CaptainJJack

How to Invest in Peak Oil

Peak oil is a function of supply and demand. The world currently uses about 1 billion barrels of oil every 12 DAYS.

If people in China had the same number of cars per household as the US, China alone would use close to 100 million barrels a day -- 15 million barrels a day more than we produce today.

Then there is India and the developing world.

Given the incredible energy efficiency of petroleum, especially gasoline, it will always be the first choice for energy, and oil will be a very valuable commodity as far as anyone can predict.

Natural gas is a wonderful heating source and while it can be converted to petroleum for transportation, it seems to be an unfortunate substitution since it is far more valuable for heating.

According to the just released biennial report of the Colorado school of mines, the US reserves have shot up more last year than they ever have in the 44 year lifetime of the biennial survey.

The US now has the highest total NG reserves, at 2,000 Tcf, followed by Russia, at 1,600 Tcf with Iran in third with roughly half of Russia.

Converting coal to methanol and other energy substitutes becomes theoretically viable with oil at $50 barrel, but that is before greenhouse gas capture.

So, I think that in the foreseeable future, while we may see spikes and dips, we should see a very strong upward drift in prices.