Killer new business thread!

[Rolo]

Ofcourse the world will need more energy, but that doesn´t automatically mean that oil prices will continue to rise into infinity, because at some point other energy sources will be able to compete and stabilize the "fear" that we are running out of energy.

So if thinking the oil price will continue rise due to fear in the market, then you must also be ready, if that fear never "peaks". If you base your reasoning on numbers of oil peak, then you also got to remember that if the world is facing major difficulties, then normal market forces are put out of play, and replaced with regulation.

The high oil price set by the market is accepted as long the world economy continues to grow...

[Robin]

Originally Posted by Rolo

Ofcourse the world will need more energy, but that doesn´t automatically mean that oil prices will continue to rise into infinity, because at some point other energy sources will be able to compete and stabilize the "fear" that we are running out of energy.

So if thinking the oil price will continue rise due to fear in the market, then you must also be ready, if that fear never "peaks". If you base your reasoning on numbers of oil peak, then you also got to remember that if the world is facing major difficulties, then normal market forces are put out of play, and replaced with regulation.

The high oil price set by the market is accepted as long the world economy continues to grow...

Some interesting points. I would counter with...

1) Oil will continue to rise in price until a) there are sufficient alternatives and b) there is not much left that can be efficiently extracted. I would argue it will take a minimum 20 years to develop solar, wind and all the other technologies required to replace oil to the level where they are more than 50%. Today alternative energies are 1%. So you are correct in what you say, but I think we have a long period ahead of us before your first point applies.

2) The only regulation that can replace pricing would be by force. In other words, if the US or China siezed control of certain supplies. Without that oil will continue to be sold to the highest bidder.

3) I disagree that "The high oil price set by the market is accepted as long the world economy continues to grow..." I would turn that statement on it's head and would say that world economies will continue to grow as long as there is affordable oil. Right now oil is cheap as chips. The Europeans pay $7 for gasoline without blinking. So can Americans. In fact $15 for a gallon of gas will still allow industry to progress if we have hybrid cars and only make essential trips.

However, I would say there is one fact that most analysts discount. Oil is *NOT* subject to standard supply and demand economics in the same way as gold and other commodities. This planet has 6 billion people ONLY because of oil. The oil has given the energy to grow food, the fertilisers and pesticides and the energy to farm the food. People NEED to eat.

Therefore people, countries and companies will pay almost ANY price for oil - it will be a matter of survival. Oil is totally unique in this respect. I predict $500/barrel oil within 5-10 years.

[Rolo]

Originally Posted by Robin

Therefore people, countries and companies will pay almost ANY price for oil - it will be a matter of survival. Oil is totally unique in this respect. I predict $500/barrel oil within 5-10 years.

There will not be one big solution to the oil problem, instead there will be many different areas, which will ease the oil problem, before any major damage happens. Everything from better technology to better consumption, and other + new energy sources.

I think the oil price is already getting close to, when other energy sources starts to make a good investment objects - ofcourse their EROI will not be anything like oil, however that is not important, because the price of oil will make them attractive. Add tax breaks to the mix, and this might kick start engery production, which again will help to stabilize the oil price.

How did you get the price of $500/barrel... why not $1000/barrel or $100/barrel?

[Robin]

Originally Posted by Rolo

There will not be one big solution to the oil problem, instead there will be many different areas, which will ease the oil problem, before any major damage happens. Everything from better technology to better consumption, and other + new energy sources.

Yes, many different solutions. Oil has traditionally given a 60:1 ratio return on energy. Ie for every unit of energy invested you get 60 out. This is why you can have 250 horsepower cars. You would need 1,000 people to pull your car with that much force. That's how much power is packed into oil.

On the other hand The coal sands yield 1.5 - 2 times because of the huge amount of power required to boil the water to release the tar from the sand. The oil is there but it will be at a HUGE price. Likewise, wind and solar only return about 2-3 times their energy cost. BUT they are renewable so, over time, renewable resources compare very well with oil. But you have to look at a 20-30 year time frame (the life of a wind turbine or solar array).

To build the coal tar extraction facilities, to place solar panels on every rooftop and wind farms near every city. This is a thing that will take 20 years. And that's from the day the project is started. That's how much energy you need to replace oil.

Originally Posted by Rolo

I think the oil price is already getting close to, when other energy sources starts to make a good investment objects - ofcourse their EROI will not be anything like oil, however that is not important, because the price of oil will make them attractive. Add tax breaks to the mix, and this might kick start engery production, which again will help to stabilize the oil price.

Oh you bet. Finally people feel investing in solar and stuff is becoming affordable. But we won't see oil prices stabilized because of the sheer huge numbers of alternate resources that have to be built. Building them will take time, loads of money and, wait for it, huge amounts of ever more expensive oil for energy and manufacturing.

Even if we built 200 nuclear power stations to replace our natural gas ones, it would still take 10 years to plan them and 10 years to build them at current projections.

So, any way we slice the pie, we still see a shortfall of at least 20 years between oil becoming short supplied and other sources replacing it. Those will be 20 lean years during which you might be able to invest in energy stocks to make enough money in the early years to see you through the later ones fairly comfortable: warm house, air conditioning and so on. Most people won't be able to afford these luxuries for quite a while...

Originally Posted by Rolo

How did you get the price of $500/barrel... why not $1000/barrel or $100/barrel?

Try continuing the curve yourself...

[Robin]

By the way, since I mentioned natural gas I had to post the following chart...



80% of our electricity in the US is natural gas powered.

Graphs like this make paying $40,000 to place solar panels on your roof seem cheap.

Well, I actually did that. I used to pay $1,000/month here in south Texas for electricity. That's $12,000/year. With power costs rising down here at 15-20%+ a year I will be paid off in less than 3 years and in year 4 will save $20,000 (assuming 20% increases for the next few years).

[Monk]

some of my current energy plays

ESLR - alt. energy
http://stockcharts.com/def/servlet/SC.web?c=eslr,uu[e,a]waclyyay[d20011011,20051230][pb34!b8!c10!b200!b50!d20,2][vc60][iub14!la12,26,9!lh14,3!lc20!lg][J58645576,Y]&pref=G

NGAS - natural gas
http://stockcharts.com/def/servlet/SC.web?c=ngas,uu[e,a]waclyyay[d20010917,20051230][pb34!b8!c10!b4!b50!d20,2][vc60][iub14!la12,26,9!lh14,3!lc20!lg][J59067380,Y]&pref=G

FCEL - alt. energy
http://stockcharts.com/def/servlet/SC.web?c=fcel,uu[e,a]wacayyay[pb34!b8!c10!b200!b50!d20,2][vc60][iub14!la12,26,9!lh14,3!lc20!lg][J53643222,Y]&pref=G

HEC - http://stockcharts.com/def/servlet/SC.web?c=hec,uu[e,a]waclyyay[pb34!b8!c10!b4!b50!d20,2][vc60][iub14!la12,26,9!lh14,3!lc20!lg][J22393912,Y]&pref=G


CELL - will be getting in if/when it breaks above $20 - http://stockcharts.com/def/servlet/SC.web?c=cell,uu[e,a]waclyyay[d20010912,20051231][pb34!b8!c10!b4!b50!d20,2][vc60][iub14!la12,26,9!lh14,3!lc20!lg][J58768292,Y]&pref=G

I think some of the oil and natural gas stocks might be a little toppy around this area and due for a pullback but long-term they look GREAT!

These bull markets don't come for 2-3 years and vanish... they last for 12-20 year cycles.

[Monk]

...and don't get me started on gold/silver stocks

BGO
CDE
GG
GFI
FCX

[Robin]

ESLR

Evergreen Solar. Yes I have some. I agree with you. In 2000 it peaked nicely at about $12.50 but it didn't have the legs to continue. Gas prices were too low and it plummeted. But as soon as gas picked up again in 2003 it bagan to rise all over again and it's previous highs will be nothing compared to what I think is it's potential. As soon as people wake up to the need for solar energy this company will make a killing and so will it's share holders.

NGAS

With the price of natural gas right now you HAVE to have some natural gas stocks. I have some of this one too. Look at this chart!





FCEL

I don't hold any of this one.I don't know enough about how solid their fuel cell technology is. Plus their stock is a bit all over the place right now. I have this one on my watch list though just in case something materializes.

HEC

Another one I don't hold. I don't like the look of this chart...



I didn't even have it on my watch list but I'll add it seeing as you like it.

CELL

I refuse to be distracted by even the brightest technology and biotech stocks. I am strictly in energy so I don't know much about this company.

[Rolo]

Originally Posted by Robin

Try continuing the curve yourself...

You are talking about almost 8 times the current price within 10 years - do you think there will even be a place to trade, if that happens? Sounds more like Madmax ;-)))

Again, ofcourse the oil demand will be higher, and ofcourse the saudis and oil companies do not want to increase their production or refining capabilities to a point where it will seriously hurt the price (no reason to kill the golden goose), however they must still keep the ecnonmy going, because without a working world ecnonmy oil demand will halt.

So for your $500/barrel might work on a chart, but oil/energy as you said is like no other product out there... wars have been started for less ;-))

[Robin]

Originally Posted by Rolo

So for your $500/barrel might work on a chart, but oil/energy as you said is like no other product out there... wars have been started for less ;-))

Unfortunately this is considered a possible outcome, as are general rioting, looting and even breakouts of anarchy.

That's why I am planning now. I have become energy efficient. I have a solar powered house and my pool and house hot water use a water heating system I devised myself (not hard when you are in South Texas )

I am planting a large vegetable garden in the spring. I have an electric vehicle which recharges off the solar power. Yes we still have gasoline vehicles but I am ready.

Why all this? 1) to save money 2) to be independent if the worst starts to happen...

[Rolo]

Originally Posted by Robin

Unfortunately this is considered a possible outcome, as are general rioting, looting and even breakouts of anarchy.

Thats why I moved out of the ghetto ;-))

[Robin]

Originally Posted by Rolo

You are talking about almost 8 times the current price within 10 years

Here's a chart of Sweet Light Crude Oil since 1920 (yes I know they left off most of 2005, but we are looking at previous years)...



1998 = $10
2005 = $70

Since 1998 the price has risen 7 times in seven years. in 1998 you would have said a 7 times increase was unthinkable. Wait a minute. I think you just told me that now!

[Rolo]

Originally Posted by Robin

1998 = $10
2005 = $70

Since 1998 the price has risen 7 times in seven years. in 1998 you would have said a 7 times increase was unthinkable. Wait a minute. I think you just told me that now!

So which difference is biggest?:

1998 = $10
2005 = $70

2005 = $70
2015 = $500