One Step Ahead of Saudi Panic

Having trouble viewing this issue? Click here. Refer a Friend to Energy and Capital.

One Step Ahead of Saudi Panic By Keith Kohl | Wednesday, July 27th, 2011 The last few nights have been restless, to say the least. And the worst part is I know exactly why I keep up my insomniac pacing. A single thought has been rushing to the forefront of my sleepless psyche: Let's hope it won't be us asking the Saudis for more oil. That's what we were left pondering after seeing firsthand how hungry China is for Canadian energy. Unfortunately, it's more likely a U.S. diplomat will be making that future phone call, apologizing to the Saudis for past grievances and promising we won't stray from their oil taps again... The real kicker is there's a good chance they'll say no. Advertisement WikiLeaks Article Details Stunning Government Cover-Up Put simply, we as Americans have been lied to for the past two years — if not much longer. Thanks to a man by the name of Sadad al-Husseini, a prominent geologist, we now know the extent of the cover-up and just how damaging it stands to be to America. There's no turning back at this point, but there are a couple very specific ways you can protect yourself from the oncoming crisis that will almost certainly ensue... I've detailed them all right here, so I suggest you check this out sooner rather than later.  Their refusal won't come from some repressed anger, but rather the fact that all they can do is shrug their shoulders helplessly... Turns out the Saudis might not be able to feed our addiction any longer because they've fallen victim to their own racket. The Sight of Saudis Panic We've listed Saudi Arabia's varied issues countless times before. The panic, however, won't stem from declining fields, or even the fact that the extra oil it can produce is heavier and more expensive to refine (that's also assuming that some European refineries can even handle the stuff)... The problem is the Saudis have gone from providing for the world's oil addiction to developing their own fix. Imagine a heroine dealer who can't sell any more of his product because he's too busy using it. And the Saudis' domestic oil consumption is heading higher — much higher. Right now we believe they're producing about 9 million barrels per day (of course, the way they cook their books, it's hard to be sure of anything when it comes to OPEC). Last year, the Kingdom consumed approximately 2.4 million barrels per day — a 50% increase just within the last seven years. To give you a comparison, U.S. demand for crude oil and petroleum products declined by almost 4.5% during the same period. Although they have a long way to go before they reach our nation's level of dependence on the stuff, the fact that the Saudis are headed down a path to oil addiction should be alarming in itself. And think about this... If Saudi Arabia's domestic consumption is increasing by nearly 6% per year, its demand will exceed three million barrels per day by 2015 and four million barrels by 2020 — and that's in the unlikely scenario that demand growth remains steady. No Leftovers for Us Saudi Arabia is one of few countries left on a very short list that will be able to increase its domestic oil production. Depending on to whom you're listening, the Saudis can pump out an additional 2 to 3 million barrels per day. For now, let's give them the benefit of the doubt and assume they can push their output to 12 million barrels per day... Not only is that amount supposed to make up for any gaps between the world's supply and demand, but now it's practically guaranteed they'll have less available oil to export. And we've already seen those headlines. Anyone else recall last December, when Saudi oil exports fell 4.9% to around 6 million barrels per day? That's 20% less oil they're shipping than they were in 2005. We'll confess that this decline is not to blame on their rising consumption rates alone, but the Saudis themselves are expecting to see more of the same going forward. They're anticipating a decline in exports to 5.6 million barrels per day in 2020, and a fall below five million barrels per day in 2030. When the longtime kings of oil realize that the cheap, easy-to-get crude is long gone, they're going to have a difficult time subsidizing energy prices... We wince at the thought of $5 a gallon; imagine how we'd feel if we were paying only $0.60, as the Saudis are right now... Advertisement The U.S. Government just pumped $100 million into one geothermal company. Which one is it? It's the one developing a new technology that can provide 130,000 times our annual electricity consumption! But don't take our word for it... These numbers come directly from M.I.T. researchers. You can read all the details here.  Beating the Saudis to Oil Profits Even though the Saudis are headed for a Peak Oil disaster, there's certainly no shortage of revenue right now. Catching word of the $1 trillion paycheck OPEC will take home this year from its oil addicts is enough to make anyone's blood boil. That total is nearly 30% higher than 2010. And taking home the biggest purse, as we would expect, is Saudi Arabia. But no matter how indignant we are for the $228 billion Saudi payday, we'll have the last laugh... Because while they continue to rattle off unlikely production numbers and build a dependence on fossil fuels, we're busy securing our own oil wealth. As my colleague Christian DeHaemer recently explained to me with a wide-eyed grin, “Good oil is hard to find. But these guys, Keith... These guys stole $267 billion worth from right under the Saudis' noses.” So much for begging the Saudis for more oil... Perhaps they'll be asking us for a few extra barrels in the decades to come. Until next time, Keith Kohl Editor, Energy and Capital Related Articles Peak Oil: Tighter Supply Ahead Off-the-Radar Oil Canada's First Oil War Erupts Losing Our Energy Security From the Archives... Will Be Energy Staple for Decades to Come 2011-07-26 - Nick Hodge Solar Market Deals and Ventures 2011-07-25 - Brianna Panzica Uruguayan Agricultural Landholder Goes Public 2011-07-25 - Brianna Panzica Game Changer: The 600-Mile Electric Car 2011-07-25 - Jeff Siegel Energy and Capital's Weekend Edition 2011-07-23 - Nick Hodge Economic Releases for the week of Monday, July 25th, 2011: Jul 26 - Case Stiller 20 City Index Jul 27 - MBA Mortgage Purchase Index Jul 29 - Chicago PMI Jul 26 - Consumer Confidence Jul 28 - Pending Home Sales Jul 26 - New Home Sales Jul 27 - Durable Orders Jul 27 - Fed's Beige Book Jul 29 - Michigan Sentiment Brought to you by Wealth Daily

You can manage your subscription and get our privacy policy here. Energy and Capital, Copyright © 2011, Angel Publishing LLC, P.O. Box 84905, Phoenix, AZ 85071. All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Energy and Capital does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment. The publisher, editors and consultants of Angel Publishing may actively trade in the investments discussed in this newsletter. They may have substantial positions in the securities recommended and may increase or decrease such positions without notice. Neither the publisher nor the editors are registered investment advisors. Subscribers should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question. Unauthorized reproduction of this newsletter or its contents by Xerography, facsimile, or any other means is illegal and punishable by law. Please note: It is not our intention to send email to anyone who doesn't want it. If you're not sure why you're getting this e-letter, or no longer wish to receive it, get more info here, including our privacy policy and information on how to manage your subscription.