This is an excerpt from David Korn’s July 28-29, 2007 weekly newsletter (Click for a FREE SAMPLE ) that comments on Bob Brinker’s Money Talk.
Brinker Comment: The price of oil has been rising. It is peak driving season in the U.S. which causes demand for gasoline prices. Gasoline prices have been rising, not just because of the demand from drivers, but also because of the fact that we are strained in our refinery capacity. When we take out refineries for routine maintenance or because of a break down, it causes problems. The entire refinery industry has been pretty stagnant. Crude oil is now at $77 a barrel which is essentially at the record. The all-time record close is $77.03 and on Friday it closed at $77.02. That is close enough to call it a record level. One of the things that has helped make oil priced high is the rebound in GDP in the second quarter which many think can continue into the future.
David Korn Comment: Over the last year or two, Bob has stayed firm in his prediction that the price of oil would trade between the $50s and $70s per barrel. Bob said he bases that prediction on the outlook expressed by energy expert, Charlie Maxwell. That means that we are at the very high end of that prediction.
Brinker Comment: The U.S. has fallen flat on its face in terms of managing its oil needs. We knew back in the mid-1970s when we waited in gas lines that we had a problem. Here we are 33 years later and we still have a problem. One problem is that we, as a nation, consume 24% of all the oil produced around the world. The International Energy Agency is forecasting that worldwide oil demand is going to increase 1.8% next year. While that might not sound like much, when you consider that in the world today we consume 80 million barrel a days, then a 1.8% increase is another 1.5 million barrels a day that will be consumed. A lot of this has to do with China and other emerging markets. How is the world demand going to keep up with supply? That is the question. In the U.S., we can do more. Its hard to believe that the U.S. doesn't like nuclear power. Other countries in the world use nuclear power widely, including France, Japan and others. Even China has announced 40 new nuclear plants.
David Korn Comment: The International Energy Agency recently made its July 2007 report available to the public. In the report, they are projecting global oil demand to rise by 2.5% in 2008. Read the report at this url: http://omrpublic.iea.org/
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