Energy Diversification

Analyst: Oil Prices Inflated by 50%

Why is it that none of the oil Bears, who claim that this is all "speculation", seem to be able to offer any substantive, fundamental arguments either? Come on -- Is a boat analogy supposed to be a compelling argument about oil supply and demand?

This is all testament to the rarely-discussed fact that we know very little about oil reserves and production, particularly in Saudi Arabia. We can listen to Hard Assets Investor and Jim Cramer tell us every day that its "not about supply disruptions, its about demand"... but the 1970s proved that supply disruptions can cause HUGE problems.

To deny that we face the same risks in the oil supply chain - or worse risks - as we did in the 1970s, is simply ignoring reality.

One terrorist attack on Saudi oil production will show the world how much at-risk our oil supplies are.

In this environment, as long as nothing goes wrong - a huge assumption - sure, oil prices may moderate. But then when a "surprise" event occurs - an act of war, terrorism, or God - all the oil Bears will say "well, no one could have predicted THAT!" But of course, its funny how unpredictable things always seem to happen.

And when those things do happen - Democrats will lament their opposition to coal and nuclear, Republicans will lament their opposition to longer-term alternative energy sources, and the country will lament its fixation on electric cars without any concern for how that electricity can be produced over the next ten years. And Vinod Khosla's utterly fraudulent claims about "cellulosic ethanol for $1 a gallon" will be revealed for the self-serving hype that they are.