longoil

A Crude 10 Year Perspective: The DJIA, Oil and Gold

Fitz,

I have the highest respect for both Hefner and Boone, but both have their personal agendas.

1) I read Hefner book (the GET) and I find he is a bit too chummy with CEO Aubrey McClendon of Chesapeake that he glosses over all the serious issues associated with non-conventional gas. While the book is the most comprehensive I have read on natural gas, he is far from neutral.

2) T. Boone Pickens wants the federal government to pay for the cost transmission line infrastructure to his wind farms.

A Crude 10 Year Perspective: The DJIA, Oil and Gold

The stock market was artificially inflated in the late 1990's thanks to the internet boom. Normally stock market indexes appreciate anywhere from 10 to 12% per year on average. In the short period of 1995-2000 we saw the DJIA shoot up 150% and NASDAQ go up 500%. Anything over 15% gain per year is unsustainable over the long term. The current DJIA = 10000 is actually the value it should have grown to since 1995.

Although gold is a good hedge. I can live without gold.

I cannot live without oil, which is used in thousands of applications (besides transportation). I think my money will appreciate the most over the long run invested in oil and gas.

The 95% of the world's energy mix (according to the BP statistical survey and the EIA) comes from oil, gas, coal & nuclear. Oil and Gas will be the key energy sources from the next 40 years. Alternative energy is still in its infancy. Solar and wind account for only 1% of the world's energy mix. Natural gas would be a good transitory solution, since existing cars can be modified to run on it for only a few thousands dollars. This is a much cheaper alternative than hybrid, hydrogen or electric cars.

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.

Wall Street's Response to Obama's Economic Policy

Although I am very critical of some of Obama initiatives, I think it unfair to paint the socialism label only on the democrats. It was the republicans that started this wave, by socializing the losses of the banking system last fall.

I think Darwinian principles should be applied fully to all businesses in America. The fittest (i.e profitable) businesses will survive and badly run (unprofitable) or outdated businesses should be allowed to fail if they cannot adapt to the new environment.

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.

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.

Paul Krugman + Al Gore = The Way Forward

I have to question Al Gore's real motives.

His global warming crusade is making a lot of green for him. He gets a minimum of $100,000 for every 90 minute talk his gives on global warming. No wonder he did not want to run again for president in 2004 nor in 2008 and get only a measely $200,000 / year salary.

www.thesmokinggun.com/...

You would think someone worth $100 million would do these talks for free, especially if he really believes in climate change.

A report by the Nashville Electric Service that showed Gore used an average 16,000 kilowatt hours a month for an average monthly bill of $1,206 in 2006. The typical Nashville home uses about 1,300 kilowatt hours. So much for leading by example !

Furthermore, look at Gore’s accomplishments with Clinton from 1993-2001. The CAFE standard was in good hands with Ford, Carter, Reagan and Bush 41. It rose from 15 to 27 mpg during1975-1992. Clinton and Gore (Mr. Climate change) were pandering for UAW votes in the 1990's and they introduced the light truck exemption that killed CAFE and it is now flat at 27 mpg.

The real motive for Gore’s five point plan is to make more money for himself. He is the Chairman at GIM (General Investment Management) a company that stands to benefit from its investments in alternative energy technologies.

www.generationim.com

Offshore Troubles, Domestic Fears

Larryh,

I think you are off by a factor of 10
I get only 72 billion a month leaving the USA to pay for oil imports.

==>22 mbl/day (USA daily consumption) x 30 days x $145/bl x 75% imported