Greg's Note: There must be someone to blame for this energy crisis. Surely there is one single entity that is causing all of us to suffer. This is at least what some members of our Congress believe. Oil speculators have become the villains in this tragic tale. Outstanding Investments' Byron King doesn't think that should be the case, however. While oil speculation certainly is an important and influential area of our economy, these speculators should not be painted with the brush they have been. Do you think speculation is to blame, or could there be other reasons for the tremendous price-rise? Write in with your comments to greg@whiskeyandgunpowder.com. Whiskey & Gunpowder
With the price of oil doubling in the past year, there are more fingers being pointed than solutions being offered. Unfortunately, one of the biggest "culprits" garnering much of the blame has been the oil speculators. Congress has decided to make them the scapegoat for our energy concerns, and unfortunately many under-educated members of the public are beginning to lap it up. Speculators are speculating because there is something about which to speculate. (Let me thank my sixth-grade English instructor for teaching me how to compose that sentence.) Remember when oil ran up back in 1979 and 1980, when the entire Iranian oil industry collapsed in the wake of Ayatollah Khomeini's Islamic Revolution? About five million barrels of oil per day simply left the world marketplace. It was gone — poof! Not there. No tankers. ~~~~~~~~~~~~~~~Special~~~~~~~~~~~~~~~ The Next Oil Crisis Oil is still surging past historic levels, yet the real oil crisis is still looming on the horizon. Soon, new information will be released detailing the actual state of the world's oil supplies. When this day comes, we'll see the actual energy crisis hit and the U.S. economy buckle. Find out the truth before the news comes out here… ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Even though five million barrels went away, people could still look to places like the North Sea, Alaska, Angola and elsewhere. And they could feel certain that sooner or later, there would be future oil supplies flowing down the pipelines. But that's not the case today. When people look ahead now, they don't see from where the oil of the future will come. Most of the world's current large oil fields are in decline. As for the so-called oil speculators, they are just defending the value of their money. They are looking forward a few years. What do they see? All of the current energy development projects will just barely replace the oil that will NOT be coming from declining oil fields. So peering ahead, there's no net increase in future oil output. We're looking at a plateau in output, if not the backside of the Peak Oil curve. But we are looking at growing energy demand, as well as demand for other resources. So investors have placed hundreds of billions of dollars into energy and other commodity funds during the past two years. They are both hedging against dollar inflation and anticipating future supply shortfalls. Long term, this is great news for one of my Outstanding Investments recommendations, a Canadian tar sands company. This company is facing higher capital costs, as well as higher costs for inputs like natural gas. And it suffers from a raw political bias (suicidal, in my view) against synthetic crude oil because of the carbon dioxide emissions. Along those lines, some politicians in the U.S. want to renegotiate the North American Free Trade Agreement (NAFTA) that includes Canada. Word to the wise: Don't go there! Really, if the U.S. renegotiates NAFTA with the Canadians, our friends to the north will have some surprises in store. The U.S. will rue the day that it tore up NAFTA with the Canadians, because that will just plain shut off many of the valves on a lot of pipelines. Seriously, the Canadians have eager buyers for their energy resources, and they don't need us Yankees. Just keep in mind that downstream, people will demand oil, and companies that have it will make money. Getting back speculation, those "speculators" are not the problem. Speculators are sending a message that policymakers had better heed. American politicians better get serious about finding pathways through the "energy issue." Although I do have political opinions, I try to keep them private, especially careful not to hurt the feelings of any of my readers. ~~~~~~~~~~~~~~~Special~~~~~~~~~~~~~~~ Be Prepared for the Stock Market Apocalypse You could still make major gains in the coming stock market bust... Even after billions more in bank losses...even as foreclosures continue to soar...even as stocks on Wall Street fall apart. In fact, in spite of those things…with a lot less risk. And plenty of confidence that you're doing the right thing. All you have to do is follow seven steps. Click here to learn how to protect your wealth (and turn a very nice profit) in the stock market meltdown… ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ But that does not mean that I don't have opinions within areas of my own expertise. If you are reading this, you must know that oil prices have doubled in the past year. There are profound supply issues looking forward. (I've been writing about Peak Oil and related issues for Agora Financial for four years.) And world demand is still rising, despite the very slight pullback in U.S. oil usage in the first half of 2008. Whoever wins the race had better be ready to think in terms of energy. And I mean from day one. Energy is not just "another issue." It's not as if a politician could "do energy" and then move onto other important items on the agenda — like appointing your friends federal judges and handing your political donors prestigious ambassadorships. Energy will be the defining issue of the next president's term of office. This is already baked into the cake. Nothing will change it, short of a major war. And even fighting a major war will be controlled by the energy issue (as was World War II, by the way — another long story). The U.S. won't go to war over most things. But we'll fight over energy. Or where have you been? Every U.S. president has had something associated with his term of office. It might be good. It might be bad. But it's the shorthand way in which we remember the guy. When I think of Lyndon Johnson, I think of the Vietnam War. When I think of Richard Nixon, I think of Watergate. When I think of Ronald Reagan, I think of him meeting with Gorbachev and winding down the Cold War. The next president's big issue is already on the table. It's energy. It has been decided. The gods and fates have so dictated. Everything else is window dressing. Everything else is just the White House Easter egg hunt. Nothing else will control the outcome of the next president's term of office. Energy, that's it. Energy. Take it or leave it. Except you can't leave it. The nation needs to get energy right. We can have energy supplies for the economy. Or we can just decide to wind down the 232-year-old experiment called the United States of America. We can hop, skip and jump into James Howard Kunstler's The Long Emergency. It's that stark. Here is the slogan for the next White House Situation Room: "It's the energy, stupid." Practice is over. It's game day. It's time to suit up and play. What's your plan? And we can't just do 20 more years of energy research. Really, suppose that nobody ever filed another patent for a new and better invention in the field of energy. We could spend the next century just rewiring the nation based on what we already know how to do. The future is one of systems engineering. The future is all about taking the ideas and technology that's already out there. Bring them down off the shelf and make them work to run the country. So if the next president-elect is not ready to tackle the energy issues of this nation, he just ought to stay home on Inauguration Day. Don't waste our time. Until we meet again… P.S.: It's become clear that oil and energy have become the dominant issues in this closely contested election. The sky-high prices along with increased media attention mean that solving this problem is paramount to many politicians and innovators alike. That's why we've seen some incredible improvements recently that could go a long way toward solving this problem. One of the best inventions we've seen in a decade is finally being released and could be the solution we've been looking for. Click here to find out what it is… |
Whiskey & Gunpowder Special Reports New "Backlash" Set to Rocket Oil Past $150...and Send Gas Soaring to Over $6 per Gallon The 10 Shocking Reasons for China's Pollution Problem Geothermal Energy: Investment in the Future Here's One Coal Stock That's Set to Skyrocket Investing in Exchange Traded Funds The Real Story Behind the True Gold Bull Market If someone forwarded you this copy, please look here to start your own subscription. Wanna let us know what you thought of today's issue? Now you can... click on this link. Whiskey & Gunpowder is a free e-mail service brought to you by a team of rebellious brigands. If you have not already done so, please click here to confirm your subscription. This will help us ensure you get every Whiskey & Gunpowder without interruption. Are you having trouble receiving your Whiskey & Gunpowder? You can ensure its arrival in your mailbox here. Please note: we sent this e-mail to lemmetry@gmail.com because you subscribed to this service. To end your Whiskey & Gunpowder e-mail subscription, click here. Nothing in this e-mail should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice.We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. © 2008 Agora Financial, LLC. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the World Wide Web), in whole or in part, is strictly prohibited without the express written permission of Agora Financial, LLC. 808 Saint Paul Street, Baltimore MD 21202. |
