TN Jim

Oil Hits New Record - Is $125 Next, or $100?

multitrader,

I respect your viewpoint and appreciate your well thought out and well written post, but I disagree with your implicit thesis that the rise in crude oils prices is fundamentally a trading phenomena.
Although sovereign nations make it difficult to obtain reliable production and reserve data, there is increasingly little doubt that depletion from existing production fields nearly equals new production being brought on stream each year. Further, since it takes several years to begin production at a new discovery, the rate of new production which will be brought on stream over the next several years is somewhat predictable.

What we have is a Malthusian situation in which new production must exceed the combination of production depletion plus increased demand from emerging economies and others before any relief appears in the supply-demand balance.

I concede your point that the plummeting dollar and the flight to commodities is aggravating the problem, but the price of crude is on a long-term uptrend until the world becomes serious about energy conservation (incandescent light bulbs, for example) and alternative sources of energy, most likely beginning with nuclear.

I whole heartedly recommend Jim Kingsdale's excellent site on Energy Investment Strategies to anyone who wants to follow up on peak oil news. www.energyinvestmentst.../