Peak Oil
What
is Peak Oil? It is the name geologists have given to a proven fact
of oil exploration and development: when half of an oil field’s
reserves have been extracted, the field will begin to yield progressively
less oil with every passing year, until it yields zero.
This is why National Geographic, following the
lead of many geophysicists, has announced that, because of Peak
Oil, we are now living in the era of “The End of Easy Oil.”
It’s not that there will be no more oil in the ground. There
will always be oil in the ground. For producers the questions will
be, how hard will it be (and thus how much will it cost) to get
it out? And, how high will the going rate per barrel have to be
to make it worth my while?
Now, why is Peak Oil important to us as investors?
Because as peak is approached, what is left in the major fields
is becoming harder to extract, reducing the growth of oil supply,
thus increasing its price. And any commodity that is steadily increasing
in price creates an investment opportunity for those with the knowledge
and foresight to seize it.
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