Huntleys On Hubbert  

Local sharemarket tipsheet Huntleys has been muttering ominously about Hubbert's Peak periodically for a year or two without ever going into detail beyond "less oil = higher oil prices". It appears they have decided the peak is almost here and will outline their strategy in the coming weeks.

As I've written previously, I give a lot of credence to the Hubbert's Peak argument that the annual global supply of oil is peaking quite likely this year at a bit over 84m barrels per day. I will explore what this means to us over the coming weeks.

At this point those 0PEC pumps are going flat out to avoid a US summer driving season spike largely thanks to Saudi Arabia. At this stage the price of oil is kept down to US$50, with a fall to US$40 seeming less likely though it would be excellent news! It is very clear that the higher the oil price goes, the slower the consumer will be. On the other side of the fence, there is the recycling of petrodollars.

And more, the huge investment required in finding and developing more oil, building new refining capacity, and even more, developing alternative forms of energy. For instance the LNG market is growing at 20% per annum. Geodynamics, an extraordinary exercise in drilling five kilometers into the earth's crust to recycle water through hot rocks, producing steam to drive generators, is just the tip of what we will see over the coming years.