Re: SC26

http://www.marketwire.com/mw/release_html_b1?release_id=169786

$100 Oil Still on the Horizon

October 05, 2006 -- The oil bears must be in their glory.

November '06 crude prices have plunged some 28.4% since mid-July trading all the way down to $57.76/barrel yesterday. Take a look at a six month oil chart. (Beware...it's ugly enough to make an onion cry.)

Ouch!

Popular motives behind the recent carnage include lessening tensions in the Middle East, a calmer than expected hurricane season, and robust growth in supplies. But here's the thing...

These are just short-term factors!!

The long-term fundamentals, on the other hand, are still in place for a continuing energy bull market that will push oil prices, eventually, to well over $100 a barrel. That's right... $100 OIL IS STILL ON THE HORIZON. Believe that.

Oil's climb from less than $20/barrel at the end of 2001 has been largely driven by the failure of producers to generate new supplies fast enough to keep pace with rising demand, especially in China and India.

This will be a continuing trend.

Look...The world now burns over 30 BILLION barrels of oil in a year. That's a lot. In fact, with the gasoline produced from 30 billion barrels of oil, you could drive a Ford Explorer (getting about 20mpg) around the circumference of the Earth nearly 50 million times!

But global oil consumption is only expected to increase from here on out.

According to the Energy Information Administration’s (EIA) 2006 International Energy Outlook, "world oil demand grows from 80 million barrels per day in 2003 to 98 million barrels per day in 2015 and 118 million barrels per day in 2030."

I think the increase in demand is pretty much a given. But rising demand alone isn't enough to push prices over the $100 mark. For that to happen we'll need a drop in supplies.

Fortunately we've been able to increase production year after year since the turn of the century. In 2005, the EIA says the world produced an average of 84.33 million barrels per day (MMbbls/d). This was an increase of 8.5% since 2000. However, global production from the first two quarters of this year has averaged only 84.08 MMbbls/d, representing a 0.3% decrease and underscoring peak oil theory.

If global oil production hasn't already plateaued, it will soon. Once that happens we're in for sharp increases that will send oil prices into the stratosphere.................

Bush has taken supplies that were meant for our strategic reserves over this summer, and has funneled them into our current supplies to help drive down gas prices. Big Oil knows Bush and his administration has been very good for thier business, and even though they don't have the power to control prices like they used to, I'm sure they are currently wielding any power they have, to moderate US energy prices and ease the public's mind before the upcoming election. The important issue regarding the long term outlook, is that the numbers clearly show a continueing rise in worldwide demand for oil and gas, with both these commodities showing very definite signs of being near, or at thier peaks of production. The actual peak will not be fully reckognized in the numbers, until we are a few years past this event. The numbers for the reserves of oil around the world are showing that new oil field discovery has fallen each year since back around the mid 70's. Even with the increasing levels of technology at our disposal, the best we have been able to do is increase the rates, and amounts that we can pull out of mostly existing wells. Those numbers I believe send a very clear message. This has created a mirage of overall, never ending and expanding supplies of oil, but in reality we are just using up the finite amount of oil there is, at even faster, and faster rates, resulting in a sharper drop off, cliff in production, when we start sliding down the back side of peak oil. There will be events to mitigate, and moderate the world energy scene for sure, but humanity, showing as a whole by its actions, that it endorses societies based on endless growth as thier model for prosperity, will continue to pile increasing pressures on an already over stressed energy supply situation, pushing various economies, beyond the limits of what thier " models of progress " can sustain. I think we will see the expanding repercussions of a deteriorating energy supply situation unfold to a very consequential extent in the next couple of decades. If Peak Oil is occuring now, we are already very far behind in what sensibly should have been done, to prepare for this reality.