*Editors’s Note: Wealth Daily has published a more recent piece on the U.S. energy production, specifically on peak oil. Click here to read Peak Oil for Dummies…
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April 2010 will go down in energy history as the month Peak Oil reemerged on the periphery of the mainstream media.
Within a week of each other, two sobering reports were released about the tenuous state of the global oil market.
On April 11, the U.S. Joint Forces Command released a report stating “by 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day.”
To give you an idea of how devastating that would be to oil prices and for the world economy, 10 million barrels is what Saudi Arabia produces each day.
So if the military’s report is correct, that would mean that daily oil production equivalent to that of Saudi Arabia would disappear off the market.
Now let me ask you this: What do you think would happen to oil prices if Saudi Arabia’s crude stopped flowing tomorrow?
You got that right! Prices would skyrocket — $300 a barrel at minimum, maybe even $500 a barrel.
There would be riots in the streets. Citizens and governments alike would hoard the black gold like there was no tomorrow.
In the end, oil would go to the highest bidder: China and the U.S.
Based on this report, the U.S. military predicts that the price of oil would shoot to $100 a barrel. But we already saw oil at $147 a barrel in the summer of 2008, and there wasn’t a supply shortfall during that spike.
So $100 a barrel on a 10-million-barrel-per-day shortfall is wildly optimistic. In fact, I would call it fantasy.
But there’s more to this story…
You see, as soon as I read the report from the U.S. military, I immediately doubled all of my positions in junior oil stocks and in oil and gas trusts. It’s my biggest sector position.
In fact the last time I put that much cash to work in oil stocks was in December 2008. But there’s a huge difference between December 08 and now…
As you may recall, the world was enduring a gut-wrenching financial crisis in December 2008. The market was getting crushed. Investors were dumping everything, and oil got as low as $33 a barrel. So I stepped in and purchased oil stocks that were selling at fire sale prices.
I’ll be the first to admit that I got lucky. My brain was telling me to be brave and buy… but my stomach was is knots. I was a nervous wreck.
Fortunately it worked out.
But my point is that I was following the aged-old market rule to buy when others are fearful. I almost didn’t care about fundamentals. I was buying oil stocks that other investors were selling for any price they could get.
Today, however, I’m buying based on a potential supply-demand imbalance that could be of epic proportions.
You see, in addition to the U.S. military’s warning of a coming supply shortfall, the International Energy Agency (IEA) released a report revising oil demand upwards for 2010.
In its April 13 report, the IEA said:
Global oil demand will hit a record high this year, revising up consumption estimates as the world economy recovers from recession.
We are raising our forecast for world oil demand growth this year to 1.67 million barrels per day (bpd), up 100,000 bpd.
World oil demand will reach an average of 86.60 million bpd this year, up from 84.93 million in 2009.
The previous record high for world oil demand was 86.5 million bpd in 2007 before the onset of the global financial crisis and economic slowdown.
This is huge.
It’s the perfect storm if you’re an oil investor. Supply is falling at a time demand is rising.
That’s why North America continues to witness frenzy in drilling in unconventional oil formations like the Bakken. We simply need every drop of oil we can get.
But the Bakken is just one area in North America that’s become a hotbed for wildcatters. There’s another play in Western Alberta that’s become perhaps the hottest — and least known — unconventional oil plays in the world. A recent geological assessment puts the resource in place at around 10 billion barrels.
How hot it is?
In March of this year, The Canadian Press said:
The region has become a hotbed of activity, as companies look to bulk up their presence in an area that holds enormous amounts of high-quality oil.
And on January 21, the Edmonton Journal was quoted as saying “Some analysts are even calling the formation ‘Alberta’s Bakken,’ comparing it to Saskatchewan’s hottest oil play in decades.”
In the coming days, we will tell you exactly how you can play this for profit.
We consider it a groundfloor opportunity like the Bakken was in 2008. And you know we crushed it in the Bakken, scoring hits of 356%… 204%… 76%… 37%… 103%… 114%… 104%… 55%… and 33% on specific stocks drilling there.
Stay tuned,
Brian Hicks
P.S. I can’t emphasize this enough. The Bakken has become so hot that the ultra-liberal New York Times did a feature story on it last week… And believe it or not, it was positive!
You see, according to the NYT piece, North Dakota — which controls a large part of the Bakken — has the lowest unemployment rate in the entire nation at just 4%. In other words, anybody who wants a job in North Dakota can have one. The New York Times reports: Now, 109 oil rigs — with scores of workers for each — are drilling in North Dakota, and some officials say that figure could reach 150 this year.
Profits in the Bakken are still in the early stages. As America scours the world for oil, crude that’s right here in North America will be highly prized because of its low cost of shipping. This is a play that will run for decades.
We’ve prepared this special report which gives you our favorite Bakken stock, currently operating in North Dakota. Simply click here to learn
more.
The clock is ticking. And this time around, you don’t want to be on the sidelines when these Bakken stocks double in 2010.
