Gold seems to be in a bit of a static point and given the Discovery Channel’s new show Gold Rush Alaska, I think gold has already infiltrated portfolios and awareness. However, what is tantamount in the immediate world is energy. What is the apex of energy? Oil. This is not to say it is the most efficient but the most widely used, especially in the US.
Oil is making the news rounds now. It usually does when something bad happens. See Deep Horizon oil spill. This time, the great Alaskan Pipeline had an issue at one of their pumping stations. The pipeline is a marvel of US engineering but is a bit antiquated. However, this leak has brought oil back to the forefront of the news. The same may be said when gasoline was over $4.00 at the pump a few years ago. Immediately after the leak, heating oil prices spiked $0.0625, gas prices moved $.0383 and crude oil surged over $89 a barrel. Crude is now above $90.
The greatest petroleum reserves (in this hemisphere) are in off-shore reserves. Yet, there are sanctions in place following the most recent oil spill. The true environmental impacts won’t be known for a long, long time. What is known is that there is oil in ‘them deep trenches.’ What is also known is $75 - $85 oil is needed for deep (below 500 feet of the water’s surface) sea fields.
Although, $90 and $100 oil is needed for oil sands production to be economical, oil sands are on the surface and are available. There are much fewer sanctions and some of the infrastructure is in place in the Canadian north (mostly in the Athabasca Basin in Alberta) from the last peak oil pandemic. It is to note oil sands are also present in Venezuela.
As the price of oil keeps rising, these deposits become more economic and have been factored into the world’s petroleum reserves. What makes these deposits cumbersome is that they are extremely energy intensive to produce and emit between 10 to 40 times more greenhouse gasses than traditional oil wells. While these factors are detrimental, the truth is that the world runs on oil.
We, as a whole, are trying to become more energy independent. It may be economic in the Middle East to produce oil at $5 to $15 a barrel level, it is counter-productive. Like mining companies, oil companies may be exploration, development and/or production. They may be speculative or a major conglomerate. Oil sands present the unique opportunity for near surface oil and the current environment allows for the economics to allow for its refining and production.
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