Gas is not expensive

I have always believed crudo was a great investment, for the very simple reasons that it´s a limited resource, we are burning it and our economy depends on it. Crude oil is a commodity and yes, you can invest in it (at your own risk).

First of all, we need to understand that it´s not expensive, price is raising but it doesn’t mean that is expensive. Think all what you can buy with US$4 (per gallon or 3.8 litros)…. Think that you are buying a gallon of something that took hundreds of million of years to be created, lot of research and development to be processed and it has been transported for probably thousands of milles and what is even worst we can not find a substitute yet… all for just 4 dollars…

Within the next decade or so, we would have reached peak supply. After that, we would simply be obtaining less and less. Even if we find “new” large reserves, as it happened in Brazil three years ago, these would be harder and harder to extract, and harder to extract means more expensive.

Consume is still growing in most of the developing countries, however some developed economies have became more resilient. US economy is 3 times larger than China yet consumes only double its oil (According to the Economist).

Future oil prices will determine the future path of transportation, and a whole lot more. Unless there is some radical huge new discovery of petroleum reserves,  or we find a substitute, oil prices are most likely headed up and up.

Just take a look of the historical oil price graphic from 1860 to 2010 from the U.S. Energy Information Administration and make your own conclusions.

Prices variations because of Middle East political situations don´t affect the price in the long term but makes the analysis more interesting.