Tuesday, May 6, 2008

The Peak Oil Prophecy - Is It Coming True?

I did a post almost a year ago in which I laid out my prediction of what the end of the surge in oil prices will look like: "Change wont be gradual. I don't know when, but relatively soon, the oil market is going to fall hard. Here's what to look for preceding the event. Mechanisms will be created allowing average consumers to purchase oil and gas futures fairly easily. Brokers and trading houses will run constant commercials advising everyone to "get in now" before it's too late. The price of oil will go insanely high, then suddenly, the bottom will fall out. The same folks who bought into the Y2K scare and loaded up on any stock that had the word "intenet" attached to it just before the bubble burst will be left holding the bag."

Today oil hit a new all time high, car companies are now offering what amount to gas futures to consumers as an incentive to buy cars. That is, you get a card good for $2.99 per gallon gasoline for the next three years. If the promotion is successful, now that the model is in place, no doubt other companies will begin to offer fixed rate per gallon gas cards, for a premium. As the bubble reaches its bursting point, somebody has to take the fall. Guess who. How much will your $2.99/gallon card be worth when the rest of the country's paying $2.15?

If you want to save money on gas, drive less, get a better car, fix your bike. When the players start offering you futures contracts or a "hot" stock lead, run, don't walk to the exits.

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