RE: [asa] $4 gas is here to stay

I am trying this again.

Last month there was a discussion of $4 gasoline and is it here to stay. Way
back in 1999 I wrote an article entitled "The Coming Energy Crisis, which
was eventually published in the ASA in 2000.
http://www.asa3.org/ASA/PSCF/2000/PSCF12-00Morton.html#The%20Coming%20Energy
%20Crisis

I think people thought I was a bit nutty back then and that included some of
the people in the oil industry. Frankly, I could have gone further into
'nuttiness', but I didn't, I wanted to get that article published.

Looking at that article, published 8 years ago, it accurately has described
the present situation. World oil production has been flat for 3 years while
demand has been rising. I can't post pictures on this antiquated email
list-serve but the production plateau we are on is not going to be long
lived.

Russia is the largest producer in the world, six months ago they were
producing right at 10.1 million bbl/day in Oct of 2007 and now they are
about 9.9 million bbl/day with the projection that they will continue to
decline in production throughout this year.

Mexico's April production was half a million barrels per day less in 2008
than in April 2007. Mexico had the 2nd largest field in the world, but now
it is third--barely. It has fallen 1/3 in production in the last year,
dropping from 1.6 million bbl/day to 1.1 million bbl/day now--in merely a
year.

The North Sea has resumed its decline. Last year a big field came on
production and stabilized North Sea production for a year, but now the drop
continues.

Saudi Arabian production is down from their highs.

Meanwhile China's demand is up 10% year on year. India's consumption is up
6.3% year on year. Saudi Arabian consumption is rising at 20% per year.
Indeed, OPEC has put online about 2 million bbl/day new production since
2001 but they have increased their own usage by about 2 million bbl/day in
that time period, meaning no more oil to export.

So, to answer the question of this thread, no, $4 gasoline is not here to
stay. It will be recalled fondly next year and the year after as evidence of
how good we had it way back then. Remember, it was only last September that
oil prices were around $70/bbl.

Now, let's not forget coal. The world doesn't have the amount of coal that
they think it does and this year there is a 100 million tonne shortfall of
coal. Metallurgical coal is becoming quite expensive. Last year it was
something like $70/tonne. This year it is $130/tonne and it is expected to
fetch $250/tonne next year.

I will also note that anyone who believed that old article of mine and
invested accordingly, would now exceedingly rich. Unfortunately, most
people thought it was a wee bit nutty. I didn't.

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Received on Wed Jun 4 23:02:09 2008