Kohl Facts:
What's Driving the Price of Oil?
By Keith Kohl
Before I start ranting today, I need to confess my surprise at your replies from last week's "9 Things That'll Happen When We Run out of Oil" list.
Trust me when I say that it wasn't the number of submissions. I've come to accept my readers' proclivity for comments--something I absolutely love, by the way. Rather, it was the individual submissions themselves.
And to think some of you called me a doom and gloomer!
Hopefully there'll be a special room reserved for us all after it hits the fan, but don't worry about bringing a book because you sure as hell won't be lonely.
As far as the list's coveted #1 spot, you only have to wait another few days (it's only right to give some of the latecomers a shot at the title, too). And honestly, sorting out my favorites is proving to be more difficult than you might think. Every few minutes I'm forced to stop and send several submissions around the office.
So for now, keep them rolling in.
$100 Oil on the Horizon
"Another record high!" This might as well be the catch phrase for the next generation.
That's all I've been hearing lately. And every time the yell was bellowed across the office, it was projected in a different voice. Each time I couldn't help but think it would be the last.
The last week was the worst, too.
Here's a better look at what I'm talking about. . . .
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Crude Oil December 2007 (NYMEX)
As you can see, there's been quite a bit of yelling, so imagine my lack of surprise today when I was taking a sip of coffee and heard, "$94.45 a barrel . . . another record high!"
Since reaching past the $94-per-barrel mark today, prices have come back down. Yet you won't believe the reasons I'm hearing for these record prices.
What's Driving the Price of Oil?
In one ear it's, "It's all about this mess with Turkey, Keith. They've got plenty of oil left." Well, I don't know who "they" are, but I'd sure like to meet them. And then there's the other camp, telling me, "This whole mess has nothing to do with anything but the fact that the dollar is crashing."
To tell you the truth, neither one of them is wrong, except to say that one thing or another is the only thing driving up prices. We know that geopolitical fiascos (more specifically ones in the Middle East) can give rise to fears that supply will be disrupted, causing a surge in oil prices.
On the other hand, the falling dollar is certainly having an effect in the oil markets. There's an entire army of analysts boasting that oil's run-up is based solely on the declining dollar. But to do so neglects the drop in supply.
Many of my readers agree that peak oil is starting to show its ugly face. And whether you believe global production will experience a sharp decline or a long plateau, most of you agree that output won't climb much higher.
Here's how I think about it . . .
When over 60% of the world's oil-producing countries are believed to have passed their production peak, the supply picture doesn't look too bright. For example, when three-quarters of your production is coming from aging fields that are more than half empty--(cough) Iran (cough)--increasing (or even sustaining) production is nearly impossible. But what do they care, their nuke program is going to solve all their energy woes, right?
I have an eerie feeling that next week I'll be hearing someone yelling "$100 oil!"
Of course, I'll have to immediately chime in . . .
"Another record high!"
For you, these record high oil prices represent an investment opportunity of a lifetime. If you're interested in finding out more, feel free to click here .
Until next time,
Keith Kohl |
