Why Peak Oil Will Never Lead To $500/bbl Crude Oil

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  • Sun, Aug 07, 2011 - 10:38pm

    #31

    sdadesky

    Status Member (Offline)

    Joined: Aug 07 2011

    Posts: 3

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    Rising prices will dramatically shift demand

Erik,

Superb article. Can’t agree more.  The hardest thing about investing over the long term, and even the medium term, is predicting the interplay between all of the interdependent variables.

We would not even need the government to ration gasoline. Consumers would do that all by themselves. One of the biggest areas of neglect in this forum  is the effect of price changes on shifting demand patterns. With gas at $3.00 / gallon, I still don’t mind driving 4 miles to work and back every day.  At $5.00 a gallon, I not only would relocate my office closer to my home , but I might even set up a home office (my boisterous children be damned…). My  consumption of gasoline  would go from 10 gallons per monthly commute to almost none. Now if you multiplied that kind of behavior by 330 million Americans, that would make a big dent in prices.

A number of intriguing  technologies exist in the automative sector that dramatically boost mileage in cars. Some of  these do not even require a costly radical re-engineering of the manufacturing process. There are numerous reasons why these technologies have not yet surfaced among the public at large. One reason is probably because the oil sellers are a powerful industry group, with deep pockets,  who are not impervious to using that wealth to suppress technologies that reduce demand for their product.  But with prices high enough, to the point it would jeapordize their private ownership of this resource and expose them to  nationalization risks, those technologies would suddenly resurface.

Your advice to protect your downside  is wise. As an investment advisor, I am a big believer in commodity-based investing. But all of my commodity investments are hedged for sudden downward plunges. The one thing I’ve learned over the last two decades investing in stocks, is that stocks drop a lot faster than they rise. You don’t want to toughen through a "buy and hold" position unnecessarily.

Thanks for your research. Keep up the great work.

 

 

 

  • Mon, Aug 08, 2011 - 02:05pm

    #32

    Erik T.

    Status Silver Member (Offline)

    Joined: Aug 05 2008

    Posts: 213

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    Hi Sdadesky,Welcome to the

Hi Sdadesky,

Welcome to the site and thanks for the kind words. But this article is actually quite a long time out of date. For more up to date perspectives on peak oil investing, google my peak oil talks at the ASPO conference in Belgium, the talk to Waloon parliament, and the two peak oil investing videos at http://www.eriktownsend.com/peakoil. All of that information is much more up to date than what’s here, and as of today I’m up +168% YTD trading the strategies presented in the second video.

All the best,

Erik

 

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