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Hi All,

I'd like to add the concept of "peak oil" to these very insightful posts. The oil industry has experienced some pretty good boom and bust cycles, but past busts have not included a declining capacity in world oil production. There seems to me to be strong evidence that we are at, or very near, peak oil production.

http://en.wikipedia.org/wiki/Peak_oil

U.S. production actually peaked in 1970.

So I'd have to guess that oil prices will only trend higher from here. There will likely be minor and moderate pullbacks, but the only scenario for a collapse in oil price that I can envision also includes long soup lines. I'm optimistic that human innovation will rise to the challenge of meeting the world's future energy demands, but oil will necessarily become a smaller percentage of the puzzle.

I'm not ready to abandon my oil stocks (PDS, UNT) and will probably take a similar position in Bill's July recommendation (CEO) keeping energy as an equally weighted portion of my investments. It will take some time to ween ourselves off oil!

Disclosure: I'm a petroleum engineer and by no means an economist.

Pat in Colorado
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