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A very nice writeup. I concur with all your points

Your writeup and my linksleads me to conclude the following:

1) No one can put a finger on what the price of oil should be or would be in the short/long terms.

2) Probably no one knows how much oil there really is or how much supply in the future can be generated.

2) High price of oil is a double edged sword. It brings opportunities via development of oil infrastructure while at the same time it creates the catch 22 situation where oil infrastructure may not get the investment it needs just because the current price it too high. Sharp rise in oil prices have the potential to derail the global economy, reduce the demand a little, drive out the speculators, at least temporarily and put a question mark on the extent of oil infrastructure needed. Had the oil price rise been gradual. 10-20% per year, this catch-22 would not have been created. It is primarily the sudden rise that has created a lot of uncertainty.

As an investor, for me, I think the prudent actions would be to keep investing in those companies that have reasonable current valuations and not simply based on a dramatically high projected growth. One can take advantage of oil price rise by also investing in alterantive energy stocks and agricultural commodities. Investing in oil related companies is not the only way to take advantage of commodity price rises.

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