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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (24519)	1/12/2005 11:03:38 PM
From: Umunhum	Read Replies (2) \| Respond to of 110194

I have read many books on peak oil and believe that it will happen this year or in '06. Kenneth Deffeyes says it will happen in Q3 of this year, Colin Campbell updated the ASPO peak to 2006. I have read several articles lately that have said Light oil has already peaked. Recently this blurb came out: In fact, oil prices might drop back below $20/barrel before 2005 is over - depending on circumstances. Several new large fields should come online this year, adding extra capacity. These are the last of the 500 million barrel mega fields, since none has been discovered in the past few years. Eighteen new mega projects are due to start producing this year, followed by eleven more in 2006. However, 2007 will see the opening of only three new projects, followed by three more in 2008. This will not keep up with declining production in older fields, much less the increase in demand. taken from: fromthewilderness.com My question, assuming that you believe the peak is imminent, is what is the best way to play this? Last Summer when you could buy '08,'09, '10 Oil contracts for crude sub $30 it was a no-brainer. Now things are a little more dicey because anything can happen in the short term and I don't want to get a margin call if somehow crude does drop $10. That said, I still would like to buy more contracts and will if the '11 ever get down below $35 a barrel. Now I am thinking about buying leaps on oil producers. I think that the world will be experiencing problems by '07. To be safe though I would like to buy '08s. Unfortunately those don't come out until June and July of this year. Right now you can buy XOM Jan '07 leap strike price $60 for $2.1. My gut is telling me that these are way too cheap. But January '07 might not be enough time. I would rather pay $4 for Jan '08 strike price $60 if they were available. Also the oil in the ground is where the value is going to be not the gas stations or the refineries so it would probably be better to stick to buying leaps on the independents. This is a play on both Peak Oil and Inflation/Dollar Crisis. Either one and this would be a home run. Anybody out there have any ideas about how to play peak oil with maximum leverage?