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EmailHow To Position For The Next Oil Shock
Friday, May 27, 2011
Executive Summary
- Saudi Arabia's reserve capacity is a myth
- World oil demand is increasingly overwhelming supply
- Why exports matter more than total world production
- What the next oil shock will do to stock, bonds, commodities, precious metals, and real estate
- What you should do to prepare
Part I: Past Peak Oil - Why Time Is Now Short
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II: How To Position For The Next Oil Shock
Putting It All Together
Let’s review the situation in the KSA:
- Despite assurances of 12.5 mbd of total capacity, the KSA has not yet produced more than 9 mbd on a sustained basis in 2011.
- The IEA is begging the KSA to pump more.
- The KSA has turned to outside companies to help it begin to unlock heavy oil reserves that will take a lot of time, energy, and money to prosecute.
- The KSA has a vastly expanded rig count as they expand drilling operations to produce more oil (odd behavior for a nation with an alleged 3.5 mbd of spare capacity?).
The simplest and therefore most likely explanation for all of this is that the KSA does not actually have 12.5 mbd of total capacity, it is already at peak, and it's now struggling to maintain even 9 mbd of total output on a limited basis.
Of course, there are other possibilities, but since those will not shake the world to its bones if they happen to be true, the safe course of action here is to go with the ‘KSA is at peak’ story. Sooner or later it will be true, so there’s not a lot of harm in being early to it, while being late could be costly.
Now let's move onto the last part of this puzzle: demand.
Your faithful information scout,
Chris Martenson
Copyright 2011, Chris Martenson. All rights reserved.
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Comments
Fantastic report Chris many thanks. I'm installing the photovoltaics tomorrow and I'm buying the Gold on Tuesday 'bank holiday here on monday'. Damn, it's getting serious guys.
"You are correct Sir", Ed McMahon to Johnny Carson, or Bob to Chris and my fellow warriors/doves.
Chris, this is very interesting technology that may have a chance. I'm hoping because every barrel we get will be useful.
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An outstanding report Chris. Even by your high standards this one is memorable. Thanks for the timely alert and good advice.
Travlin
for all the information you provide here. chris and company.
peace, Shamba
G'Day
When the Politicians (Pollies) say; "Growth" or "Employment', they ought be saying; "We need more OIL and need to use more OIL".
When you employ a person. What does it take...Oil. When an economy has more growth...
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I have owned Petrobank since they went public for THAI. Talk to management once every quarter. I have started to bring it up before but didn't want to come across as a pumper. They took this company from a $40 million market cap to having Petrominerales(Colombia) spun out at market value now of $3 billion and Petrobakken at $3 billion both having taken from close to zero production to now both being over 40,000 bod...
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Chris for another great report. Still would love for you to define classes of stocks that will do badly. For instance Canadian e&p oil companies I would think would do well. That being said I lightened up on a bunch at your recommendations and waiting on end of June to see what happens...
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If only Donald Trump were president, our oil problems would be solved. We could just "take it." Oh well . . . .
Looking forward with baited breath for the next report!
Chris,
Would you please clarify your comments on silver. I knew it was used in industry, too, but I thought you felt more comfortable with it as PM than you sounded in this article.
Thanks,
Ernest
I've often wondered how gold & silver miners will do in a very high inflationary environment where oil prices are also very high. Anyone have any thoughts?