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Why oil will jump to $100/barrel within five years if not sooner!

I’m going to lay out my argument why oil will skyrocket to $100+/barrel over the next 5 years. You can laugh & ridicule all you want but hear me out then decide.

Problem #1.
Every major exporter of oil has been pumping millions/billions of barrels of oil every day for the past 40 years and they are all running low.

Don’t take my word for it, read the following links which discuss the decline of production in Mexico’s Cantarell field. Or you can read about Cameroon’s declining production (Africa) too.

There’s long been rumors that Saudi Arabia has been “exaggerating” their REAL reserves anywhere from 20% to 80% and they’ve been conspicously planning on expanding exploration and divesting into other industries for revenue generation.

Problem #2.
Speaking of Saudi Arabia, the entire middle east reserves sit on a geopolitical powder keg waiting to blow up. The smallest spark can cause the price of oil to explode.

Problem #3.
China and India have an insatiable appetite for energy. Over the next five years, these two countries with 1/3 of the worlds population isn’t going to consume LESS energy, they’ll consume more.

Problem #4.
Russia has plenty of oil to cover the increase in demand and some of the declines, unfortunately there isn’t enough
equipment, people, pipelines, capital, and other infrastructure to make any difference. The political turmoil at the head of state doesn’t help bring investment into the region.

Problem #5.
New oil discovered in the gulf and asia suffers from the same problem. The average US rig is almost 30 years old. Thirty year old rigs were often junked but now they’re becoming the workhorse of production. Expect downtime for repair & maintenance to impede production in the very short future.

Problem #6.
If we are to believe the gloom and doom climatologists, we can expect hurricanes, floods, typhoons to further impede oil production over the next decade.

Problem #7.
The idea that high oil prices (e.g. $100/barrel) would curtail consumption and bring the price down is a myth. There was virtually no reduction in consumption the last couple of years when oil hit $70/barrel and gas went up to $3.50. We’ll test that theory again if gasoline hits $4/gallon this summer. People complained and wanted Congress do to something but it was all out of their hands.

Any combination of one, two or three of the things above can really set off the price of oil but in reality, all of the problems are fairly valid and each will impact the price of oil. So what am I doing? Rather than crying & whining about the high cost of energy/oil/gas, I’m preparing NOW to profit from the opportunity in energy price increases.

ETFs that I like XLE, OIH, GDX and XLU.