Impossible! Could Never Happen! Well actually in mathematical terms it has happened a number of times before. And $500 a barrel is not that ridiculous when you think about it.- that's just a five fold increase Compare that to the jump it took between 1971 and 1980 when it moved from $2 to $35 a barrel - a 17 fold increase. Meaning a five-fold increase is possible and more probable to occur as time goes on.
So Marc's bullish attitude towards oil is well founded and supported by growing demand from increasing populations and on-going economic growth in Asian markets. However, it is quite the opposite on the supply-side as most believe we are at or near peak extraction and can no longer add to reserves an amount equal to this consumption.
Doing some simple analysis, we confront a rather disturbing destiny. With present global consumption running at 30 billion barrels annually - equating to 300 billion every decade - total reserves of 1.2 trillion are thus set to be practically depleted by 2053, if not sooner.
But what comes between this date and now is much more disturbing, as the world scrambles to find a way to replace the cheap energy equivalent provided by these 30 billion barrels. One thing is certain, if alternatives are found they will not be any cheaper than today's energies prices. Expect more political and social turbulence as the world seeks to rebalance this physical loss of energy inputs - that will dramatically affect food and basic transportation needs.
To the point, we are bullish on oil and bearish on currencies whose national economies are highly dependent on imported supplies - their turbulence could be devastating. As well it will place huge downside pressure on stock and bond markets - so cash, and better yet a farm, are certain to become increasingly popular as oil prices rocket to new heights.
Dr. Peter G Kinesa
July 11, 2013