A woman pumps gasoline into her vehicle

July 23 (Bloomberg) -- The $100-a-barrel oil that Goldman Sachs Group Inc. said would prevail by 2009 may be only a few months away.

Jeffrey Currie, a London-based commodity analyst at the world's biggest securities firm, says $95 crude is likely this year unless OPEC unexpectedly increases production, and declining inventories are raising the chances for $100 oil. Jeff Rubin at CIBC World Markets predicts $100 a barrel as soon as next year.

``We're only a headline of significance away from $100 oil,'' said John Kilduff, an analyst in the New York office of futures broker Man Financial Inc. ``The unrelenting pressure of increased demand has left the market a coiled spring.'' New disruptions of Nigerian or Iraqi supplies, or any military strike against Iran, might trigger the rise, Kilduff said in a July 20 interview.

Higher prices will increase revenue for energy producers from Exxon Mobil Corp. to PetroChina Co., while eroding profit at airlines including EasyJet Plc and railroads such as Union Pacific Corp. The U.S. and other oil-importing nations risk accelerating inflation, while higher energy costs threaten to restrain growth.

Benchmark crude oil futures ended last week at $75.57 a barrel on the New York Mercantile Exchange, up 51 percent since mid- January and twice the level of early 2003. A record number of options have been sold that give the buyer the right to buy crude oil at $100. The contracts, covering 50 million barrels, only pay off should oil go above the target price. September crude futures fell 89 cents to $74.90 at 11:16 a.m. in New York today.

Goldman's View

Arjun Murti, a New York-based Goldman Sachs analyst who covers oil producers and refiners, roiled markets in March 2005 with a report saying prices could touch $105 a barrel during a ``super spike'' period because demand was stronger than anticipated. Price swings might also go as low as $50, Murti said at the time.

Currie, Goldman's global head of commodities research in London, is predicting that oil prices will probably touch a record and stay at unprecedented levels for months or years. The all-time high for Nymex crude futures is $78.40 a barrel on July 14, 2006.

``Ultimately, the key to the outlook going forward is when will Saudi Arabia ramp up production,'' he said in an interview. ``If you have a situation in which inventories globally get drawn to critically low levels, the volatility in this market is likely to explode, which significantly increases the probability of $100 oil.'' Oil might slip to $73.50 if OPEC were to start producing more now, he said.

The Organization of Petroleum Exporting Countries is scheduled to next meet in September. No members have called for a gathering before then. A decision to raise output at that time would lead to greater supplies toward the end of the year.

Accelerating Demand

The failure of near-record fuel prices to restrain global oil demand growth is what concerns Rubin, chief strategist at the brokerage unit of Canadian Imperial Bank of Commerce in Toronto.

``Prices have doubled, and demand is alive and well and accelerating,'' Rubin said in a July 18 interview. ``The argument that rising prices would choke demand and bring increased output is falling to the wayside.''

A National Petroleum Council study led by former Exxon Mobil chairman Lee Raymond, released last week, predicted a growing gap between production and demand for oil and gas during the next two decades. As recently as 2005, Raymond said oil prices had probably peaked and dismissed the possibility that supply and demand could not be brought back into balance.

``There are questions about whether the oil industry can keep up with demand,'' U.S. Energy Secretary Samuel Bodman said last week, commenting on the Petroleum Council report.

Gasoline Sales Rise

Gasoline pump prices averaging more than $3 a gallon across the U.S., the consumer of 25 percent of the world's oil, haven't dented sales. Deliveries of gasoline were a record 9.23 million barrels a day in the first half of this year, according to a July 18 report from the American Petroleum Institute in Washington.

``It appears that high prices are acceptable to the American consumer,'' said Robert Ebel, chairman of the energy program at the Center for Strategic and International Studies in Washington. ``People want the house with a yard and white-picket fence so they are moving further and further out of the cities. They have to just get up earlier and drive further.''

Outside the U.S., demand increases are being led by India and China, where growing economies mean more cars and trucks and more factories that burn oil and gas.

Consumption between now and the end of the year will increase by 3.6 million barrels a day because of seasonal shifts. The rise is equal to the daily production of Kuwait and Oman combined, and it comes after OPEC twice in the past year cut production to support prices.

Rising Costs

The cost of finding and pumping oil is rising steadily, convincing analysts such as Rubin and Deutsche Bank AG chief energy economist Adam Sieminski that higher prices will last. Shortages of deepwater drilling ships and rigs has pushed daily rents to records, and the skilled workers needed to run rigs, weld pipes, pilot vessels, fix refineries and build oil-sands projects command ever-higher wages.

``Three years ago we were calling for $30 oil, then $35 and then $40 oil,'' said New York-based Sieminski, who last week raised his forecast for the average price of oil in 2010 to $60 a barrel from $45.

``I've gotten tired of increasing these forecasts in $5 increments,'' Sieminski said in an interview. ``Something has happened. Costs have continued to escalate, and the geopolitical situation has gotten worse.''

The $60-a-barrel forecast for 2010 is 15 percent higher than the average analyst forecast, Sieminski said. The projection probably will turn out to be too low, he said.

Oil prices could triple in three months to more than $200 a barrel, given the right circumstances, according to Matthew Simmons, chairman of Simmons & Co., a Houston investment bank.

`Still Cheap'

``Oil is still cheap,'' Simmons said. ``In the 20th century, with a few exceptions, oil was almost free. The only exceptions were during 1973, 1979 and when Iraq invaded Kuwait.''

Prices rose in 1974 after an oil embargo that followed the Arab-Israeli war and from 1979 through 1981 after Iran cut oil exports. The average cost of oil used by U.S. refiners was $35.24 a barrel in 1981, according to the Energy Department, or $79.67 in today's dollars.

While crude oil prices are approaching the records they set at this time last year, not everyone is convinced $100 crude will happen. From their peak, oil futures began a six-month slide. They got below $50 on Jan. 18 before rebounding.

``The risk parameters are somewhat different than a year ago, however the overall situation is similar,'' said Tim Evans, an energy analyst at Citigroup Inc. in New York who correctly predicted a year ago that oil prices were at a peak. ``We've priced in a shortage that is not evident yet.''

Pickens' Opinion

A pullout from Iraq may be the event that pushes oil to $100 a barrel, according to Boone Pickens, the Dallas hedge fund manager who has joined Forbes Magazine's list of billionaires because of his bullish bets on energy prices. Pickens predicted a year ago that $100 oil would probably occur by now. Today he is looking for $80 within six months, and he says growing chaos in Iraq would be a bad sign. ``That could run prices pretty high,'' he said.

Goldman Sachs's Currie also notes similarities to a year ago, with global inventories at about the same level and U.S. government data showing an increasing bet on higher prices.

``At face value this market is strikingly similar to a year ago,'' Currie said. ``What is different? Supply is down a million barrels a day, demand is up a million barrels a day. The market is in a deficit.''

GRAND JUNCTION, Colo. — The headline on the newspaper that state Rep. Bernie Buescher keeps in a box at home captures the allure of the vast petroleum riches under the rolling hills and arid mesas north of this western Colorado city.

"Oil Shale Development Imminent," the paper reads. That edition of the defunct Grand Junction News, Buescher notes, was published at the dawn of the 20th century.

More than a hundred years later, instability is roiling world oil markets, and Americans are paying $3 a gallon for gas. And oil shale fever is again rising in the geologic region known as the Piceance Basin, part of the Green River Formation that stretches across the rugged plains of northwestern Colorado and parts of Wyoming and Utah.

There is no dispute that a thousand feet below the isolated ranch country here on Colorado's western slope lie almost unimaginable oil riches. It's locked in sedimentary rock — essentially immature oil that given a few million years under heat and pressure would produce pools of oil easy to extract.

The Energy Department and private industry estimate that a trillion barrels are here in Colorado — about the same amount as the entire world's known reserves of conventional oil. The entire Green River Formation might hold as much as 2 trillion barrels.

Pushed by the Bush administration and legislation from Congress last year, and spurred by oil prices above $70 a barrel, the energy industry is mobilizing to unlock the secret of oil shale. As it has before, oil shale holds out the hope of a USA no longer dependent on foreign oil.

Testing a new approach

In a remote area of Rio Blanco County, nestled between dusty ridges covered with sagebrush and pinyon and juniper trees, Shell Oil is engaged in a multiyear test of a new technology for extracting the oil. Previous efforts that were uneconomical and environmentally destructive entailed mining the rock, crushing it and heating it above ground to release the oil.

Shell's new process involves sinking heaters deep underground, cooking the rock at 700 degrees and recovering the oil and natural gas with conventional drilling.

For a decade, Shell has been ramping up its research on private property here. It is also one of a handful of companies vying for research and development leases on larger tracts of federal land nearby. That could lead to full-scale development across 1,200 square miles of western Colorado.

Early results are promising, says Terry O'Connor, a vice president in the oil giant's unconventional resource division. But, he admits, "no one has been able to develop oil shale on a commercially sustainable basis." Shell has four more years of research here before it will know if it has the answer.

U.S. Sen. Pete Domenici, R-N.M., who heads the Senate Energy and Natural Resources Committee, was less cautious at a tour of Shell's test site Wednesday: "This is not pie in the sky. It's real this time."

Such talk has swept this region before, most memorably in the wake of the energy crisis of the 1970s. Longtime residents remember how it ended on May 2, 1982 — "Black Sunday" — when Exxon abruptly canceled its $5 billion Colony Shale Oil Project, laid off more than 2,000 workers and left a trail of home foreclosures and economic distress.

Now, said U.S. Sen. Ken Salazar, D-Colo., who accompanied Domenici on the tour, "we have a tourism-based economy on the western slope, and we will not do anything ... that will endanger that sustainability." Though oil shale has "great potential," Salazar said, "there's also great risk."

A RAND Corp. study last year for the Energy Department said that "the prospects for oil shale development are uncertain," though new technology could make it competitive with conventional oil. Producing 3 million barrels a day — about 15% of U.S. consumption — "is probably more than 30 years into the future," the study said.

Among the possible negative effects cited by RAND were large scale land disruption, air pollution, a large population influx in a rural area, and a huge demand for water in a region where it's scarce and, as Salazar said, "as precious as oil."

Randy Udall, of the Community Office for Resource Efficiency that promotes energy conservation in Carbondale, Colo., pointed out another drawback: the huge demand for electricity to cook the shale. "To do 100,000 barrels a day ... we would need to build the largest power plant in Colorado history."

'We ... need to get it right'

This region's bitter experience with the boom-and-bust of oil shale was on display Thursday as Domenici and Salazar held a hearing before an overflow crowd at the city auditorium here.

Outside, critics hawked T-shirts urging "Go Slow on Oil Shale." Inside, state and county officials said they welcome energy development but worry about the costs of providing roads, housing and other needs if a new boom arrives.

"Most of us agree it's time for the development of oil shale," said Russell George of Colorado's Department of Natural Resources. "But we really do need to get it right."

A letter from 17 county and city officials noted, "When oil shale is mentioned on the Western Slope of Colorado it is discussed as an industry that brought our economy and communities to their knees."

And Buescher, the Democratic state legislator, thought of that ancient newspaper headline. "They may be able to make it work," he said, "but I'm skeptical."

USA TADAY

You won't think much of Rio Blanco County if you ever drive through it. In fact, unless you take a right turn off
Interstate-70 West at Rifle, head north on Railroad Avenue and then west on Government road to Colorado state highway number thirteen, odds are you'll never even step foot in Rio Blanco County.

But even if you keep heading west toward Grand Junction, through the town of Parachute and the shuttered oil shale
refineries from the 1970s, you'll see the Book Cliffs geologic formation on your right. For miles and miles. It's
a bleak landscape. Almost lunar. At first glance, it's the kind of land you'd never want to explore, much less settle
down in.

Oil Shale Reserves: America's Strategic Future

In the small world of geologists, though, the region is well-known. In fact, you might even say it's the single
most important patch of undeveloped, unloved, and desolate looking land in America. But you'd never guess this
particular corner of the Great American Desert may play an integral role in America's strategic future just by looking
at it. You'd never guess that the whole stretch of brown, red, and orange land contains enough recoverable oil and
gas to make you forget about the Middle East for the rest of time.

The first seeping pools of oil were discovered in Western Colorado as far back as 1876, the year the state entered the Union. But exploration didn't get serious until drillers settled in the town of Rangely in Rio Blanco County.

By 1903, thirteen different drillers had come and gone in Rangely. According to the local museum, the only six wells that actually struck oil were producing just two to ten barrels of oil a day. Hardly a Spindeltop, the gusher that launched the Texas oil-boom on January 10th, 1901, and immediately began producing 100,000 barrels per day.

The energy reserves of the Piceance Basin, upon which Rio Blanco County sits, contain massive petroleum reserves of a very unusual nature: Oil shale.

Oil Shale Reserves: A Congressional Legacy

Most of the nation's oil shale reserves rest under the control of the U.S. government - a legacy of a 95-year old
Congressional Act. In 1910, Congress passed the Pickett Act, which authorized President Taft to set aside oil-
bearing land in California and Wyoming as potential sources of fuel for the U.S. Navy. Taft did so right away. The Navy
was in the process of switching from coal burning ships to oil burning ships. And the U.S. military, conscious of the
expanding role of America in the world, needed a dependable supply of fuel in case of a national emergency.

From 1910 to 1925 the Navy developed the Naval Petroleum and Oil Shale Reserves Program. The program became official in 1927 and President Roosevelt even expanded the scope of the program in 1942 as the U.S. geared up for war with Japan and Germany.

Several of the oil fields set aside for the nation's first strategic reserve, particularly Elk Hills in California,
would go on to produce oil for the U.S. government. Elk Hills was eventually sold off to Occidental Petroleum for
$3.65 billion in 1998 in the largest privatization in U.S. history. The shale reserves, however, still remain, locked
1,000 feet underground in the Colorado desert.

Unlocking The Future

The destruction of Hurricane Katrina shows the importance of a strategic petroleum reserve, or, more accurately, a
strategic energy reserve. But the SPR in Louisiana only holds about 800 million barrels of emergency, enough to get
the country through about 90 days of regular oil usage. That's barely a band-aid for a country that faces a potential
energy heart attack.

In other words, the future of oil shale may have finally arrived. Extracting oil from shale is no simple task, which
is why the reserves remain almost completely undeveloped. But an emerging new technology promises to unlock the
awesome potential of the oil shale.

"The technical groundwork may be in place for a fundamental shift in oil shale economics," the Rand Corporation
recently declared. "Advances in thermally conductive in-situ conversion may enable shale-derived oil to be
competitive with crude oil at prices below $40 per barrel. If this becomes the case, oil shale development may soon
occupy a very prominent position in the national energy agenda."

Estimated U.S. oil shale reserves total an astonishing 1.5 trillion barrels of oil - or more than five times the
stated reserves of Saudi Arabia. This energy bounty is simply too large to ignore any longer, assuming that the
reserves are economically viable. And yet, oil shale lies far from the radar screen of most investors.

But we here at The Daily Reckoning are on the case. Just yesterday, I caught a first-hand glimpse of a cutting-edge
oil shale project spearheaded by Shell. I trekked out to a barren moonscape in Colorado to tour the facility with
Shell geologists. To summarize my findings, oil shale holds tremendous promise, but the technologies that promise to
unlock this promise remain somewhat experimental. But sooner or later, the oil trapped in the shale of Colorado
will flow to the surface. And when it does, it will enrich investors who arrive early to the scene.

Can Oil Shale Change The World?

America's oil shale reserves are enormous, totaling at least 1.5 trillion barrels of oil. That's five times the
reserves of Saudi Arabia! And yet, no one is producing commercial quantities of oil from these vast deposits. All
that oil is still sitting right where God left it, buried under the vast landscapes of Colorado and Wyoming.

Obviously, there are some very real obstacles to oil production from shale. After all, if it was such a good
thing, we'd be doing it already, right? "Oil shale is the fuel of the future, and always will be," goes a popular
saying in Western Colorado.

But what if we could safely and economically get our hands on all that oil? Imagine how the world might change. The
U.S. would instantly have the world's largest oil reserves. Imagine…having so much oil we'd never have to worry about
Saudi Arabia again, or Hugo Chavez, or the mullahs in Tehran. And instead of ships lined up in L.A.'s port to
unload cheap Chinese goods, we might see oil tankers lined up waiting to export America's tremendous oil bounty to the
rest of the world. The entire geopolitical and economic map of the world would change…and the companies in the
vanguard of oil shale development might make hundreds of billions of dollars as they convert America's untapped
shale reserves into a brand new energy revolution.

Presidents Gerald Ford and Jimmy Carter may have been entertaining similar ambitions in the late 1970s when they
encouraged and funded the development of the West's shale deposits. A shale-boom ensued, although not much oil
flowed. The government spent billions and so did Exxon Mobil. New boomtowns sprung up in Rifle, Parachute,
Rangely, and Meeker here in Colorado.

And then came Black Monday. May 2, 1982. The day Exxon shut down its $5 billion Colony Oil Shale project. The
refineries closed. The jobs left (the American oil industry has lost nearly as many jobs in the last ten years as the
automobile and steel industries.) And the energy locked in Colorado's vast shale deposits sat untouched and unrefined.
  www.bigoilfields.com

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If you care for the unaware and want’s to make the unaware aware of the importance of awareness awareness send me $20 for a silly t-shirt.

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deanphilpot@bigoilfields.com

There’s Enough Oil & Gas for the U.S. to be Self-Sufficient in the Near Future… Let’s Start Today

There’s more oil in the United States than in the entire Middle East. We know where much of it is and we know it can be recovered at current prices. What we have is richer than the Alberta, Canada Tar Sands and we can use similar processes to recover it. We have the reserves to supply our needs with no decline curves for maybe 200 years.

The Oil Shale reserves of the U.S. are just a part of the oil and gas trapped in the United States and could produce trillions of barrels of the fuel that runs the world’s economic engine. We don’t need a government program. We need the government to get out of the way, to allow the private sector build the machine that will take us away from the terrorist threats.

In the mean time we can drill in Alaska, offshore Gulf of Mexico and the Over Thrust Belts or we can be black mailed by the likes of some tin horned dictators on the other side of the world.

Don’t believe me? See for yourself.

http://www.fossil.energy.gov/programs/reserves/npr/NPR_Oil_Shale_Program.html

http://www.fossil.energy.gov/programs/reserves/publications/Pubs-NPR/40010-373.pdf

www.largeoilfields.com

The Ipsos Mori poll of 2,032 adults - interviewed between 14 and 20 June - found 56% believed scientists were still questioning climate change.

There was a feeling the problem was exaggerated to make money, it found.