Oil, Oil, Oil

Dear Homer, Hope this finds you well. I was struck by the ongoing ups and downs in gas prices and wondering when we were going to get out of these price gyrations. I know, you'd probably say "never". But a guy like me is scared to death to invest in oil stocks. I just think it is plain unAmerican, particularly with all that's going on in the Middle East.

Hi Kid, Hope you are enjoying the leisure life in "The Villages". I heard golf is 'free for life'. You and Sarah must be in heaven.

I have no idea why you're so 'hung up' on oil when all you do is putt-putt around all day in an electric golf cart! Well, to each his own, I say.

Here's some info you should probably know since you, as usual, are way out in 'left' field on this one. I don't mean that politically Kid since I know your politics. I mean it from the stand point that you still don't know what you're talking about. It's not the Arabs the world has to fear when it comes to controlling the world's oil reserves, it's us Kid. America controls the largest hoard of unused oil reserves in the world - about 72% of it, give or take a percentage or two. Woke you up with that one didn't I?

Here's the facts.

One thousand feet below the surface in the States of Colorado, Wyoming and Utah in what is referred to as the Green River Formation lies the greatest oil reserve in the world. How much? Well Kid, would you believe more than 2 TRILLION barrels. In August 2005 President Bush had the guts to finally order its extraction. Three companies have been chosen to lead the way.

How does this shake up the world's so called 'balance of oil'? One thing is for certain it would make the United States the largest producer of oil in the world with the world largest oil supply in reserve. When I tell people we have enough oil beneath the ground to last us for 500 years at anticipated rates of consumption they fall over in disbelief. But that is what is estimated. Not by me, but by the experts.

This oil is locked up in shale. The oil in the shale in the Green River Basin is so rich that when oil makes and sustains $50 plus a barrel it becomes economically feasible to produce. With the price of a barrel of oil recently breaking through the $70 per barrel price barrier before it dropped back, we can conclude one thing. As China and India and the rest of the developing world thirsts for oil the current consumption of oil reserves of the liquid kind will evaporate faster than anyone estimated. Mass production of oil shale in the USA cannot be far behind.

Oil has been called Black Gold for as long as I can remember. The following, I believe, amply demonstrates why.

• One ton of oil shale produces a barrel of oil. That's worth a little over $55 a barrel on today's market. It is almost four times more profitable than gold that only extracts about $15 of gold per ton. This isn't NEW math. This is the bottom line.
• Oil shale when heated, oozes oil and American shale is more productive per ton than any known deposit from any other country in the world.

But the real story is how much untapped oil shale lies beneath U.S. soil? Kid, I'm proud to say there is four-times more oil shale in the U.S. than in all other countries combined.

Shale oil has been a secret source of a handful of nations blessed with an abundance. But, as noted, the US has more than all of them combined. When we add up all the known oil reserves in the world, including the liquid variety, the, good ole' USA holds almost 3/4's of the world's oil supply. That Kid, as I have often reminded you on other occassions, is something you can take to the bank.

So, Kid, the moral to this story is simple. Check out the government approved oil shale producers and latch onto one. It makes no difference which one, for they all will make their shareholders a fortune. It shouldn't be a hard choice, now should it?

Enjoy your golf game!

Your Pal, Homer