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Sunday, May 20, 2007

Charlie Maxwell Interview by Bob Brinker

This is an excerpt from David Korn’s May 19-20, 2007 weekly newsletter (Click for a FREE SAMPLE ) that comments on Bob Brinker’s Money Talk.


Brinker Comment: Bob introduced Charlie Maxwell, Senior Energy Analyst for Weedon & Co. Charlie was educated at Princeton and then Oxford. He has been working in the oil industry since the 1950s. In the 1960s he became an analyst on Wall Street and has been rated the #1 energy and oil analyst on many occasions. Bob heaped heavy praise on Charlie as the best of the best in terms of energy analysts and mandatory listening for Moneytalk trekkies.

Maxwell/Brinker: Bob opened the interview praising Charlie for his predictions on Moneytalk that the price of oil would trade in the $50s to the $70s which has been right on the mark. Bob asked Charlie if he had changed his forecast. Charlie said he sees more of the same, but knows that it can't last forever. There are two schools of thought. One school thinks oil can go to the low $30s. Charlie wishes that would happen because it would help our economy, however, he doesn't see it happening. When you look at the large oil producing countries, it looks like things are getting tighter, not looser. Charlie thinks in one or two years, we will actually move out of the range that he has projected and move higher.

Maxwell/Brinker: Bob said we are close to a record in gasoline prices. What is going on?

Charlie said there are two factors causing the increase. The first is that we have had a return to the high end of oil prices, now in the upper $60s. Over the summer, we will probably run in the low $60s which could reduce pressure. We have also had a series of refineries go down in the U.S., in part because they have been running so hard that maintenance was inevitable. It looks like now that we will have enough gasoline over the summer. Charlie thinks we may hit $3.15 as a peak this summer, but that it will then recede to below $3.00.

Caller: This caller asked Charlie about the implications of our country not preparing for oil running out. Charlie said we are not preparing ourselves either materially or psychologically to meet a sudden emergency. If there was a sudden outbreak of war, for example with Iran, or between Israel and Iran, we could find that 60% of the oil supplies were on the wrong side of the coin. What we have done is created the Strategic Petroleum Reserve. The Reserve gives us 6 months to a year supply, but long term we need to do something else, whether it is nuclear energy or clean burning coal. If we had a sudden cut-off in supply, it could seriously impact our economy.

David Korn Comment: As of Friday, the Strategic Petroleum Reserve Inventory stood at a total of 689 million barrels. We have 274 million barrels of the sweet stuff and 415 million of the sour stuff. Sweet and sour oil. All of a sudden I have a craving for shrimp fried rice. Keep track of the reserves of the inventory at this url:

Maxwell/Brinker: Bob asked Charlie where he stood on the idea of using nuclear energy. Charlie said he is for it because it has a proven record of clean burning fuel. However, Charlie said you shouldn't discount the fifth fuel. What is the fifth great fuel? Well, number 1 is oil; number 2 is gas; number 3 is coal; number 4 is nuclear. The fifth great fuel is "conservation." Charlie said that usually we need a warning shot -- such as a threat to cut off the oil from the Middle East.

David Korn Comment: If you are interested in energy conservation, Wikipedia has a very well-developed web page on the issue here:

Maxwell/Brinker: Bob noted that France is way ahead of the game in terms of building nuclear plants. China has announced its intention to step up their efforts and other countries are talking about that as well. Is this the reason for the big move in the price of uranium? Charlie thought it was and said that one of the enduring sources of supply in the future looks to be nuclear. What our country needs to do is recognize that we are going to be less competitive if we don't make the switch soon.

David Korn Comment: The last time Charlie was on the show he said we had thought for many years that the supplies for uranium would have been almost limitless. It turns out that we have about 60-80 years left of it.

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