CSM Writes: US to be No. 1 oil producer, but it won’t last

The US will lead the world in oil production for two decades starting in 2015, according to a new report. After that, OPEC will reassert its dominance in oil production.

The US is poised to become the world’s largest oil producer beginning in 2015. But its reign will be fleeting as the Middle East reasserts itself two decades from now.

Why? America’s oil boom won’t last forever, according to an annual outlook released Tuesday by theInternational Energy Agency (IEA). And the technologies that have fueled that North American boom in shale rock formations won’t be easily replicated in the rest of the world.

“The capacity of technologies to unlock new types of resources … and to improve recovery rates in existing fields is pushing up estimates of the amount of oil that remains to be produced,” reads the Paris-based agency’s report. “But this does not mean that the world is on the cusp of a new era of oil abundance.”

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In a bit of a good news, this is a positive development for the US Economy and the consumer. While this positive development will not have an immediate impact on the financial markets, over the next decade it will be a huge positive for the overall US Economy.

Just as the US will be the clear winner, there will be many losers who rely on the high price of oil to sustain their faltering economies. Most notably, Russia and most of the OPEC members. Going forward, the US should use this 20-30 year window of opportunity to make a massive investment into renewable energy and new technologies to try and completely eliminate oil dependence. I believe it’s possible and if done right should set the US Economy for massive economic growth over the next 30-50 years. At the same time, if such independence is achieved, middle east countries like UAE (Dubai) and Saudi Arabia will face the full force of economic pain.

Even though they have built massive cities and infrastructure I do not see how such cities can be sustained without oil money. I believe it was one of the Sheikhs who said something along the lines of (and I am paraphrasing here ) “Our fathers rode camels, my children and I ride in Mercedes and my grandchildren will ride camels again”. It looks like his wisdom might become a reality.

So, is now a good time to start investing in a Camel Business?

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Warning: Camel Business Is Forecasted To Boom In The Middle East

Bloomberg Writes: Egypt’s Coming Civil War

chart

Three months ago, Egypt’s military seized power in a coup that it said was necessary both to prevent civil war and to restore democracy. By now it is clear that the military is failing on both counts.

Today, suspected Islamists killed at least nine soldiers and police in attacks. Yesterday, security forces killed 51 pro-Muslim Brotherhood protesters at a rally in Cairo that, according to witnesses, had been entirely peaceful. Meanwhile, the country continues to live under a nightly curfew.

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This is an important matter for regional stability and overall macroeconomic picture. The article argues that Egypt is basically on the brink of a civil war. It goes without saying, should such a war erupt, it will have significant repercussions on the entire region.

At least at this time I am not in the camp that believes Egypt will face civil war.

Why?

Because Egyptian stock market has been on a tear over the last few months (see chart above) indicating further stability and economic growth. Could the stock market be used as an indicator of upcoming economic and civil stability?

Not always, but it is the best future anticipation machine that we have and at least for not it is saying that Egypt will pull through.

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