CHAPTER 1
The End of an Era?
“I once set up a debate between the geological optimists and pessimists
for the IEA with Morie Adelman, Mike Lynch and Peter
O’Dell on the one side, and Colin Campbell and John Laherrere on
the other. The optimists won.”
—David Knapp, senior editor,
Energy Intelligence Group
AN OIL CRISIS CREATES DEBATE THAT
MAY DETERMINE WHO IS THE TOP DOG
With oil prices on a stratospheric flight, many traders and investors are finally
taking notice. The stock market already is: Oil stocks are higher
than other equities in 2006. In 2005, oil stocks rose while the rest lagged.
Oil has had a negative effect on the market ever since it went above $35 a
barrel just two years ago. Since then, on days when oil has risen, the stock
market has dropped, and on days that oil has fallen, stocks have gone up.
The oil stock gains have been seen all around the world, not just in the
United States alone. Last year, one hedge fund manager who has benefited
from higher oil prices by purchasing oil stocks was among those
touting investments in refiners as well as Canadian oil royalty trusts.
Everyone, from professional economists on Wall Street to ordinary consumers,
has been wondering why oil prices are so high and continue to
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