Welcome to Black Gold the HedgeCo blog site about Energy and investing operated by logi Energy. logi Energy is an investment management team that invests in the oil and gas sector in equities, options, futures, as well as on and off shore oil and gas fields and wells. In this premier post, I’d like to tell you who we are and what we believe. In other posts, other team members from logi Energy will provide detail and clarity to my mere words. The basis of our investment approach is that peak oil has occurred in the world. The world will never produce as much oil as it did in 2008 – ever again -. Exploration has been conducted for over 130 years and every jungle, every desert, every mountain range, every rolling plain and every ocean site with potential to produce has been reviewed to identify where oil is. As we look back at what the world has found over the decades, we now know that we’ve never found as much oil as we did in the 1960s. Every decade since, we have discovered less and less oil. We are on track this decade to discover approximately 20% of what was discovered in the 1960s. Today we use technology so sophisticated, it takes a PhD to refine the mathematics of the software processing the imagery. Complex engineering and deep mathematics are a hallmark of the oil industry. Long gone are the days when geologists would lick the rocks taken from wells to identify pay zones for oil and gas. We have technologies for finding, drilling, producing and improving oil production that allow us to very quickly identify opportunities and exploit them at a rate faster than we’ve ever been able to do. Field after field, major region after major region, we have been applying these technologies to stretch out production well beyond original predictions. These days our predictions are getting better and we are finding that even with the best of technology and nearly unlimited funding, we can’t stop major regions from peaking. The latest unconstrained use of technology and money was the North Sea. With no limitations in drilling or technology, it peaked in 1999 and today produces 70% of what it produced just 10 years ago. The world is using oil at prolific rates. Today we use six times the oil we used in 1950. It is the most magical fluid in the world. One gallon of gasoline has the energy content of a man week of hard labor. Don’t believe me? Assuming you get 32 miles per gallon on the highway like I do, how long would it take you to push your car 32 miles? A week? Longer? Even more difficult, where could you get a week of hard labor for $2.85? You can’t get that anywhere in the world. The Egyptians used slaves to build their pyramids; the modern world uses liquid hydrocarbons. Some of us use our oil in more efficient ways than others. For the last 5 years, the third world citizen driving their moped has been impervious to price changes that have caused the economies of the OECD to cave in. The summer of 2008 was the first of many price oscillations we will experience in the post Peak Oil world. Prices will ascend until people can no longer afford the commodity, the demand dries up and prices drop letting the market rush back to the lower prices. If it behaves like most other limited commodities, we can expect these oscillations to continue until the world transitions to other forms of energy for transportation. Now knowing why and when the oscillations occur is our full time effort. Check out our website at www.logipeakoil.com or contact us for details on how we do this.
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