World oil demand is…expected to surpass 115 million barrels per day in 2025 from only 91 million barrels per day today yet production in many countries is either waning or being consumed by the producing country. [In this article I identify those countries whose production is in decline, 2 countries who have increased production thanks to unique sources and how to invest accordingly.] Words: 595

 Increased Oil Consumption Means Higher Oil Prices

Global crude oil production has plateaued at 74 million barrels per day.  However, now that economies are recovering, consumption levels are back on the rise [and] the result will be an inevitable rise in oil prices. Words: 717

So says Chris Mack (www.TradePlacer.com) in an article* which Lorimer Wilson, editor of munKNEE.com , has reformatted into further edited [...] excerpts below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) Mack goes on to say:

Oil Consumption is Crucial for Economic Growth

Ignoring the rest of the world, the U.S., China and India are expected to increase their daily consumption of oil by almost 10 million barrels per day by 2025. Economic advancement over the last 150 years has been highly correlated with the consumption of oil and other fossil fuels [and] without this increase in consumption of oil at low prices, the world will experience no growth. With such large populations and leverage to energy consumption, [however,] it is unclear if China and India can live up to their high hopes of leading the world out of the current global economic slump.

What An Increase in Oil Price Means For Global GDP

A $100 increase in the price of oil would cost an additional $3 trillion in direct consumption expenses globally – effectively reducing global GDP by 5.1 percent. While some of this wealth might be transferred to oil exporting nations, this is not a zero sum game. If oil shale or deep water drilling were used to replace current low cost supplies than oil producers would be spending nearly $100 in additional productions costs and realizing none of the financial gains to offset the losses from consuming nations.

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Most developing nations that are driving global economic growth are highly dependent on energy consumption. Although the U.S., EU, and Japan consume large amounts of energy, these nations have less leverage to the price of oil in relation to their GDP. If the price of oil were to rise by $100, China would suffer from a direct 6 percent hit to their economy, India would suffer from an 8 percent hit to their economy [and] Japan, as probably the most economically vulnerable nation in the world, [would be even more adversely affected].

What Oil Dependency Means

Another important consideration for countries is their foreign dependency on oil. While Russia has a high level of leverage in oil consumption, it is also a net exporter. As a result, Russian oil supplies are relatively secure. The two most vulnerable nations in the world to an oil shock are Japan and South Korea as they import more than 97 and 98 percent of their oil respectively. Both nations are also highly urbanized with very little arable land. These nations would not survive a halt in global oil trade. The EU, China and India are also highly dependent on oil imports.

Why Extent of Unused Arable Land is Important

South and Central American nations including Brazil and Argentina may have the best chances of coming out ahead as they are energy independent, have lower populations than Asia, and the most unused arable land.

Capacity of arable land is a strong indicator of potential for economic prosperity if energy prices spike because the arable land supports farming and food production.

Conclusion:

Now that the U.S., and Europe are also financially insolvent energy consumers the world is turning to nations such as India and China to drive global growth [but] their large population and leverage to the price of energy create a situation of great risk.

If peak oil is realized within the next five years then growth prospects in India and China will be reduced drastically [and] the result will be negative global GDP growth and a reduced standard of living for virtually all nations.

*http://tradeplacer.com/blog/2010/10/21/1287691140000.html

Editor’s Note:

• The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
• Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.
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Crude oil

The politicians in Washington tell us the economy is recovering. Well, maybe so … as long as you don’t need a job. The problems facing this country — in debt, energy, lost jobs, unbalanced budgets and more — continue to mount. In short, I think we’re headed for a head-on collision with hard times. Are you going to be ready? Words: 1386

So says Sean Brodrick (www.uncommonwisdom.com) in his original article.* Lorimer Wilson, editor of www.munKNEE.com, presents below further edited [..] excerpts from the article for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) Brodrick goes on to say:

4 Economic Dark Clouds Are Gathering Over the Country:

1. Jobs Depression
Sure, sure, GDP is rising … on a tide of government spending. U.S. manufacturing is growing too, as long as you don’t mind that a growing slice of the parts used in “U.S.” manufacturing are made in China. Meanwhile, jobs are vanishing. Twenty-nine million Americans either can’t find jobs or can’t find full-time work. Do you think that’s going to improve as long as companies can ship American jobs overseas where someone will work for $3 a day? Heck, no. It’s going to get worse!

2. Budget Implosion
Yes, the national debt of the U.S. has doubled in less than eight years, but I’m sick of talking about the ballooning U.S. budget gap. For a different dose of awful, let’s talk about the states. Across America, states are running deep in the red, and together, face a shortfall of $156 billion in fiscal 2010, according to The Economic Policy Institute.

Florida, Arizona, Michigan, New Jersey, Pennsylvania and New York are all facing severe funding crises, and they’re just the tip of the iceberg. The head of JPMorgan Chase, Jamie Diamond, says California’s $20 billion budget deficit is worse than anything facing Greece or other financially troubled countries in Europe. Since California is the world’s eighth-largest economy, that should set off alarm bells!

State budget deficits will likely be resolved with layoffs and budget cuts, which will hammer local economies and worsen the downward spiral.

3. Energy Crisis
After over 18 months of recession, world oil consumption is roaring back to its pre-crash peak. The International Energy Agency says oil demand will probably hit 86.5 million barrels a day this year. That is equal to a thousand barrels a second. The growth in demand isn’t in the U.S. — we’re using oil at 2005 levels. Instead, it’s the growth in China, India and other emerging markets that is driving global demand now.

Meanwhile, on the supply side, new oil discoveries peaked decades ago. Starting in 2011, we’ll see a drop of just over 4 million barrels per day from the fields that are currently producing about 85 million barrels a day. After 2014, world production will go into steeper and steeper decline.

4. The Road to Famine
World food demand is projected to increase 100% by 2050 due to a rapidly expanding population in countries such as China and India and yet, 963 million people, 14% of the world’s population, are already chronically hungry. Do you think you’re immune? The food on your dinner table travels an average 1,500 miles to get to your plate. Think again!

Stand Up and Fight Back
I could go on, but a whole list of all the problems facing us can seem overwhelming, and it’s probably too early for you to start drinking. I don’t think these problems will hit next week, but they are growing, and time is a luxury we cannot afford to waste. Here’s the good news: you don’t have to sit there like a lump and wait for bad news to smack you in the face. You can stand up and fight back! When it comes to finances you should be using these good times to get ready – and if you don’t think these are the good times, brother, you don’t want to know about the potential bad times!

4 Ideas to Beat The Crises and Protect Your Portfolio:

1. Move Your Money
Do you trust the big banks? I sure don’t… Their bad behavior was never punished, which increases the odds that the big banks are going to mess up big-time again. Do you think that Wall Street banks will get another bailout? I think that’s unlikely — the American people are downright furious! [As such] I don’t want my money in their banks when the manure hits the fan AGAIN… [and have] moved [my] money from a large, global bank to a couple of smaller, local credit unions and community banks. Community banks are typically more conservative about how they manage their money. I certainly don’t have to worry about them using my taxpayer dollars to hand out billion-dollar bonuses.

Bankrate.com [will tell] which banks in [your] area are the most financially secure… and you can google “Move Your Money” for more information on this movement. It’s not just individuals who are doing this. Cities as big as New York and Los Angeles are fed up and considering moving their money to local community banks as well.

2. Buy Gold While It’s Still Cheap
…if you think gold is pricey now … just you wait! I prefer to own physical gold for the long term, but you can always buy the SPDR Gold Trust (GLD) or ETFS Gold Trust (SGOL) if you’re just doing it for a trade.

3. Buy Gold Miners While They’re Still Cheap
You can play the coming rally with any gold ETF, but I think gold miners look cheaper right now. If you don’t like buying individual miners, consider the Market Vectors Gold Miners ETF (GDX) or one of the other funds or ETFs that holds a basket of miners.

Now, why buy gold miners if I think hard times are coming?
a) If the U.S. dollar slumps the way I think it will, stocks will probably head higher. That’s because they’re priced in dollars, so it takes more dollars to buy them.
b) In the Great Depression, when many stocks weren’t worth toilet paper, select gold miners did well. That’s because the price of gold did well, and they were real companies producing a real asset.

4. Ride The Market Megatrends
Not all things financial are headed down the tubes. The commodity supercycle is real and we’re seeing it play out as China, India and other emerging markets buy more and more metals, energy, and other commodities to feed their economic expansions. Commodities should continue to outperform going forward. While other sectors are headed down the tubes, commodities should continue to outperform going forward.

Meanwhile, America’s baby boomers are aging. They’re going to be looking for income, and with bonds paying piddly yields, they’ll probably load up on dividend-paying stocks and what are some stocks that pay some of the best dividends? Commodity stocks! Put those two trends together and you should have some stocks that will outperform the market, pay you nice dividends and potentially rack up solid price appreciation, too. You can find these stocks on your own. If you’re looking for dividends, as a rule of thumb, you want stocks that pay at least a 3% dividend. Just be careful, and be aware that when it comes to stocks that pay dividends, it can be hard to tell the turkeys from the eagles.

What am I doing? It all boils down to the Three P’s — Plan, Prepare and be Proactive. In other words, I’m trying to take an honest assessment of the problems facing the country and me personally. I’m preparing both physically and financially. (Are you?]

*http://www.uncommonwisdomdaily.com/4-tips-to-beat-the-next-crisis-8846 (Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. To view archives or subscribe, visit our site.)

Editor’s Note:
- The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
- Permission to reprint in whole or in part is gladly granted, provided full credit is given.
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