Oil Prices-Terrorists Weapon Or Investors Defence? Posted By : mick madigan
Is oil still a good investment? And is the price of oil set to rise and rise? Weve been lulled by a mild winter and low heating oil demand.
Countries like the US and UK have become net importers of oil. Used for heating, refined into gasoline and cracked into industrial chemicals, oil is
vital for modern existence and powers growth.
Our present demand for oil keep increasing. On top of this, the demand for oil from newly industrialized countries is shooting oil prices ever upwards!
China, India, Brazil, and several other emerging consumer economies are soaking up their own oil production along with many other resources and are willing to pay over the odds for regular outside supply and favourable trade deals.
Yet resource quantity of pumpable oil remains the same. No huge new oil fields ready to supply cheap easily available oil have come online. In fact it appears most present oil producers have exaggerated their reserves so output has PEAKED, or may fall. All the major oil fields are in decline. This can only keep prices high!
The days of oil at $20 a barrel again have gone forever. Nations have shown they can easily cope with oil at $60 a barrel. But will they have even that option in future?
There are powerful, unstoppable new forces acting in the biggest oil producing regions. And the trend looks unpromising (to say the least) for oil or oil company investors there.
Militant factions mainly based in in Iran and Syria wish to encourage war and instability, pushing oil prices up and gains them political power in the region, plus a greater influence in world affairs.
Overall the likelihood is an integrated, anti-Western Middle East having control of the major part of the worlds current oil supply,and ability to dictate both availability and price per barrel, particularly towards any weakening Western economies.
Any serious long term restriction in oil supplies would probably send oil prices skyrocketting above $120 a barrel, and push most Western economies into recession.
The weakening dollar and the tendency of even allies of the US to switch to safer currencies such as the euro and yen, make it less and less likely that suppliers would be willing to be paid in depreciating paper rather than value commodities such as materials, information or services.
Oil investment in the Middle East is no longer a good deal as supplies become unpredictable oil prices become a secret weapon of terrorists.
Another problem - Mexico the No.2 oil supplier to the US after Canada is running dry. Another easy source gone.
The big investors can see all of this and are pulling out. But where can an investor make a profitable investment if oil supplies are uncertain?
Renewable sources of power such as solar, wind wave and geothermal, are unproven. Even when fully resourced, they will only supply a fraction of the worlds energy needs for the forseeable future.
Nuclear power is set to expand its electricity role, but present unpopularity, regulatory problems, waste storage and disposal, plus lengthy construction times mean that growth here will happen relatively slowly, and building is likely to occur on existing sites, rather than on new ones.
The majority of cars-even hybrids-will continue to require a fossil fuel source, as suggested alternatives such as hydrogen, ethanol, LPG and fuel cells continue to display major drawbacks compared to gasoline.
In short, more oil is needed fast.
Fortunately, there ARE oil investment areas where safe continuing profits are likely, but you do need to look around and look at the bigger picture of how an investor can still profit from new oil supplies and alternative energy sources.
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