Oil - The Coming Supply Crunch (Part II)

Sunday, April 12, 2009, 3:17 PM
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Sunday, April 12, 2009

Executive Summary

  • Explaining Oil Pricing - oil prices are "set at the margin"
  • Oil Storage - When it's pumped out of the ground it has to go somewhere
  • Oil Price Behavior - slight supply and demand imbalances drive prices
  • The Total Shortfall - too little oil to support a robust recovery
  • Nothing Fails Like Success - the worst thing would be a rapid economic recovery
  • Timing - when will Oil Shock III arrive?
  • What should you do?
  • Investments, food, selecting a community, and an abbreviated buy list

These prices now are dangerously low. The lower prices fall, the less oil will be produced and the greater the chance of an oil spike.

We are three, six, maybe nine months away from a price shock. We are not talking about three to five years away -- it will be much sooner.

Within a few months, we are going to realize our visible inventories are really tight -- squeaky tight -- and what would really be inconvenient is to see a recovery in the economy."

Matt Simmons, Chairman of energy investment-banking firm Simmons & Co, March 26, 2009


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