Wealth Building Lessons

Warren Buffett was recently featured on CNBC where he discussed oil depletion and the fact that we could be close to peak oil production.

He says that we’ve been “sticking straws in the ground” since the 1850s and all of the easy to reach oil has been tapped. We’re consuming 85 million barrels of oil every day and the demand from countries like India and China is just increased. Existing production is maxed out and the fields seem to be in sharp decline.

Sounds like Buffett is a proponent of the Peak Oil Theory. While is he doesn’t mention it directly, I got the feeling that he bullish on the price of oil. Or at least, he doesn’t think the price of oil is coming down anytime soon. My personal belief is that oil will peak at $200 and then stablize between $125 and $150 per barrel over the next 2 years. Accordingly, I’ve been investing in direct oil drilling programs. These programs aren’t without risk and are not meant for everyone. But they can be quite rewarding.

If you’d like to profit from the increase in oil and gas prices, you could check out Canadian Royalty Trusts (also called Canroys) that specialise in the oil and gas business. This is the easiest and most liquid way to invest in oil and gas. However, these are stock products and are subject to the same risks as all other investments.

Well today oil hit $108 per barrel. It’s been widely reported that gas prices at the pump are likely to hit $4/gallon by summer. If that doesn’t cause a drop in SUV sales, then I don’t know what will!

If this news is too depressing for you (and even if it isn’t), before you go out and torch your SUV, spend two minutes listening to John Stewart talk about high oil prices.

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