When you consider that, according to some, the only reason oil went to $140+/bbl was those evil speculators, and said speculators are now mostly broke, is oil going to stay down at these levels for good?

I’m guessing not. And to back up my thoughts is Rick Rule of Global Resources who sent around an email yesterday quoting one John Westwood, an oil service executive. What John had to say parroted almost exactly what a friend of mine in the refinery business had to say:

“The current situation was caused by two decades of underinvestment, and the industry needs ten trillion dollars by 2030 to get back on track.”

“Global energy demand is up 37% since 1990, and across the world the demand for energy was met 35% by oil.”

“The ‘easy oil’ is gone. In 2007 the average oil price increased by 58%, but the revenue per barrel to the producing companies was unchanged from the prior year.”

And, oh by the way, who doesn’t think that now gas prices are posting around $1.65/gallon in my area, after peaking right at $4/gallon, people will start driving more again. And, (hopefully), accelerating a bit past 52mph in that 55 zone?

The oil sands in Canada are pretty much on hold at these prices, and you can bet a good many other exploration projects will be too. IF they can get operating capital, these prices are not much incentive to explore for companies in the business to do so.

My advice: watch the drill rig count.

Peak oil is still a reality. President-Elect Hussein won’t be pulling any miracle green energy out of his sleeve any time soon. Not to mention that “it’s the economy, stupid” and that’s likely to keep him busy past his first 100 days.

One thing I think we can count on, though, is that the severly distressed stock prices of some high quality energy firms will not stay this low forever. Granted, when the market resumes it’s expected downward slant these fine companies may get cheaper yet, but picking a bottom is no easier than picking a top.

It might also be said that when these things take off, there may not be much more notice than there was when the rug was pulled out after the peak.

If you want some help deciding what stocks to pick up cheap and which to stay well clear of, I suggest checking out Casey Energy Opportunities.