We now consume more oil than we can produce.
The world is running out of oil — fast.
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For the first time ever, the U.S. Department of Energy admits that the world has crossed a critical threshold in the supply of oil:.
We now consume more oil
than we can produce.
The world is running out of oil — fast.
The DOE numbers show that we’ll run short of oil sooner than anyone thought. And they leave no doubt that the era of cheap oil has already drawn to a close, which is plain to see for anyone who drives a car.
Every year the Department of Energy publishes its International Energy Outlook for the purpose of forecasting energy supplies 20 years into the future. The report is usually known to be overly optimistic, but the latest edition paints a bleak picture for the future of cheap energy.
According to the U.S. Department of Energy’s own estimates, 2008 was the last year the world will have ever produced more oil than it consumed.
- At the end of 2010, there was a shortfall of 5.3 million barrels a day – a shortfall equal to the daily production of Iraq and Kuwait combined.
- By 2015, a shortfall of another 5.5 million barrels a day.
- By 2020, a shortfall of 8.1 million barrels a day, equal to 80% of the oil produced in the U.S.
- And by 2035, a shortfall of 12.1 million barrels a day — more than all the oil produced in Saudi Arabia.
The world is heading for a catastrophic shortage of oil. And there won’t be any other source of energy available in time to replace oil. To say that we’re going to experience turmoil in the energy market might be the understatement of the year.
Of course, we all knew this was coming. It’s no surprise to anyone that there is a limit to the world’s oil resources, and that demand would exceed supply sooner or later. What’s surprising is that the DOE admits that we’ve arrived at this critical threshold DECADES earlier than it had anticipated.
In 2004 the DOE made the sunny prediction that “[we] expect conventional oil to peak closer to the middle than to the beginning of the 21st century.”
In 2005 the DOE predicted that total world oil production would reach 122.2 million barrels a day by 2025. In 2010, that optimistic estimate was downgraded to 97.6 million barrels a day.
That’s 24.6 million barrels a day LESS than what was predicted just five years earlier.
It’s not that the Department of Energy has intentionally overestimated production. It’s simply that there’s not nearly as much accessible oil as they once thought there was.
Of course, the hunt for new oil reserves continues. BP has found what they believe may be 3 billion barrels in the Gulf of Mexico, for instance. But due to the extreme depth of this discovery (over five miles beneath the surface) and the uncertainty whether it can be economically recovered, industry experts predict that it will be at least 10 years before these reserves come on line — if they ever do. And needless to say, there is considerable resistance to the idea of BP— or anyone else — conducting new deep drilling in the Gulf of Mexico.
Oil is often described as either “conventional” (think oil wells) and “unconventional” (think tar sand, oil shales, and heavy oil). The former is the low-hanging fruit of the oil world; the latter, of course, is much more problematic to harvest.
There is a school of thought that the trillions of barrels of oil in the shale and tar sands of Canada, for instance, will supply us with oil for many decades.
In its 2010 report, the Department of Energy projects a near tripling of unconventional oil production over the next 25 years, from 5 million barrels a day in 2010 to 12.9 million in 2035. Most experts agree this production estimate is wildly optimistic.
The problem is that unconventional liquids are far more expensive to extract than conventional liquids, and they require considerably more energy as well. At some point they use more energy to extract than they yield.
Furthermore, production of unconventional liquids tends to have far greater environmental impact than that of conventional liquids. Resistance from an environmental standpoint will be intense.
Unconventional liquids will definitely play a role in bridging the oil supply gap. But 12.9 million barrels a day by 2035 — approaching three times the current unconventional production — is not a likely scenario.
So the shortfall of production is almost certain to be considerably worse than the Department of Energy now indicates.
And that’s going to create fantastic opportunity for investors...
… because energy is fundamental to every sector of the global economy. And as we’ve recently experienced, the price of energy is profoundly affected by political, economic, and environmental issues — as well as both supply and demand.
Naturally, as supply diminishes, the price of oil goes up — way up — as will most other sources of energy as demand for alternative fuel rises. One certain result will be fundamental volatility throughout the energy sector.
Even now, before the shortfalls in oil have really begun to hit home, the industry is undergoing tremendous change. Coal production is being curtailed. Events in Japan have cast real doubt about the future of nuclear energy, and disruptive government subsidies for green energy sources are now flowing. The scramble for alternative energy sources is heading into high gear.
As a result of the rising price of oil and the feverish search for alternatives, every corner of the energy industry will be in turmoil. Rapid swings in energy prices and stock values will be the norm.
But it won’t all be driven by simple supply and demand: Wall Street darlings will fall in favor and out again; government will bestow subsidies on one market today and a different one next month; and genuine technological advances will move the winners ahead and leave the others behind.
Tremendous opportunity for wealth-building will exist in all that turbulence in the energy sector. Companies will rise, and others will fall. Fortunes will be made, while others will be lost. And investment opportunities will be abundant.
Energy is poised to be one of the most promising sectors of the next decade, but it will also be a difficult sector to navigate. If you are to profit from energy, you’ll need expert advice along the way — people in the industry who will share with you their experience, analytical skills, and tremendous knowledge of every corner of the energy sector.
Casey Research has put together a team of four energy experts, led by chief energy investment strategist Marin Katusa. Each month, the Casey energy team will tell you exactly where to find profitable investments in Casey Energy Opportunities.
They leave no stone unturned in looking at energy sectors that hold extraordinary opportunity for growth — and extraordinary profit for their readers. They’re constantly looking at every source of energy in:
- Natural gas
- Energy service companies
When a particular industry holds promise, they dig deep to identify the best-of-breed companies in the industry — those that will benefit most from the opportunities at hand.
They rigorously examine the company’s management, resources, and numbers. And they’ll sit down with the key players to ask them the hard questions about the company’s finances and future plans.
When Marin and his team in the Casey energy division recommend a company, you can be sure they’ve done their homework. They tell you exactly why they like the sector, why they like the company, and what you should pay for it’s stock.
You’ll get specific, actionable advice about when to buy, and — every bit as important — when to sell.
How successful has the Casey Research energy division been in picking stocks?
They boast an 86% success rate on their latest picks — 6 winners out of 7 picks* — and counting…
Although we can't reveal the tickers of our currently open recommendations, we can show you how they're performing...
- Up 15.4% in 5 month
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