T.STP

Sure there are fantastic and truly unique fundamentals relative STP and sure geopolitical events as well as Peak Oil points at much higher oil prices going forward.

Oil demand destruction USED to be the real worry. What now is starting to daunt people is in fact that there are clear signs of SUPPLY destruction. As an example the Strategic reserves has to be used in order to compensate from Libyan oil shortages as there is not excess oil production to compensate for this. Thus strategic reserves margin will decrease and question is in that margin again ever will be filled? Then as distortions on the supply side affects prices in a much more aggressive way than what is the case with demand destruction we're in for a ride.

True this fear of demand destruction has been with us for a while, granting low oil prices. It’s been like a shotgun to the head “hike oil prices more and you’re dead”. In fact oil demand has decreased in relative term in the OECD economies all the way back since the very first oils chock in the 70ties. Sounds like kinda we need less and less oil ten as our developed world economies becomes more efficient and environmental friendly?
Well give this argument a second thought and you realize what has happened since then is that basically all of the OECD production has been moved abroad to low cost countries in the eastern European block and primarily Asia (spell China). What’s then key is that enormous amounts of energy is required to first move all commodities to these new and producing economies and the vast amounts of recourses are needed in order to schlep the ready made goods, from the underdeveloped world to the developed OECD countries.

Thus what seemed to be a reduction of oil in the OECD was in fact cased by the fact all production in those countries now have been outsourced to these new and producing economies at the same time as an ever increasingly ww web of transportation then is required in order to keep this system going. Then you also need to realize - the energy efficiency is quite different for a worker working in a OECD facility vs. a worker working in a developing production site. A fair estimate is that the same type of job done in a developing production site thus requires some 4-5 time as much energy as is the case in a developed world industrial plant. Consider this and this idea about less oil dependence in the OECD world really is nothing but a cute idea.

Oil producing countries will produce less oil as Peak Oil unfolds and at the same time they will increase consumption domestically thus exports of oil from oil producing countries will go down very aggressively from now on. Remember that OPEC together with Russia and Mexico in fact is a twice as large oil consumption market as is China today. As consumers in oil producing countries pay a very different and significantly lower oil price in their own countries there are sure then not any real incentives to save oil to any great extent and at the same time this idea about demand destruction due to higher world oil market prices will not happen at all to the same extent as will be the case for the rest on the non oil producing world.

Then read the following and understand that also regarding another matter "this time it's different". With QE excess liquidity pumped not only pumped out of the system, that liquidity will not only create inflation increased commodity prices of all sorts it also needs to be placed somewhere. And that somewhere will be hard assets. Even if there will be less oil available on the world markets and as oil really is the engine for our economy oil will be much more valuable and considered the real currency going forward.

Gold and silver may protect your investment against currency devaluations but oil will not only protect your worth but in addition increase in value in relative terms.

Then the the QE programs will continue as the level of debt all over the world in every aspect of our economy is such that there is no option but to continue pushing that excess money out in the system.

So add up the real true fundamentals relative STP, oil and this is a great story. Then add the QE story as well and this play will reach valuations nobody today even can comprehend.

"So here we are, waiting for the “event” which triggers a loss of confidence across the system. Will it be a sovereign, a US state, a bank, QE3 or QE5, the oil price, Chinese fixed investment, a false flag event (a convenient distraction/excuse) or a revolution?

There is no solution whatsoever until there is a MAJOR crisis
http://intheendwerealldebt.blogspot.com/2011/02/there-is-no-solution-whatsoever-until.html

Then also consider the environmental aspects of this globalized economy and you realise what an absolute no gainer it in fact is. Really it's all about moving jobbs to where you need to pay the least wages. Nothing else.

"China is also not energy efficient, producing a third more carbon dioxide emissions per unit of energy than the United States, largely because it relies on coal for two-thirds of its total energy needs.

"There are more coal plants in China today than there are in the United States, the U.K. and India combined," Mr. Rubin and Mr. Tal write. At its current rate of one new coal plant per week, it will see 30 more coal plants built before the "green" Olympic games this summer. Plans call for 560 new coal-fired generation plants by 2012.

"You can't have the OECD making a long-term commitment to decarbonize their economy and have the developing world ? rapidly carbonize their economies," Mr. Rubin said. "It makes absolutely no sense.

The savings the [OECD] makes on their own emissions are going to be dwarfed by the rate of growth ? in the developing world."
http://www.worldtradereview.com/news.asp?pType=N&iType=A&iID=179&siD=3&nID=40188&pPage=Y