just look around, if all plastic disappeared we would be back in the stone age

2008 Aug 08 09:29 AM