Dear Wealth Daily Reader:
On Monday, your editor was again called on by the zombie media to explain why oil was trading for $93 a barrel . . . and why I thought the price was headed higher . . . and higher.
This was on CNN, my first-ever appearance on the Ted Turner spawn. And I have to tell you, what I said shocked them, as though this was the first they had heard about depleting reserves, decline rates and the potential for $300-a-barrel oil.
But I have to be honest, I’ve appeared on so many radio and television shows in the past year, I can recite the interviews in my sleep. I’m not joking. It’s scary… “Must find 2 Saudi Arabia’s by 2015… Iraq is about oil, not WMD’s… and so on and so on.”
You probably can too, if you’ve been a loyal reader of Wealth Daily.
For years, we’ve been telling you about a major global transition that was well underway. We’ve used alarming phrases like:
"This time the wolves are really at the door."
To less threatening–even profitable–titles like:
"It’s the greatest investment event of a lifetime.”
Regardless of which side of the coin lands face up, years from now we’re going to look back at this current situation as a major tipping point . . . a moment of great change, great opportunity, and potentially one of prolific pain and suffering. And maybe world war.
In fact, we see no less than five tsunami-like trends that are on a collision course at one single moment in time. Here they are, in no particular order:
1. The End of Cheap Oil
2. The End of US Dollar Dominance
3. The Emergence of Two Economic Superpowers in China and India… and maybe Russia
4. The Global Scramble and Hoarding of Precious Resources, especially Water and the Remaining Oil
5. Population Bomb–as the World’s Population Hits 8.9 Billion by 2050
For today, however, let’s look at oil.
Yesterday’s Wake-up Call to the World
For decades, OPEC has denied that oil was going to run out anytime soon.
However, OPEC has finally thrown in the towel. "No mas, no mas."
Libya’s National Oil Corporation chairman Shokri Ghanem said this at an industry conference:
"There is a real problem–that supply may not be possible to increase beyond a certain level, say around 100 million barrels. The reason is, in some countries production is going down and we are not discovering any more of those huge oil wells that we used to discover in the Sixties or the Fifties.”
It gets worse…
Sadad al-Husseini was a key architect of Saudi Arabian energy production policy for more than a decade while a top official at state oil firm Saudi Aramco. He is even more pessimistic, saying world oil production had already peaked.
"We are already three years into level production,” Husseini told the annual Oil & Money conference, a gathering of top executives.
Husseini said at the conference that reserves estimates are too high and oil prices can only remain on a rising trend.
Proven oil “reserves” are overstated by 300 billion barrels of speculative “resources,” mainly in OPEC countries, he said. By 2030, production of oil and natural gas liquids could fall to about 75 million bpd.
"As long as demand continues to grow, oil prices can only go up.”
He also said that oil production had reached a structural ceiling determined by geology rather than geopolitics, and that the technical floor for the oil price will rise by $12 annually for the next four to five years as new fields become increasingly costly to exploit.
Andrew Gould, the chairman and chief executive of Schlumberger Ltd., an oil-services company, noted that 70% of the oil fields that now quench world demand are more than 30 years old. The growth in global demand since 2003, he said, has been roughly the equivalent of the daily output from two of the world’s larger suppliers: the North Sea and Mexico.
"Our industry simply cannot cope with these kinds of increases,” Mr. Gould told the assembly.
My friends, it’s time to get your house and your portfolio in order, if you haven’t already done so.
Already, there are growing signs of social unrest spreading around the globe:
• Protests over rising gas prices have erupted in at least nine countries, including oil-rich Iran.
And this was reported today in China . . .
BEIJING/SHANGHAI (Reuters)–China’s worst fuel crisis in two years spread to the capital and other inland areas by Wednesday, and one man was killed in a brawl at a petrol station queue, upping pressure on the government to intervene.
Diesel shortages in China’s political heart, which escaped previous supply crunches unscathed, highlight tensions between the government and its increasingly independent oil firms about who should pay for the country’s generous fuel subsidies.
Governments, Big Oil and OPEC should take notice: You can fool some of the people some of the time, you can fool all of the people some of the time, but you can’t fool all of the people all of time. And they haven’t fooled us at Wealth Daily.
Here’s what we said in these very pages back on March 3, 2005:
"Oil is going to $80 a barrel, and will probably stay above that price."
We’ve even created the Peak Oil Clock to give everybody a dramatic visual of how much oil the world is consuming.
Follow this link… it’ll show how to add the Peak Oil Clock to your website or blog: http://www.energyandcapital.com/peakoilclock/
I urge you to put the PO Clock on your website or blog, because until something changes, the clock will relentlessly tick toward the moment of truth.
Profit, don’t panic,
Brian Hicks
