Peak Oil and Economy

[Hat tip to Vox Day] WND reports "Discovery backs theory oil not 'fossil fuel': New evidence supports premise that Earth produces endless supply" (which is a free summary of for pay article "Abiogenic Hydrocarbon Production at Lost City Hydrothermal Field" Proskurowski et al. Science 1 February 2008: 604-607).

This could explain why oil is plentiful and new reserves are added, not reduce over the years. This could also explain why old, "exhausted" oil wells are found to be refilled with oil. Granted, we do pump them out sooner than they can be produced but still it seem to me that the peak oil fears are as manufactured as oil themselves.

As for the $100 crude? It's only a matter of time before it too falls down. I've worked for an oil exploration company for 12+ years and owned many shares (including stock options which I exercised for modest gain) so I had and still have interest in following crude prices. Over the years, it's gone up and down and the current peak has to be some combination of war "premium" and a lot of speculations and exchange rate premium (Middle East buys more from Europe so the dollar amount has to go up to cover the difference with the weaker dollar vs the Euro). If you ask me, commodities like crude oil and gold are in a bubble: it's only matter of time before they get deflated, just as the housing bubble is (still) deflating as I type.

BTW, currently my net worth is 80% short of the stock market (DXD, QID, SH and SRS). Overall I'm ahead but this week was not good for my portfolio. You should be (or keep) reading blogs like CalculatedRisk to see (they have nice graphs every once in a while) that we have just begun the downturn of the economy and over time the stock prices, I believe, will follow. Overall attitude, though, people are more bullish than bearish. Stocks should be a leading indicator but it's not all too reliable since people look at future performance based on past results. Stock valuation tools like PE ratio works if the economy is growing but not when the economy reverses: more companies will report fall in earnings (including negative numbers) as we are now seeing: WSJ has a great summary page.

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