The phenomena commonly referred to as "peak oil" is still not widely understood by investors, lower-level policy makers and certainly not the general public. We remain hopeful that by the end of 2008 higher oil prices might lead to greater awareness. It is encouraging to see an increasing number of top oil company executives that are willing to speak openly about peak oil. Take for example the former CEO of Talisman Energy, Dr. Jim Buckee. His recent interview with the Australian Broadcasting Corporation and additional context can be accessed via the Australian/New Zealand chapter of TheOilDrum.com. Click here to pull up the story.
When 2008 is entirely in the rear-view mirror, we will not be surprised to learn that $108 proved to be the average 2008 price for West Texas Intermediate, with at least one price spike above $125. Rising domestic consumption rates within oil producing nations that subsidize their domestic consumption, combined with escalating rates of annual production decline of existing fields is going to keep a lid on export-available global oil supplies. Furthermore, even with a global economic slowdown, oil demand growth will not retract for an extended period of time. Making matters "worse," we subscribe to the modest slowdown camp. It's hard to believe today, but monumental levels of monetary stimulus, seasoned with a dash of fiscal policy, should help keep the global economy muddling along. China growing at 8% rather than 11% will still result in significant oil demand growth.
When 2008 is entirely in the rear-view mirror, we will not be surprised to learn that $108 proved to be the average 2008 price for West Texas Intermediate, with at least one price spike above $125. Rising domestic consumption rates within oil producing nations that subsidize their domestic consumption, combined with escalating rates of annual production decline of existing fields is going to keep a lid on export-available global oil supplies. Furthermore, even with a global economic slowdown, oil demand growth will not retract for an extended period of time. Making matters "worse," we subscribe to the modest slowdown camp. It's hard to believe today, but monumental levels of monetary stimulus, seasoned with a dash of fiscal policy, should help keep the global economy muddling along. China growing at 8% rather than 11% will still result in significant oil demand growth.
The Investor Intelligentsia model portfolio needs additional energy exposure. Today, we will establish a number of positions. We will return with a fundamental review of each company. On the open, we will establish four new positions and raise our stake in EnCana to a more appropriate weighting:
Profile, Disclosure, Compliance and Disclaimer: Click Here
- CNOOC Ltd. (CEO: NYSE): Buy 200 shares on the market open
- Canadian Natural Resources Ltd. (CNQ: NYSE): Buy 400 shares on the market open
- Noble Corp. (NE: NYSE): Buy 500 shares on the market open
- Baker Hughes Inc. (BHI: NYSE): Buy 100 shares on the market open
- EnCana Corp. (ECA: NYSE): Buy 100 shares on the market open.
####
Profile, Disclosure, Compliance and Disclaimer: Click Here
