IS $400 A BARREL CRUDE OIL IN OUR FUTURE?

This is an email to my friend  who is trying to make sense of her retirement investments in energy stocks and is one of many on the subject.  The following is just my opinion based on what I have studied or heard and what seems to be the truth.


We will use more oil when the economies rebound, if they do.  Those toxic derivatives are still out there and the banks run the governments.  There has been every possible action to prevent any other type or source of energy being developed or used.  My uncle
George spent 40 years with Socony Oil (Mobil) and used to tell us about how they price fixed and outright cheated every chance they had.  http://www.altlaw.org/v1/cases/393559
Uncle George's dad was an Ambassador and he learned the back room stories of politics in the 20's and 30's. 

One of my favorite stories was how Standard Oil feared the alcohol powered engines that were being developed in the 20's.  They (as they do now) bought up every patent they could, but, with a stroke of genius, got behind the temperance movement.  To make alcohol illegal.  Prohibition got the money it needed to pass from the Rockefellers and industry organizations like the American Petroleum Institution. The lobbyist of the era.

My experience with Texaco taught me that everything he told us was true and to understand long term energy markets one has to understand that oil controls the world and there is little chance that ANY technology new or otherwise will ever be able to unseat oil.  The Oil lobby shut down Ronald Reagan's dream, THE SUPERCONDUCTING SUPER COLLIDER PROJECT.  This project would of made the United States a Super Power for the next 50 years and made us energy independent.  Cost as much to shut it down as to finish it.  Guess who lobbied the hardest to kill the project? 

Are these corporations acting like they are going to run out of products, no!  That is a fear tactic like peak oil.  This is why oil is a good investment.  It does not pay good dividends as it reinvests and hides profits but are good for a steady return over the long run.  

We are going to use as much oil as we find just as we have done for the last 80 years.  Peak oil, first talked about in the twenties, is in reality a planned shortage.  Of course at our current pace we will outstrip supply.  Technology will keep pace to make oil recoverable at reasonable price.  There is a plan and by the behaviors of the involved corporations we can get some measure of what will happen.  Without refineries the quantities of oil available mean little.  There is much oil in the Persian Gulf that can be brought on-line in ten years or less.  There is a great quantity of oil ready to be tapped in Saudi Arabia that is not even mentioned in known world reserves. 

Right now we have an economy to be concerned about.  It will shrink next year too if nothing is produced that can be classified as real wealth.  Products.

Oil is a buy.  It will be for sometime.  If Iran gets its way the price will go to $400 a bbl or more with the destruction of Saudi Arabia which is it's real goal.

It's a lovely world. 

What do you think.