Next two years may witness severe bull market for oil

Most folks realize that oil is a very important commodity for the stabilization of any modern or emerging civilization. We know all too well in the US that when oil gets too high, the economy slows down and drags. This is because the oil price spikes effect transportation, which is inherently linked to all economic activity, and causes wholesale inflation of every product, service, or government operation. It essentially raises the price of everything.

Not long ago, I was discussing the economic history of oil with an acquaintance in South East Asia, and he wanted to invest in oil futures. He asked me what I thought about that and inquired; "Is petroleum price embarking for a severe bull?"

Well, yes, that's a really good possibility. You see, we might see oil hit $100 a barrel early to mid-2011 because China is expanding its oil reserves from 103 million barrels to 168 million barrels. The US with 726 million barrels, might attempt to let their buying float a bit to counter balance that, but the US has to keep reserves in case of war with Iran, and we are still 6-8 years out for Iraq to hit its target goals for production 12 billion barrels.

Argentina, Brazil, are coming online, of course that oil is a little more expensive to get out of the ground, and it won't be coming out of the sea floor anytime soon in any large numbers, but there does appear to be lots available when it starts pumping. At $90-100 per barrel the shale-oil in Canada becomes profitable, and that will ramp up, if the high oil prices are sustained at those prices.

Of course, OPEC isn't stupid so they will adjust downward to prevent runaway prices and their strangle-hold, perhaps work to hold back Iraq production too, as a strategy. And right now we have talk of Al Qaeda in Africa purposely screwing with supply, and Nigerian issues too, and such attacks on oil assets in these places drive the commodity higher on frenzy speculation.

Also don't forget the big-money waiting to make a play for oil futures. Further, alternative energy pushes, global warming propaganda, etc. is also a factor in all of this. If Oil stays high, North American shale reserves will take over, and the US will not be buying oil from the Middle East. There is a balance with the supply and demand which keeps things in check for now.

Oil prices can be a drag on the US economy, but if Americans get pissed off, they'll figure out a way to get their oil, trust me. And it won't necessarily be pretty. What are your thoughts? And again, thank you for reading my various articles on the topics which interest you. Please consider all this.