longoil

Stephen Schork: More Upside in Oil

I agree with blu,

These high priced reports from Schork and other "experts" like Yergin at CERA had a good track record of being wrong 95% of the time.

home.entouch.net/dmd/c...

I stick with my experts (i.e. Simmons, Pickens, Campbell, Laherre, Deffeyes, etc) that actually got their hands dirty in oil fields and know that Peak Oil is a reality.

Oil and Stocks Have Bottomed, But Their Paths Forward Vary

There is equal blame to go around for both parties.

1) Bush 43 wasted one trillion dollars and sacrified over 4000 young lives for access to the oil fields of Iraq.

2) Clinton torpedoed the CAFE standards by implementing the light truck exemption, in order to buy UAW votes, during the 1990's. The CAFE standard had risen steadily from the Carter era through the Reagan's and Bush 41 terms from 15 mpg to 27 mpg.

I think Obama will be another Clinton in this regard, thinking more about the next election rather than implementing change we need.

Are Stocks and Oil Bottoming?

I agree fully with the conclusion of this article.

The current low oil prices are setting the stage for very high prices next decade:

1) Projects with high production costs (oil sands, deep sea oil, etc) are being shelved.

2) Alternative energy projects are also being shelved thanks to low prices.

3) All the remaining cheap and easy to extract oil in Saudi Arabia, Nigeria, etc is dominating the current global production.

These three factors are setting the stage for a perfect storm. By next decade the economy will have recovered and oil demand will exceed supply once again. All the cheap oil will be gone, no serious alternative energy projects will be in place and only non-conventional oil projects will be able to supply a fraction of the oil demand needed. Needless, to say oil prices will climb exponentially by 2015. We are living in the good old days of oil prices and peak oil has been masked by the current economic crisis.

Why Is China Stockpiling Oil?

Youngolf,

Most MBA curriculums are a collection of isolated courses (finance, accounting, organizational behavior, statistics, economics, etc). The problem is not the courses themselves, but the fact that the students are not taught the interrelations between them or the effect of external factors like geopolitics.

Finance methods are mostly trying to predict future stock valuations based on past valuation along with ridiculous variables like sales growth (how do you predict something like this ???)

Why Is China Stockpiling Oil?

Chris,

You are right the link I pasted is broken.
Trying Googling the following key word string and it will give you the link.

Russia, China agree $25-billion oil for loans deal: report
By Polya Lesova

Why Is China Stockpiling Oil?

The Chinese are taking full advantage of the temporary low oil prices and even striking deals with their former foes. Russia (one of the world's largest oil producers) was so desperate for cash this year it signed a twenty year agreement with China. The agreement signed in February allowed China to lend 25 billion U.S. dollars to Russia in an exchange for a 20-year oil supply starting from 2011 with a total volume of 300 million tons (2.2 billion barrels). This translates China getting oil at $11.50 / barrel.

www.marketwatch.com/ne...={B09A2B61-15EF-4120-A...

Non-Opec Oil Production Has Peaked

Russia (one of the world's largest oil producers) was so desperate for cash this year it signed a twenty year agreement with China. The agreement signed in February allowed China to lend 25 billion U.S. dollars to Russia in an exchange for a 20-year oil supply starting from 2011 with a total volume of 300 million tons (2.2 billion barrels).

www.marketwatch.com/ne...

Oil: Despite Decline, A 'Must-Have' Profit Play

Excellent article, oil is definitely a "must have" long term investment.

Three Conditions Needed for a Surge in Iraqi Oil

Your third condition that will be the most challenging.

Without US presence, a power vacuum will be created and Iran will quickly annex Iraq and control all Iraqi oil production. The current Iraqi government is too weak to control the infighting between Sunni, Shiite and Kurdish factions. Iraq is a country that was artificially drawn up by the British after the collapse of the Ottoman empire. Unfortunately, it seems it can only be held together by a dictator or an occupying force.

Welcome to a New World of Investing

romerjt,

Electric cars and PHEVs are highly desirable as one of many solutions for energy independence.

The major obstacle is the new infrastructure needed. The electrical energy required for these new vehicles, formerly provided by gasoline or diesel, needs to come from new power plants. Current power plants barely provide enough electricity for non-automotive use. This means thousands of new NG, coal, nuclear, solar, wind and biomass electric power plants need to be built in order to sustain a fleet of +100 million electric vehicles.

Bullish Amid Oil Majors' Lay Offs

The one good thing about collapsed oil prices is we are now mainly draining the reserves of hostile nations like Venezuela, Saudi Arabia, Russia, Iran, etc where the marginal cost of production is under $30.00.

Unfortunately, high cost producers like the Canadian oil sands and deep sea oil (i.e Brazil Tupi) have shelved many projects.

I concur with the opinion that when the economic crisis recedes, oil prices will skyrocket due to the heavily reduced investment in E&P.

Welcome to a New World of Investing

>>>Reducing oil dependence really boils down to batteries. What this country needs is a good, cheap battery.<<<

Batteries, NG conversions and cellolusic ethanol certainly can reduce oil dependance as far as automobiles are concerned.

However, there are many other areas where no suitable substitute for oil exists.

1) Petrochemicals are used in thousands of goods like plastics, pesticides, medicines, etc. There is no substitute for the petrochemcial industry. Derivatves from coal and sugar can only be used in a handful of applications..

2) Lubrication is another key use of oil and no suitable substitute exists.

3) Shipping is dominated by diesel powered vessels. The alternatives are sails, coal and nuclear. Each has its own major drawbacks.

4) Aircraft can only be powered by kerosine. Yes, Richard Branson promoted a trial flight with kerosine thinned with biofuels. This is more of a publicity stunt rather than a realistic solution.

This is why I am long on oil.

Crude Reality: How Long Can Oil Stay Down?

Chris B,

Thanks for detailed breakdown of fixed and variables costs.

I would add one more point. Losses can be carried forward and reduce tax liability on future profits.

Invest Now with a Keen Eye and Be Regarded a Genius for Decades

Oil is definitely the place to invest now. The chronic under investment in oil E&P coupled with the sky rocketing demand that will occur when the economic recovery has setup a perfect investment opportunity.

I like Canroys & MLPs. You get the best of both worlds
1) Steady dividends of 5% to 15% (even with sub $40 oil)
2) A nice capital gain when the price of oil rebounds.

Of course, services companies (DO, Pride, Noble, HAL, etc) will be major beneficiaries as well oil recovers.

Marc Faber, Jim Rogers and Boone Pickens - Bullish on Oil

Roger Knights said

>>>I wonder if the oil price is being manipulated down (by the gov't.) to clip Chavez's wings. If so, it may not bounce up as soon as the bulls expect.<<<

You would probably enjoying reading the "The Oil Card" by James Norman. The entire book describes in detail two interesting hypothesis's:

1) The US engineered the drop in oil prices in the mid-1980's to bankrupt the USSR.

2) The US manipulated oil prices upwards recently to stunt Chinese economic growth.

I don't agree with the author, but it was an interesting read.