Oil Spikes Due to fundamental, not speculation
Would not it be nice if the recent spikes in oil have been entirely due to speculators and investors, and these greedy hedge and pension funds are simply creating an oil bubble "that will burst sooner or later?
According to Hussain Iraq Oil Minister al-Shahristani:
"There is more oil on the market that consumers want. What is the price inflation is an increase in hedge funds. An increase in production by OPEC does not really change the landscape – not affect the price. "
(Http: / / groups.msn.com / general.msnw CNBCBoard /? And MVIEW Action get_message = = = 0 & & = ID_Message 147 298 All_Topics LastModified = 4675673990919292694 & 1) All bubbles eventually end up in the same way – sooner or later rushed.
If that is the case, Oil prices fall below $ 100 We can all benefit from cheap oil filling our cars under $ 4 a gallon.
Unfortunately, this scenario does not represent the reality. In fact, it looks more like a fairy tale. And of course, if speculators are indeed responsible for the peaks, the Arab countries discharge the burden of increases in oil production. In my opinion, oil prices highest peak, at least in the long term. Heres why:
1) stagnant supply
There is something called the Hubbert peak theory, which predicts that oil production will increase, peak, and remain stalled for a time, then drops to almost the same speed as he went.
Dr. Hubbert predicted in 1956 that U.S. production oil peak around 1965-1970. Like Arjun Murti (Goldman Sachs analyst predicted that oil reaching $ 100 a few years), Snobb by other "experts" who seemed very optimistic about the oil supply. Unfortunately, both Hubbert and Murti was proven correct.
Check out this chart:
The ASPO (Association for the Study of Peak Oil and Gas) has predicted that the peak of world oil production would occur in 2010. Some analysts believe same as the peak that occurred in 2005.
The evidence that peak oil is irrefutable.
Companies oil companies increasingly difficult to replace every barrel of oil consumed with a barrel of oil fields. Even fields of Saudi Arabia's vast oil reserves are depleted rapidly. The mighty Ghawar oil field probably peaked in 2005, and other areas, as they could Shaybah before following the footsteps of Ghawar. (Saudi Arabia still has much oil but is running soon)
No wonder why oil companies are not investing money on oil exploration when theres not a lot of oil left. As one analyst, "Well, it means more oil drilling more. It just means more holes. "
Meanwhile, British Petroleum (BP) recently announced that global oil production fell for the first time, to 130,000 barrels per day. The offer was 81.53 million, while demand has risen to 85.22 million / day, which brings me to my next point.
2) increased demand
As we know all, China and India are fast growing economies with a huge appetite for oil. Although China continues to rely almost entirely of coal in power, this trend seems to change very rapidly growing Affluent Chinese are buying cars. In 2002, General Motors has experienced 300% of its sales in China.
Check out two cards:
href = "http://upload.wikimedia.org/wikipedia/commons/thumb/b/b7/Population_curve.svg/550px-Population_curve.svg.png">
(No graph of the population and the table of oil prices, food and metals?)
As you can see, it is quite obvious that our world is experiencing unprecedented population growth since the industrial revolution. Even Ken Lay and other Enron executives are likely to feel like a high rate of growth!
If you think oil is only necessary to transport you are very wrong.
In agriculture, for example, most fertilizers and pesticides come from oil. The tractor or combine is oil. And of course oil is needed to transport food from farm to restaurants and supermarkets.
Petrochemicals (Of which many plastics and gels are made of), come from oil. A growing population leads to a simple growth in oil demand, no doubt.
Currently, demand is growing at about 1-2% per year. Perhaps not much, but does not mean that demand will double from about 85 million today to 170 million dollars in a few decades. (This is assuming that the growth of demand remains constant, then it should increase)
3) The weak U.S. dollar
The last and perhaps the most low leading to peak oil, is due to the weak U.S. dollar. As oil is priced in U.S. currency bought NYMEX, oil prices should increase, as simple as that.
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In my opinion, oil will rise even higher. In the short term may fluctuate, probably due to a correction following months some time.
However, I remain very optimistic about oil prices. Even forecast Goldman Sachs $ 200 seems cheap to me.
Disclosure: I have a few shares BOD, which tracks the price of oil, and I'm sure will be even more benefits in the future
http://investing-advice.blogspot.com/
About the Author
TRUCK & TRACTOR PULL, LUCAS OIL EAST COAST, WINCHESTER, VA
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