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July 12, 2008

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Gale Whitaker

The "peak oil" study is not about running out of oil it is about maintaining an ever increasing supply rate. Its obvious to us traders that "easy to get" oil is a rapidly declining resource. The phsycological impact of this knowledge is that it is safe to go long oil because the price will go up for the rest of time (just like gold). It is beyond belief that you conservatives have gotten your heads somewhere where you can't see the situation for what it really is. Lets face it the low lying light sweet crude is nearly gone and the world will never be the same from now to kingdom come.

The Optimist

I read recently that the last barrel of oil (i.e. the most expensive) is produced for about US$75 at the moment. All the oil you are talking about is below that figure in terms of cost.

In order to get oil to stay above $100 for a long time, we need to increase demand continuously, we need to exhaust the Canada tar sands, we need to exhaust coal (which can be turned into gas and other oil substitutes) and we need to have continuing conflict in the Middle East.

All of these could come to pass, but if I were a trader, I would be betting someone else's money on it.

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