I look forward to hopefully reading your perspective on the probably market effects of the hurricane disaster in New Orleans in the next Smart Money Report, Larry.

At this point I frankly find it difficult to figure out if the degree of loss for gasoline refining as well as crude oil production is meaningful and if so for how long.

Added to that is the question about how long cargo ships on the Mississippi will be blocked from accessing the Gulf of Mexico and the effect that has.

Opinions are colored so often by hidden agendas (politics both governmental and corporate) such that I frankly do not have a clue.

In any case, I hope you will have something to say in the next SMR even if it is only that no one can know the probable impact at this stage.

in his book "hot commodities" jim rogers has a chapter titled: "goodbye, cheap oil". he explains very simply why the price of oil will rise and will NEVER return to pre 9/11 prices. you should get the book & read it for yourself but in so many words rogers is saying that, due to supply vs. demand, there are just too many reasons for oil to go up & NO reasonable scenario where oil will go down.

demand for oil was huge BEFORE china & india started to ramp - war in the middle east makes it very likely that something can slow supply... then there's weather/nature like what's happening in new orleans currently.

it's not that we're about to run out of oil on planet earth, there's oil... but even if we do tap all the supply in canada, alaska, the artic, russia, etc. - it's just too darn expensive to GET it & it'll take years to refine it! so yeah, it's there... but we can't use if for about a decade! meanwhile, demand grows!

rogers also explains why alternative energies, even if we DO pursue them, are still at least 10 years from being viable (you don't just throw up a nuclear power plant overnight - and where, prey-tell, will you put it?)

even if the war in the middle east ended tomorrow there are lots & lots of OTHER reasons supply can choke and there's no let up in sight for demand. econ 101 tells us that means higher prices!

btw: this book was published in 2004, probably written in 2003. since rogers wrote "goodbye, cheap oil" the price of oil has doubled! not only is his argument logical... it's already proving to be true.

all this to say... regardless of the "news" - BUY OIL!

-ja

Clint,

Here’s the deal. I try to stick to things that have something to do with my investment decision making process. Making investment decisions based on news events is a loser’s game. Whatever news from the hurricane that might affect oil prices was discounted into price instantly.

It’s an interesting thing about bull and bear markets. In bull markets, things happen that make the price go up. In bear markets, the same things can happen and the price will go down. Oil in a primary bull market. For reason’s that Joe cited in the above post, it’s going to last for a long, long time. The era of cheap oil is over. I think investor’s are just now beginning to understand that.

As one of the smartest oil men I’ve ever encountered, T. Boone Pickens, said on CNBC yesterday, the demand for oil is greater than the supply (even before the hurricane). As long as that is the case, prices are going up. The only thing that’s going to change that is less demand. The only thing that is going to curtail demand is higher prices.

It’s a primary bull market, Clint. Just go with it.

Larry

I was just wondering if it might have reached catastrophic dimensions since the freighters cannot get through New Orleans area and there is unknown amount destruction of oil rigs and refineries.

It is one thing to look at a bump in price. Another to consider a complete collapse of the economy.

I am supposing that you see this as not on that level, which is reassuring.

No, Clint, I don't think there's going to be a complete collapse of the economy. We've been through worse than this and we'll go through worse in the future.

Now the stock market? That may be a different story.

Larry