Where Will Future Oil Production Come From and How Can Investors Profit Today?

This was an interesting read, but it still looks like OPEC will have the world by the balls 5 - 10 years from now, and if anything they will have a growing strangle hold over world supply with Kazakhstan being the only non OPEC country looking to contribute anything significant to the world oil supply over the next 7 - 10 years.

 

I thought I'd add my two cents. Coming from an economics background this tends to be m basis for alot of decision I make.


In times of high inflation, driven domestically and internationally, alot of investors become jittery. My opinion is that the only things people cannot switch away from in the long run is highly inelastic goods. The example of smoking and ciggerettes getting hit by tax should show this.

In my opinion the two most inelastic goods are food and raw energy(although energy to a lesser extent). No matter how devalued a currency becomes, or the standard of living rises, people in most cases will have to consume both. This inflation is arguably being driven by increased demand from places such as china and india.

Put simply if your wage was 200 dollars a week, and basic food supplies cost you 150 dollars a week, you do not have much choice but to purchase this. Energy is slightly different insofar as people will not easily give up cars, appliances and general energy needs, but they will switch away from these goods if they become too costly.

Thus in my opinion, if you are looking to benefit from growing oil prices, look forward to those inelastic goods: food and energy, and draw your own interpretation.