Tuesday, March 15, 2005

Dr Strangelove or: How I Learned to Stop Worrying About Peak Oil and Start Making Money Off It.

On a whim, about a year and a half ago I picked up a copy of the book "Hubbert's Peak". The idea was absolutely mind-boggling. Oil would eventually become scarce? Did the rest of the world know this? Did they know that experts thought we might be near the peak?

I checked the web. Whoa. Scary stuff. End of the world at hand. [But apparently not so at hand that one guy didn't want to sell me a book and a DVD on the topic. Sorry dude, if the end of the world is at hand, I'm gonna need something downloadable, you know what I mean?]

Quick, what was that stuff I learned in college? Oh yeah, supply and demand. When something gets scarce, prices rise, demand maybe goes down, hopefully supply goes up, etc. But wait, I know no more oil supply is to be had.

&^%$, this is gonna be mighty profitable!

Needless to say I immediately put some money into energy.

Then a few months later I heard Jim Rogers on FoxNews announcing that oil would soon skyrocket and viewers needed to get informed. Literally everybody on the show laughed at him.

My jaw dropped.

One of the world's great investors was apparently thinking along the same lines.

I read more. "Out of Gas", "The End of Oil", "The Oil Factor". Jenna Jameson's book. [Okay, I only looked at the pictures on that last one.]

Holy Gas-Guzzling Batmobile, Batman!

Anyway, that's my story. Figure out your own. Do you believe the peak oil theory? Do you think the world is done for? If so, no need to invest. But if you think there's a good chance we muddle through, think about investing. As always, your mileage may vary. (Pun.. you know the drill.) As we are in front of a seasonal slowdown in demand in the spring, you may want to look for a break in the price before investing.

And for your reading pleasure:

"In short it is a good time to be in the energy business. It is also a good time to be an energy investor. As to those skeptics that keep waiting for $20 oil, the world is passing you by. It is time to recognize that a new bull market has begun. It is time to revalue and compare the returns offered on traditional equities to the returns offered on hard assets. It is also time to reallocate your portfolio. As for the energy cornucopians among you, it is time to familiarize yourself with “peak oil”  – it has or will soon arrive."

Quote from an article I'm going to call Hakuna Matata