January 12, 2011 – Storm Clouds are Gathering for Oil

Featured Trades: (ALASKA OIL SPILL), (DIG)

3) Storm Clouds are Gathering for Oil. Spill six barrels of oil in a remote basement in Northern Alaska, and all of a sudden, 15% of the US oil supply is cut off. That was the response of officials at the Trans Alaska Pipeline over the weekend, no doubt hyper sensitized to accidents in the wake of last year's Gulf oil disaster. BP happens to be the largest shareholder in the line. Does anyone see a coincidence?

The 640,000 barrels a day we get from the home of Sarah Palin, dog sleds, and moose sausage is expected to start flowing again soon. But the event does underscore the fragility of our energy supplies. This is why I think we are going to $110 to $120 sometime this year, and $300 within this decade. The $5 a gallon gasoline this assures explains why I will soon take delivery of a black, all electric Nissan Leaf with a solar roof panel. It is also why my newly enriched Macro Millionaires own the 200% leveraged oil major basket ETF, (DIG), in their trading book, which hit a new all time high today. If you need further convincing about the short, medium, and long term case for oil, take a look at the chart below.



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