The Fundamental Things Apply…As time goes by

…In the years and decades to come, oil will be in ever-greater demand around the world. Supply will continue to be found, but the cost of getting the oil to market will get higher as companies and countries look to deep sea drilling, tar sands and oil shale production. All these methods are extremely expensive in terms of labor, materials and energy expended. Oil will always be available, but the cost of producing a barrel of oil, transporting it, and refining it will likely continue to rise. In addition, the supply of light, sweet crude is declining rapidly. Heavy sour crude will be the substitute, but it

In 2002 oil was $20 per barrel. In 2004, $50 per barrel. Now it is $72+ per barrel and demand is still increasing at 2% per year (which exceeds growth in supply). The world is adjusting to a higher cost of energy, but it is functioning like a global tax, which is beginning to bite into US consumers.

In the future, oil will be even more critical to global prosperity, as it will be more and more coveted by every nation on earth, both sellers and buyers. The arrival of Peak Oil will likely be the most critical and defining event of the 21st century. Energy and other tangible assets will form the mirror opposite of the global currency glut, as the particularly debased currencies become less and less coveted, as time goes by.

Financial Sense