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Michael Lombardi, lead contributor to Profit Confidential, reports that oil wells supplying the world with oil are declining at a rate of three percent to five percent per year. According to Lombardi, even if there is no economic growth in the world, roughly 3.6 million barrels a day more of oil need to be found to replace the wells that are running dry.
New York, NY (PRWEB) May 08, 2012
Michael Lombardi, lead contributor to Profit Confidential, reports that oil wells supplying the world with oil are declining at a rate of three percent to five percent per year. According to Lombardi, even if there is no economic growth in the world, roughly 3.6 million barrels a day more of oil need to be found to replace the wells that are running dry.
“If worldwide economic growth is 1.5%, this is another 1.35 million barrels per day needed to meet demand, bringing the total supply required to roughly five million barrels a day,” says Lombardi.
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To put this into perspective, Lombardi reports that Saudi Arabia exports about six million to six and a half million barrels per day. “Five million barrels a day is a significant amount of oil that needs to be replaced,” says Lombardi.
In the article How “Peak Oil” Will Affect You, Lombardi highlights that the era of cheap oil is over, which will mean sustained higher oil prices.
“As oil wells deplete, we need to drill 6,000-7,000 feet below the ocean’s floor to find replacement oil or we extract oil from the oil sands, both expensive propositions,” says Lombardi.
Lombardi estimates that China could overtake the U.S. to become the largest consumer of oil over the next few years, even if China’s economy is slowing.
“My contention is that if oil prices drop below $70.00, oil companies will simply stop extracting the more expensive oils out of the ocean or the oil sands, because oil companies will lose money on these ventures,” says Lombardi.
Lombardi believes that we have reached cheap peak oil, which means those higher oil prices are, unfortunately, here to stay.
“This is bad news for consumers, bad news for the inflation numbers, but good news for the oil companies,” says Lombardi.
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market... before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit www.profitconfidential.com
Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.
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