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Peak Oil Investing Mach 2 – Part 1- The Sixth Sense

|Includes: The United States Oil ETF, LP (USO)
Amazing - today the President announced that petroleum rationing would be enacted across the country due to shortages of imports.  Well thankfully that actually did not happen.  But if anyone with an objective mind and some exposure to the hard evidence of oil flow rate depletion and the export land model knows that future rationing will be a certainty.  This event of USA oil demand exceeding supply on an almost permanent basis will happen most likely in the next 5 years. The reason for this is that the USA reached a peak in domestic production in 1970 and since then our oil production has gone down almost every year since then. The USA now imports about 65% of total petroleum imports and that number is growing every year. So we have a condition of irreversible domestic oil production decline with ever growing oil

What is even more interesting are the implications of the brilliant work of Texas Geologist Jeffrey J. Brown and Samuel Foucher has put forward on the Land Export Model and its effect on world oil supply. The Land Export Model is a concept that takes into account available oil exports that is affected by both declining oil production and increasing use of oil in the countries that produce and export oil. Their work shows that future oil exports available will decline not in a linear manor but more like in an exponential manor. 
Since the USA oil imports are virtually increasing every year and the future oil available for export will be declining exponentially fast – we are going to be in one hell of a situation. Jeffrey Brown has a metaphor to explain this situation that he recently discussed on the web site of Zappata-George (listen to 8/8/09 internet broadcast) - . Jeffrey Brown said that this future situation where our available supply of oil in this country starts going down very fast our petro-dependent society that is riding down the freeway on the cell phone will essentially be dead but we just don’t realize it yet. He said that "it will be like the movie the Sixth Sense where people are dead and they don’t want to realize it". 

Well what does this mean to our country and our investing philosophy? Well there will be massive responses to this petroleum shortage and just as long that we still maintain a free market capitalist system we should be able to compensate somewhat but it will be different this time. Times will be more difficult to make a living and get by; it will not seem like the times with cheap oil.   Life will go on and energy will get expensive.

For the investor that understands peak oil mach 2 investing this could be an opportunity of a lifetime. Massive investments will need to be made in the oil, natural gas, nuclear; uranium, coal liquefaction, battery, alternate energy, bio fuel and others to mitigate this future challenge and massive profits will be made to those that understand what to do. In my next article I will explore specific areas of investment in peak oil mach 2 and even how to cope with the acrimony sure to come from our shrinking petroleum supply.

I hold many long positions in oil, natural gas, uranium, alternate energy, food, coal, and precious metals.