Compass Venture Inc T.CVI.A

A Crude Awakening

[Anewtrader]

Text from Sprott Management Full text here : https://sprott.com/pdf/marketsataglance/08-22-2005.pdf Markets At A Glance A Crude Awakening Pursuant to our ongoing theme of energy, we would like to share with our readers some thoughts on what kind of world we will be left with after global oil production peaks. Recall that, as explained in previous Markets at a Glance articles, the problem of “Peak Oil” occurs when the world has attained the maximum rate at which crude oil will ever be produced. The problem is not, therefore, that we are running out of oil – we’re still decades away from having extracted the last drop. Rather, the problem is that once oil production peaks, from that point forward we will be unable to extract it fast enough to meet the world’s ever-growing (and seemingly-insatiable) demand. According to Kenneth Deffeyes, this turning point in the oil era may occur as soon as November 2005 – a little over two months from now! Before the year is out, we may be in for a rude (crude) awakening. Does that mean all hell breaks loose come November? Not quite. The law of supply and demand will take care of the situation and price oil such that demand drops to meet diminishing supply. With the price of oil more than doubling in the past two years (tripling in three), this process already seems to have begun. But alas, even such a sharp price escalation has done nothing to put a dent in demand. Global demand for oil increased by 4.5 million barrels per day in the past two years regardless. Therefore, the price of oil in a declining supply scenario will likely be multiples of what it is even now. In a recent interview, Matt Simmons conjectured that the price of oil can go up by a factor of 5 to 10 times (from here) in a shortage. The reason being that we rely on oil for over 90% of our transportation fuel, and viable alternatives are still decades away from fruition – assuming they are possible at all on such a scale. It not the time to sell your share... Perhaps CVI shares will save your butt one day!