Energy Association

Wednesday, January 27, 2010

The Case for Commodities in 2010 (And Beyond)

by Frank Holmes, CEO, U.S. Global Investors

Simply put, an investment in natural resources is a vote of confidence in global economic growth.

- Just over half of the world’s people now live in cities – that figure is likely to rise to 70 percent over the next four decades. The urban population in emerging nations has expanded by an average of 3 million per week for the past 20 years.

- More than 13 million cars and light trucks were sold in China in 2009, transforming a land once dominated by bicycles into the largest auto market in the world. Forecasts for 2010 call for vehicle sales to increase by as much as 10 percent.

Commodities (as measured by the Reuters-Jefferies CRB Index) shot up 24 percent in 2009, the largest single-year increase since the early 1970s, and the International Monetary Fund projects that prices will keep rising this year due to emerging-markets demand and global economic recovery.

Commodity supercycles typically last 20 to 25 years – the current supercycle began in 2000, so we are just at the halfway mark. A stress in the markets is that insufficient capital has been invested in resources in recent decades, while at the same time the world’s population has doubled and there has been spectacular growth in the middle class. Any supply disruptions quickly lead to price spikes.

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Friday, January 22, 2010

The Growth of the State: Leviathan Stirs Again

"This is partly a product of the oil boom. Three-quarters of the world’s crude-oil reserves are owned by national oil companies. (By contrast, conventional multinationals control just 3% of the world’s reserves and produce 10% of its oil and gas.) But it is also the result of something more fundamental: the shift in the balance of economic power to countries with a very different view of the state from the one celebrated in the Washington consensus. The world is seeing the rise of a new economic hybrid—what might be termed “state capitalism”. "

Monday, January 18, 2010

Matthew Simmons on Peak oil

Jack Up Offshore Drilling Rigs

ExxonMobil bets on natural gas boom with largest merger agreement in years

ExxonMobil bets on natural gas boomwith largest merger agreement in years

Published: Jan 1, 2010

Purchase of XTO gives Exxon access reserves of nearly 45 trillion cubic feet of gas

In an effort to enhance its position in the development of unconventional natural gas and oil resources, the world's largest publicly traded oil company, Exxon Mobil Corp. has agreed to buy XTO Energy Inc. in an all stock transaction valued at $41 billion, including $10 billion of existing XTO debt.
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Thursday, January 14, 2010

Marc Faber-2010 Outlook

Marc Faber discusses his forecast for 2010. He's expecting a meaningful correction in the S&P. Last year, US bonds did not do very well, (Bonds were in a bull market from 1982 until 2003). This trend will continue for several years to come.