Tranquilmeditation

The Impending Mother of All Oil Shocks

Last summer's oil price of $145 a barrel was a speculative bubble fueled by the cheap credit of hedge fund mania. The resulting collapse to $32 a barrel was an overreaction to the downside.

My guess, which is probably as good or as bad as anybody's, would suggest that the true market price of oil under normal economic conditions would be between $70 - $90 a barrel. That means oil is an attractive investment opportunity.

It is important to point out, market responses to the high prices of oil last summer were quite impressive. Major oil and gas finds in Haynesville, Tupi and Azulao-1, etc. added significantly to the world's known reserves. Weren't all major oil reserves supposed to have already been found? Tupi is under 7,000 feet of water. Enhanced technology of oil and gas recovery is also significantly improved (Nansen Saleri WSJ article).

T. Boone Pickens has formulated an impressive plan of using natural gas as a transportation fuel which would greatly reduce U.S. dependence on foreign oil.

The point I would like to make is that the doom and gloom sayers of peak oil have been foiled again. Forecasting a future that suggests starvation, chaos and political upheavel is bereft of man's ability to organize, cooperate and use his immense God given intelligence.

I am highly suspect of fear based agendas: peak oil, global warming (oops, I'm sorry "climate change"), ice ages, african killer bees, legionaire disease, nuclear energy, mad cow disease, over population, under population, etc. ad nauseum. The hysteria speaks realms about the demigods espousing them. Their solutions suspiciously always require a reduction of my individual liberties.