-->GROWTH STOCK OUTLOOK: July 15, 2004, Vol. 40, No. 14 Charles Allmon, Editor

100- Year Love Affair is Over - Man's 100-year love affair with the internal combustion engine, that is. I think we can say with some finality that the dawn of this new millennium is witnessing the twilight of abundant, cheap oil.On every hand you hear screams of anguish over the price of gasoline. As I said on June 1, 2004,"You ain't seen nothin' yet." In the 2010 - 2015 period, we should expect the price of gasoline to hit $6 per gallon, when available. In 1956, M. King Hubbert accurately forecast that US domestic oil production would peak in the early 1970s (see GSO 1/1/2004, p.3). Now the whole world rushes pell-mell to the gas pump, rapidly depleting a finite world supply.
Our planet consumes about 81 million barrels of oil daily, with two thirds used to power planes, cars, and trucks. With 5% of the world' population, the US consumes around 25% of world production, or three gallons per person per day. Who are the five biggest oil guzzlers? US, China, Japan, Russia, and Germany, in that order. China could pass the US as number one sometime in the 2010-2015 period. Consider that auto purchases in China were up 70% over 2002. U.S. oil consumption is expected to grow 50% in 20 years.
Until the gasoline price climbed sharply last year, your cost of gas at the pump amounted to about the same as you paid in 1980, adjusted for inflation. Unfortunately, the U.S. political establishment for over a quarter century never had the cojones to tax gasoline at $2 - $3 per gallon, as they have for decades in Europe. Our taxes amount to about 43 cents per gallon, feeding our growing national addiction to cheap fuel. A gallon of crude oil today is cheaper than a gallon of water. No one with an ounce of brains doubts that the end of cheap oil and the internal combustion engine is in sight.
US oil imports today amount to 59% of our national consumption. Who are the principal suppliers of this oil?
Saudi Arabia 17%
Mexico 16%
Canada 16%
Venezuela 13%
Nigeria 6%
Iraq 5%
With oil production worldwide a losing game in the long run, this unthinkable dilemma is on a collision course with our US way of life. Our lives will be turned upside down unless a new energy source powers the internal combustion engine. And quickly. While other countries merely sipped at the energy trough, the US drank deeply for half a century, like some thirsty drunk.
Russian ranks first in oil output, with Saudi Arabia second. But the Saudis haven't found a big new field in decades. what's more, Saudi Arabia oil reserves might be substantially less than experts tell us, not unlike the recent revelation that Royal Dutch reserves were grossly inflated. Many Middle East oil fields suffer from water problems, with the life and productive capacity of some fields now questionable. Goodbye oil well when water becomes a problem. Look at it this way. Even if there is 50% more oil than is believed to reside in all underground reserves of all countries around our planet, that will not last long with sharply growing demand.
The once-promising Caspian Sea oil reserves now are estimated at 17-33 billion barrels, less than half thought to exist a decade ago. No doubt there will be other big surprises. In our own backyard, in the Gulf of Mexico, new oil wells are drilled in 5,000 feet of water, then 17,000 feet more below the ocean floor.A big offshore platform may cost $4 billion. The cost and technology stagger the imagination.
So what is the answer to this coming worldwide dilemma? Nuclear power appears inevitable
on a broad scale worldwide, regardless of the do-gooders' rants. here are the current nuclear power nations. and their energy production as a percentage of 2003 total electricity output.
Lithuania 81% South Korea 33% Russia 13%
France 75% Germany 32% Mexico 7%
Belgium 60% Finland 30% Netherlands 2%
Ukraine 47% Spain 29% India 2%
Switzerland 41% Britain 27% Brazil 1%
Hungary 40% U.S. 20% China 0.5%
Japan 35%

Tell your children and grandchildren to plan ahead for $10 - $12 per gallon gasoline, super-small autos, the end of SUVs and monster pickup trucks, plus cooler homes in winter, less air conditioning in summer, perhaps the end of monster homes. Our national addition to plentiful, cheap fuel is drawing to a close. (Growth Stock Outlook, PO Box 15381, Chevy Chase MD 20825).

(aus US-Forum)