Peak Oil
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Why Oil Is the New "Gold Standard"
Something very interesting just happened at the 2013 MoneyShow in Las Vegas.The purveyors of doom and gloom were all still hawking their services there. But the primary solution they offer - a cure-all elixir for everything that ails markets - was beginning to wear thin.
The usual conviction that this one asset is the remedy was gone. And the seats at these sessions were only half-filled.
Indeed, gold is beginning to lose its luster.
The erstwhile commodity fix has been under pressure of late as well. Yet, even while most eyes have been on declining commodities - especially gold, silver, and platinum - something else has been happening.
Crude oil is emerging as a new replacement to reflect stored market value.
That is good for folks like us who invest in the energy sector, because it will provide a floor to downward pressures in oil prices. It will not counter all forces reducing the price of oil, but it is likely to temper such movements, allowing us some leverage.
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Why the "Death of Peak Oil" Still Won't Mean Cheap Oil
Today (Wednesday) an analyst from Citigroup became the latest lemming to declare the death of peak oil.
In a report entitled "The End is Nigh," Seth Kleinman says a combination of flattening demand and rising supply will cause oil prices to slide slightly by the end of the decade to $80-$90 a barrel.
But while oil companies have made many large new discoveries over the past few years, including big shale oil finds in North America and Australia as well as deepwater finds in the Gulf of Mexico, that doesn't mean oil prices will fall.
In fact, according to Money Morning Global Energy Strategist Dr. Kent Moors, it's far more likely that oil prices will continue to rise over the next decade.
Moors points out what most other analysts seem to be missing - that all of the new oil finds present many challenges that will add to the cost of extraction.
"None of this new volume is light, sweet crude," Moors said. "The average wellhead costs continue to go up, and that moves its way downstream to processing, wholesale, and retail."
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This Key Energy Metric Could Make You A Lot of Money
Last week I discussed what EROEI is-and how to use it.
This week I'd like to talk about how this key metric affects the balance of your energy investment portfolio.
Now, this is certainly not the only element in determining preferable stock moves, but it's critical that you know the EROEI because it could make you a lot of money.
Recognizing the real elements that determine the genuine cost of energy production, EROEI is becoming an important factor in estimating profit margins.
And those margins certainly influence the performance of a stock as we've seen all across the energy value chain in recent months.
EROEI refers to the amount of energy used to produce energy.
If this ratio produces a figure of 1.0, EROEI is telling us that it takes one barrel of oil equivalent to produce one barrel as a result.
Anything under 1.0 means that more energy is consumed in the production process than is gained as an end product.
EROEI has the advantage of being a useful yardstick throughout the energy curve - from upstream production sites (wellheads, generating facilities) through midstream (gathering, transit, storage and initial processing) to downstream (refineries, terminals, wholesale and retail distribution, end use).
Some applications of EROEI are already in wide usage, although we don't tend to think about them in these terms. Energy-efficiency ratings on appliances, heating and cooling systems, windows, or building supplies are an application at the end of the energy curve.
But how can we use this to fine-tune an investment portfolio?
To continue reading, please click here... -
Oil Prices: Two Ways to Profit From 'Peak Oil'
If there's one thing U.S. investors need to know about the future, it's this: Oil prices are headed higher - much higher, in fact, and could well double to reach $150 a barrel.
And if that's what the future holds, you may as well go along for the ride...
For a glimpse of this "peak oil" future, please read on...
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What Insiders Don't Want You to Know About "Peak Oil"
Why did the oil industry impose a media blackout at a recent summit of industry giants in Mexico? The answer explains why thirsty nations are already pitted against each other in a cutthroat brawl for ever-dwindling oil supplies. Read this report to find out two ways to profit from the coming shortage of black gold.
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Ghana May Kill Exxon's $4 Billion Oil Deal
The government of Ghana may kill Exxon Mobile Corp.'s (NYSE: XOM) plans to buy a $4 billion stake in a giant offshore oil discovery from Kosmos Energy LLC. The move could help China expand its growing presence in the region through its state-owned oil company China National Offshore Oil Corp. (NYSE ADR: CEO).
Ghanaian Energy Minister Joe Oteng-Adjei sent a letter to Exxon last week informing the company that the government wouldn't approve the deal with Kosmos. The letter said the government is "unable to support an Exxon Mobil acquisition of Kosmos's Ghana assets," according to a copy reviewed by The Wall Street Journal.
The government said Dallas-based Kosmos had shared critical information about the field with potential buyers without its permission. Ghana also said Kosmos had left Ghana's state-run oil company, Ghana National Petroleum Corp. (GNPC) out of discussions held to determine how the field should be developed.
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If U.S. Oil Companies Aren't Winning Bids in Iraq, Who Is?
Iraq has auctioned off more proven oil reserves in the past six months than are collectively held by the United States, Mexico, and the United Kingdom.
But U.S. oil companies have signed surprisingly few development contracts – and foreign rivals have swooped in to scoop up major deals.
Take last weekend, when Iraq wrapped up the biggest oil-field auction in history. Major new deals were announced by Europe's Royal Dutch Shell PLC (NYSE: RDS.A , RDS.B), OAO Gazprom (OTC ADR: OGZPY), Lukoil (OTC ADR: LUKOY), China's China National Petroleum Corp. (CNPC), and Malaysia's Petroliam Nasional Berhad (Petronas).
The U.S. oil majors – ExxonMobil Corp. (NYSE: XOM), ConocoPhillips (NYSE: COP) and Chevron Corp. (NYSE: CVX) – were nowhere to be seen. -
Despite its Decline, Oil Remains a "Must-Have" Profit Play
By Keith Fitz-Gerald Investment Director Money Morning/The Money Map Report Commodities may be down, but they're not out – and they shouldn't be out of your portfolio, either. As the investment director for Money Morning, I'm invited to a large number of speaking engagements each year. It's something I enjoy, and it's quite useful, too, [...]
