Is Rice Hoarding A Prelude To Crude Oil Hoarding?

Picture from Drudge Report


LESSONS FROM THE RICE MARKET
---Panics can happen very quickly.

---Prices can skyrocket just as fast; rice prices tripled in several months.

---Hoarding happens at an individual level as well as a national level. Export countries can quickly stop shipments to other countries.


PEAK OIL
There is a huge debate in the energy world as to when "peak oil" will hit. There is one argument that it has already passed. Consider the following facts:

---Worldwide daily production peaked in May of 2005. Despite record prices and growing worldwide demand, oil production has actually been falling.

---Saudi Arabia's oil production has been very flat and they have turned down requests from the United States to increase production. They claim that it does not believe there is a need for further expansion. They cited "imperfect" market signals, the move away from oil, the worsening world economy and the turbulence in financial markets as reasons to hold back.....But as many analysts believe, maybe it is simple as their inability to raise production levels.

---Last week, Russia surprised the world by announcing that a lack of investment will result in a fall in oil production for the first time in ten years.

---As the 08/21/07 posting indicated, Mexico may stop exporting oil in seven years. Today, it is the 2nd largest exporter to the United States, and the 5th largest exporter in the world.


PREDICTIONS
---Either peak oil has already happened, or it will likely happen in the next decade or two. This is against a backdrop of steadily rising demand, particularly from emerging countries.

---It is only a matter of time before the oil market experiences the disruptions now seen in the rice markets. Huge price increases and hoarding can be expected. $100 oil is nothing. Once the crisis hits, you can add a zero to this number.

---Because of the geopolitical and military implications of oil, the market disruptions will probably be extremely severe. Expect the government to ration how much gasoline you can use in your automobiles.

---Eventually, the world will really get serious about alternative energy. But it will probably be too late. Mining uranium and building nuclear power plants can take decades, not months or years.